Note that Nouriel Roubini describes the "necessary approval" of today's bailout bill, which confirms my suspicion that he thinks it was better than doing nothing (maybe he thought otherwise four days ago). But he's absolutely right that we need to radically redesign the plan after its passage. In short, we need:
* Recapitalization of the banks in exchange for preferred shares, or something similar. * Real protection of homeowners through a new HOLC. * The return of something like the Reconstruction Finance Corporation, which would lend money where private banks were unwilling or unable to do so, focusing on infrastructure projects. * A way to pay for the upfront costs, using targeted taxes such as those suggested by Bernie Sanders (i.e. a 10% surcharge on incomes over $500k individual/$1m per couple, and a .25% transaction fee on stocks.) * A rollback of the Bush tax cuts (this is coming anyway if Obama wins, but we might as well do it now because we need the revenue now). * An expeditious end to the Iraq War, and a demobilization of our military force abroad in general, redirecting the tax dollars to the renewed RFC for investment.
I suspect that the first point will end in something akin to a Sweden-style nationalization of the financial industry. In my view, the faster that happens the better. We need to get the public in control of our capital system, and make sure that going forward the public profits from investments made with that capital. At the very least, public ownership should continue until the current crisis is over and the public's equity can be sold for a profit, but I think you can make the case for a continued controlling or strong-minority share in banks for the indefinite future. It would be really helpful to have a ready supply of capital for converting our economy to a post-oil, post-motoring future, and so far private ownership has failed to move quickly enough to avert even bigger disasters than what we're currently facing.
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* Recapitalization of the banks in exchange for preferred shares, or something similar.
* Real protection of homeowners through a new HOLC.
* The return of something like the Reconstruction Finance Corporation, which would lend money where private banks were unwilling or unable to do so, focusing on infrastructure projects.
* A way to pay for the upfront costs, using targeted taxes such as those suggested by Bernie Sanders (i.e. a 10% surcharge on incomes over $500k individual/$1m per couple, and a .25% transaction fee on stocks.)
* A rollback of the Bush tax cuts (this is coming anyway if Obama wins, but we might as well do it now because we need the revenue now).
* An expeditious end to the Iraq War, and a demobilization of our military force abroad in general, redirecting the tax dollars to the renewed RFC for investment.
I suspect that the first point will end in something akin to a Sweden-style nationalization of the financial industry. In my view, the faster that happens the better. We need to get the public in control of our capital system, and make sure that going forward the public profits from investments made with that capital. At the very least, public ownership should continue until the current crisis is over and the public's equity can be sold for a profit, but I think you can make the case for a continued controlling or strong-minority share in banks for the indefinite future. It would be really helpful to have a ready supply of capital for converting our economy to a post-oil, post-motoring future, and so far private ownership has failed to move quickly enough to avert even bigger disasters than what we're currently facing.