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Web Letter

I have been listening to various experts on the economy, including Joseph Stiglitz, over the past several days, and I find it ironic that on one hand they seem to say it's OK to bail out financial institutions at taxpayer expense but that Chapter 11 is a perfectly acceptable alternative for the automotive sector. As a citizen of what is commonly called the "Rust Belt," I see this is just one more example of Wall Street insiders thinking that companies that produce nothing (e.g., Google, Yahoo, and Ebay) are more valuable than companies that actually manufacture a product used and needed by everyone.

Would someone please look at the reality of the American economy and explain how companies that provide only services or information can survive if the majority of people that produce goods are unemployed and not able to purchase anything? It appears that the segment of the economy that has shown the greatest productivity gains in the past ten years is inconsequential to the folks who seem to "print money" in the lending and brokerage houses (in good times).

The critics of the auto industry don't seem to realize that the reason they are in the position they are in at present is principally due to the fact that the consumer cannot get credit to buy their product (this is not just the domestic companies--it's all automotive sales). Where then does the blame for the crisis lie? Is it because the car companies are not building fuel-efficient vehicles? Is it because their cars are substandard in quality? No, the current financial crisis can be laid at the doorstep of the same sector so blithely defended by the economic community.

May I ask Joseph Stiglitz just one question? What would be the impact to the US economy if 2 million more individuals were out of work? What will the loss of hundreds of billions of dollars do to the GDP? Do you Mr. Stiglitz have any clue as to how many companies (tier one and two suppliers) would follow GM into bankruptcy? And you say that is what Chapter 11 is for! Has a company of that size ever been forced to that point? I am amazed at the attitude of contempt for such an important part of the American infrastructure.

Jim Miles

Ann Arbor, MI

Nov 13 2008 - 6:12pm

Web Letter

This bailout of the Wall Street bankers is one big boondoggle. The government should have bought up the mortgages, and the same bankers would have ended up with the money anyway.

This entire system is so darn rotten and corrupt, the politicians couldn't even think of this. People would at least be in their homes, and we wouldn't have all of this rapidly deteriorating real estate that soon won't be worth anything.

Alan L. Maki

Warroad, MN

Oct 25 2008 - 9:10pm

Web Letter

The Congress is likely to pass something to come to the aid of Wall Street, but I find it hard to support much of what has been proposed. I keep wondering if this crisis has been engineered in some fashion to facilitate another raid on the US Treasury and taxpayer.

This administration, and by proxy its corporate masters, has gotten almost everything it desired. There have been huge tax cuts, huge payments to corporate America through "privatization," huge economic stimulus through remarkably low interest rates and more. But there is one thing that President Bush hoped to achieve and campaigned for that has not happened. He had hoped to privatize Social Security and transfer massive sums of money to Wall Street in the form of private accounts, and in the form of fees earned to manage those accounts.

Is this a case of trying to go through the back door to accomplish what couldn't be done through the front door?

This fiscal year's Social Security contributions will be about $900 billion. From fiscal 2001 through 2008 (Bush's presidency), total contributions were about $6.24 trillion. The surplus over those years is about $1.4 trillion. Maybe Wall Street feels they deserve half of that surplus to play with, or $700 billion?

On a related note, the CBO figures through August show that Social Security tax revenue for this fiscal year are up by over $30 billion through August, while outlays are flat compared to last year. Not bad for a program that is in "crisis."

Randall Conradt

Southwind Country Club<br />Garden City, Kansas

Oct 1 2008 - 3:22pm

Web Letter

Mr. Stiglitz is right about the bailout. Both Democrats and Republicans caused the current crisis. The current bailout plan is just more of the same.

One more issue should be added to the discussion. Congress has been pushing the concept of "affordable housing" for several years. This is a code word for minority homeownership. Fannie Mae and Freddie Mac were major instruments of this policy. What Congress ignored is "affordable lending." The push for low- and moderate-income housing at any cost exposed millions of borrowers to predatory subprime lenders. Artificially low interest rates combined with vast flows of money from domestic and foreign sources poured into real estate. This caused home prices to skyrocket. High prices eventually priced new homebuyers out of the market and prevented existing homeowners from refinancing toxic loans. Values began to fall, defaults rose and major lenders and investment firms began to collapse.

One has to ask: What if all this money had flowed into building new businesses and schools, repairing the aging US infrastructure and creating American jobs?

What's the solution? (1) Let the market punish bad lenders and Wall Street investment firms. Bankruptcy is almost too good for them. (2) Tighten regulations on lenders and promote good lending practices. (3) Stop promising low-income citizens something for nothing--it does not work. (4) Sell off Fannie and Freddie to private investors. (5) Invest billions in the US infrastructure using American workers and American firms.

Dr. Bill Hatch

Spokane, WA

Sep 30 2008 - 2:24pm

Web Letter

NO, to any bailout that does not include the immediate demise of the Federal Reserve Bank. Our Constitution explicitly spells this out of a national controlled currency based on silver and gold.

As long as the Fed is privately owned, this country can be yo-yoed again and again. The president and Congress are out-and-out criminals along with the bankers/hucksters and should all be voted out--Ds and Rs.

Without removal of the Fed this country and all situated the same are doomed. See Chile, Argentina, Brasil etc.

Better we have a revolution than to stand and play this game over and over with the same result guaranteed.

Carl Rite

Montrose, CO

Sep 30 2008 - 2:07pm

Web Letter

The stench of corruption is so great that they can smell it all the way to China. We are so intensely committed to the notion of an imaginary free market that we forget to notice that China is a managed economy growing at 17 percent, and we will borrow a billion for the war and a billion more for this bailout. We need to re-industrialize the country or face an ever-pending Doomsday. Global trade is fine, but we have shipped all the tools for the things we make offshore. We are now exporting all the coal we can mine while we try to heat our homes by burning the furniture we are buying from China, and the politicians keep dribbling on. France learned some decades ago that they couldn't sell the farm and still produce food.


Caribou, ME

Sep 28 2008 - 7:37pm

Web Letter

I am not in favor of a bailout for those holding companies that were too big to fail. The opportunity for a massive economic failure increased, because too much of the market was in too few hands, with too few brains. Genius is rare in any field, but "normal" intelligence seems to be in short supply on Wall Street. Risk must be dispersed among many firms and not concentrated among the few. Allowing larger companies to buy these failed assets compounds the risk for future failures. When these companies fail, support should be given to their subsidiaries as independent companies. As to real estate, it has been overpriced for years, and buying a home was becoming too expensive for ordinary people. We cannot expect it to remain at the same unrealistic level. The price of homes has to fall to a more affordable level. Jobs that pay well are the key to recovery so they can support the real economy and real estate in particular

Pervis James Casey

Riverside, CA

Sep 27 2008 - 3:36pm

Web Letter

Oh, come on, Mr. Stiglitz. This is the game:

The Dems feign compassion for the yokels, and the Republicans don't.

It's exactly as it is with the war, except for the fact that the roles are reversed.

Cameron Jones

Indiana, PA

Sep 27 2008 - 2:45pm

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