Robert Reich: Will it even work?

[deminks]

http://tpmcafe.talkingpointsmemo.com/2008/09/23/the_bailout_to_end_all_bailout/

The Bailout To End All Bailouts

But will it work? Here's Paulson's and Bernanke's logic, made explicit at the Senate hearing today: There's only a certain amount of bad debt on Wall Street's books, left over from the wild and woolly days of lax mortgage lending. Once removed from the Streets' books, credit will flow again. And once credit flows again, even Main Street can breath a sigh of relief.

P&B failed to mention that bad debts are growing even among people recently considered good credit risks. At end of August, 6.6 percent of mortgages were at least 30 days past due. That's up from 5.8 percent at end of June. We're also seeing a growing amount of credit card and auto payments past due.

The culprit isn't just those sub-prime loans. With jobs and wages are dropping across America, many people who had been able to pay their bills no longer can.

It's no coincidence that states where mortgage delinquencies are highest are also states with the highest rates of job losses. According to the Bureau of Labor Statistics, the official rate of unemployment in California last month was 7.7 percent. That's up from 5.5 percent a year ago. In Florida, unemployment has climbed to 6.5 percent, from 4.1 percent a year ago. No surprise that bad debts are mounting fastest in California and Florida - and elsewhere around the country where jobs are evaporating fastest.

(snip)

Bottom line: Unless Americans on Main Street have more money in their pockets, Wall Street's bad debts will continue to rise -- which means the Bailout of All Bailouts grows even larger, which means taxpayers take on even more risk and cost.

(end snip)

The war to end all wars. Never again. etcetera, etcetera, etcetera.

[ReadTomPaine]

1. I love Robert Reich.

Wish he had Rubin's place in the Obama campaign.

[sandnsea]

2. Reich is an adviser too

He isn't quoted as often because he isn't an actual economist. But he is an adviser.

http://www.reuters.com/article/idUSN2731965020080627?pageNumber=2&virtualBrandChannel=10112

[ReadTomPaine]

3. Hey, thanks for this!

:)