We approach one year since the Government of George W. Bush came to the rescue of Profiteers on Wall Street to create systemic reward for failure in our market driven economy.
Yesterday, Rachael Maddow interviewed Paul Krugman, and
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In minute five he begins describing the remedies for the current situation and I will be discussing the statements he concludes by about minute six, and among the other interesting points he made he mentioned that in order to get out of the Great Depression we had WWII which required government fiscal input of ~40% of GDP.
He went on to state that the current stimulus is only about 2.5% of GDP.
Now I am not going to spend time checking to see how accurate those numbers are this morning, and I dont agree with everything Krugman says. That disclaimer out of the way, I will say hes probably pretty accurate on those facts, and it is clear (as he also went on to say) that the political fortitude for such a stimulus plan is weak at best (mirroring the point in the one minute clip I could find above).
SO lets take those facts as a rule of thumb. Lets say the economy is twice as efficient now as it was sixty or seventy years ago; Let grant that this Severe Recession isnt exactly the same as the Great Depression (lets say for simplicity its half as bad adding the broader networking of International markets, exchanges, and trade); and we would need about ten percent of GDP in stimulus to really soar past our current problems!
Now lets assume the government has screwed the pooch with Paulson-Cheney's rescue, and that Obama's versions are still too early to call. All that, according to Krugman yesterday is about 4% of GDP (including cash for clunkers, et. al.).
[Lets apply about 1.5% of GDP for Infrastructure improvements, as my memory from first post to this update was off by 1.5%, so that means] we have about another 6% of GDP yet to spend: So thats about $858BB we can still spend.
1. Thats about the estimated cost for the full Health Reform Bill without any efficiency savings
2. My top ten wish list (inclusive of increased infrastructure and health care inclusive of efficiency savings)
or
3. A Citizens Stimulus
Here's the idea: Instead of giving more money to the moneyed interests, give to the citizens! Let's say there are about 200,000,000 individual and family tax payers; There is about $850BB to give for completion of stimulus which is about 1/4th as strong as how we escaped the Great Depression; then we have about $4250 Credit Amount per individual.
A. Order of the Allthing. In Icelandic and Nordic cultures there was the All Thing which basically reconciled all debts every year-- including debt forgiveness. So here would be the thing which I prescribe;
i. First, subtract Federal back taxes and penalties forgiven up to the Credit Amount
ii. Then from that remainder, subtract State back taxes and penalties forgiven up to the Total Credit Amount (This money goes to the States!)
iii. Next from that remainder, subtract local (real estate) tax liens and penalties forgiven up to the Total Credit Amount (This goes to the local governments!!)
iv. Finally, assuming anything is left over, any outstanding judgements, child support, or other unpaid levies would be forgiven up to that Total Credit Amount
B. The way TARP should have been applied.
i. Citizen give government the right to examine credit records (they ostensibly have this data just from Fannie-Freddie)
ii. Government confirms real outstanding balances from an official capacity via subpoena powers (thereby any institution being usurious or illegal would be committing fraud at a Federal level)
iii. Citizen has time to dispute final balances
iv. Creditor has right to re-validate claim(s)
v. Citizen may elect to have any remainder from Allthing process (above) to be applied to some or all participating Creditors to discharge debts in a class manner
C. Citizen may simply bypass this class bailout/credit restoration process and collect remainder form Allthing process.
SO think about this practically! Lets say 33% have something left over and want to participate in this settling of debts. Lets imagine who the money is owed to? In its current configuration (post-bailouts and mergers) something like 90% of all consumer debts are carried by 5 major institutions.
IF we imagine that Citibank (for instance) then recovers something to the tune of 10% of its consumer debt, doesnt that serve the same purpose of stimulus? It also relieves the consumer, and technically allows Citibank to make new loans!
FInally, if all those bailout moneys had been so applied the amount being discussed would be closer to $10K per person, and if we added the idea that mortgages could be included as direct or indirect beneficiaries to the class settlements or the use of funds by individuals who elected to bypass the settlement process some of the foreclosure and real estate market issues would have been rounded out.
You may say I am a dreamer, but I hope someday you will join me...!
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