Jon Stewart’s Daily Show on Comedy Central may not be the first place to look for economic wisdom but last night he laid out a plan to rescue the economy that makes as much sense as any I have heard yet. Instead of the government giving billions to financial institutions, give that money to individuals with debt with the restriction that they can only use it to pay down their debt. The plan is genius in its simplicity.
The rationale for the TARP bailout is that “loaning” billions to banks and financial institutions is needed so that they will restart loaning money. Of course, that hasn’t worked despite pouring over $350 billion into the cesspool called “financial services.”
Stewart reasons that if you instead give to those who owe money on a mortgage enough money to pay down their debt to avoid foreclosure has the dual result of keeping people in their homes and giving banks the money they need to make new loans. I know, genius isn’t it?
Yes, there is the problem of rewarding bad behavior; many of these were people who knowingly got in over their heads and took on debt they had no way of paying off. Of course, the same could be said for the banks and lending institutions themselves.
Only the Stewart plan would reward the bad behavior of average Americans instead of enriching the Thains of the world with huge bonuses and obscene profits at public expense. While I am not fond of rewarding anyone with my hard earned money, if I have to choose I will choose Joe Debtor rather than the idiots who ran the economy into the ground.
In fact, it seems to me that this is an opportunity to reform the system of finance that we should not pass up. As I see it, the problem is endemic in that the entire financial services industry is built upon rewarding the players in it, the analysts, the brokers and the managers on an insane system of bonuses and rich rewards. Why is it that a person who manages to move money around is rewarded at a pay rate a thousand times that given to a person who actually produces goods and services?
That is the heart of the problem and all the tinkering and regulating will do little to get at this until we remove the incentive for anyone to create “new financial products” which put at risk the down to earth business of producing goods and services.
There is something sick with a culture that says moving money and debt around the planet is more valuable than making cars, healing illness or driving a bus. We live in a world in which discovering the cure for cancer has infinitely less value than dreaming up the nightmare called “derivatives.”
To my simple mind, that is the heart of the problem and no set of regulations and certainly no “stimulus” package is going to do anything to right that wrong. So I say let’s go with Jon’s plan and spread the wealth out to each and every person so we can trickle the money up for a change.