The calamari salad was world-class. Still, my friend the CPA's face screwed up. "You know what still has me pissed off? The bailouts. All wasted on CEO bonuses. But nobody cares!"
I told him I thought people cared, but they didn't know what they could do about it.
"I'll tell you what we should do," he fumed. "Stop paying our taxes. And our mortgages. They can't throw us all in jail! They can't evict us all!"
What should we demand?
"The bailout money. Make 'em give back every cent to us, the people who need it."
How would the money from The Mother of All Clawbacks be distributed? Equally? Should people in foreclosure get more? Or those who pay higher taxes? He didn't know.
So some details need to be worked out. But the point remains: it's time for a revolt.
The economic collapse began eight months ago, in September 2008. The Bush and Obama Administrations have since racked up $12.2 trillion in commitments and spent $2.5 trillion on bailouts: AIG, Bank of America, Bear Stearns, Citigroup, Morgan Stanley, TARP, purchases of debt and derivatives issued by Fannie Mae and Freddie Mac, discounted overnight lending to banks, purchases of toxic commercial paper, and all manner of other high-flying fiscal shenanigans that you paid for when you could least afford it.
Why didn't they bail out the homeowners whose mortgages backed the troubled securities that sparked the crisis? Helping them would have been a three-fer: the banks would gotten paid, consumer spending wouldn't have fallen off a cliff, and government would have restored some of the faith lost after Katrina.
Sadly, the trickle-down approach is easier than a good plan. Issuing checks to a dozen big financial institutions doesn't require the creation of a new federal agency to analyze requests from millions of distressed homeowners. It's the same reason lazy presidents support dictatorships abroad instead of democracies: all you need to strike a deal is one handshake. Besides, presidents and cabinet officers spend more time hanging out with bankers and dictators than they do with average citizens.
Trickle-down never works. Consider what happens when parents die. Their will may instruct their children to divvy up the estate equally. In practice, however, the son or daughter assigned as trustee somehow ends up with more than his or her fair share. That happened on a massive scale with the bailouts. Congress wanted banks to loosen credit but didn't put it in writing. Banks instead used the cash for new mergers and acquisitions, executive bonuses and remodeling their offices.
Anyway, here we are $12-plus trillion in the hole--$40,000, plus compound interest paid to Chinese and other foreign investors, for every man, woman and child in the United States. That's more than the national debt was at the beginning of the current mess. What have we got to show for it? Zip.
Unemployment is still soaring. There is no real estate market. The stock market is puttering along at 50 percent of last year's value. Two million Americans faced foreclosure last year. Eight million more are on the chopping block. The bailouts haven't done anything to help Americans who have been laid off, subjected to furloughs and pay freezes, seen their retirement benefits fall along with the stock market and been gouged by voracious health insurance costs.
Check out this statistic: according to the Fed, the total net worth of American households fell by $11 trillion last year. That's almost exactly the amount--$12 trillion--that Bush and Obama spent on bailouts. Think about what that money--$160,000--would have done for the average family of four.
Unrealistic? That's what my girlfriend thought when I led a rent strike. The landlord hadn't provided heat, so I organized the tenants in my building to pay their rent into an escrow account until things improved. My girlfriend doubted that everyone would participate. "That's OK," I said, "we don't need everyone." We didn't. A 60 percent income drop was enough to get the landlord's attention. The heat came back on and a judge awarded us several months free rent.
We don't need everyone either. If millions of Americans were to pay their taxes, mortgages and debt payments into escrow (to show that we're not deadbeats), it wouldn't take long before we got some action from Obama and his gang of bank-loving technocrats.