The Jon Stewart solution

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.

 

15 Responses to "The Jon Stewart solution"

  1. barak  January 30, 2009 at 6:28 am

    NO! NO! NO!

    This is just a joke. Stewart would not seriously suggest such a plan. Why? Because it is just substituting one bailout for another. We aren’t solving anything. We aren’t fixing anything. The fat cats on Wall St and at Citibank will continue to buy their private jets so they don’t have to ride with the unwashed masses.

    Well, I fly a lot and I bathe at least once a day. If I had the opportunity to sit next to one of these wall st. crooks I would be sure that I didn’t bathe for at least a month before the trip. I’d eat lots of garlic and work-out daily to get really sweaty. Then I’d get in his or her face and confront them about the wasting of money on corporate frills, golden parachutes, and conventions in exotic, far away luxurious resorts.

    Let’s pass some really tough laws re how bailout money is spent, and then police the implementation and enforcement of those laws. Put the jerks in jail and see how quickly they reform their profligate practices.

  2. Ladywolf55  January 30, 2009 at 11:31 am

    If we put them all in jail, there would be no one left to run the country and corporations, which are one and the same now. They’re all corrupt, no exceptions.

  3. ImaginativeSolutions  January 30, 2009 at 4:35 pm

    Even better, …

    I shared this very idea with my legislators several months ago, and with change.gov each of the last two months; but …

    There is a cheaper way to accomplish the same thing. Just rescind all debt and let the financial sector fail. They deserve it for being wholly and solely responsible for breaking the economy anyway. It doesn’t even require the government to rescind really; if all the debtors just fail to pay, which is what’s happening anyway. Formalizing it would be more orderly, and prevent a lot of civil turmoil.

    Then, in order to fund a new economy, tax at 80% all income and capital gains in excess of $200,000 (or 20 times the minimum wage, if that’s more palatable).


    just another thought worthy of serious consideration

  4. Flapsaddle  February 3, 2009 at 2:42 pm

    A shell game, pure and simple. Mencken was spot-on. Barnum grossly underestimated the birthrate.

    Most sincerely,

    T. J. Flapsaddle

  5. silentSCREAM  January 28, 2009 at 8:54 pm

    Viability debate aside, Mr Stewart’s solution could NEVER, repeat NEVER, be entertained as an option by the powers that be. Why. Simple. It’s inconsistent with rule #1 in the plutocrat’s guide to good governance — keep the rich rich and the poor poor.

  6. Baal  January 28, 2009 at 10:35 pm

    HEAR!!!! HEAR!!!!!!

  7. Warren  January 28, 2009 at 11:10 pm

    Uhmm, well, I have been financially responsible, paying off my mortgage ahead of schedule based on my financial resources and ability to pay, for the past 12 years on the current house. I didn’t buy too much house and I knew that there would be ups and downs.

    No way in hell am I taking over the mortgages of irresponsible idiots, especially by way of government fiat.

    I like Jon’s show and I watch it regularly and usually I get a good laugh or two. On this occasion I am totally disgusted.

  8. Elmo  January 29, 2009 at 2:11 pm

    If your money goes to the banks to buy the worthless assets then you’re taking over the mortgage. If the Stewart plan goes into effect, you’re taking over the mortgage. You’re taking it over one way or the other. The only question is, which plan will get the credit market unfrozen quicker?

  9. DJM  January 29, 2009 at 2:08 am

    Obviously the idea is meant to get people thinking about ways to help the economy besides giving more money(and thus more power over all of us) to the financial “wizards” who made the mess in the first place …. especially with no over sight or strings attached! As it is they are just giving money away to banks without taking any control at all. (I think not nationalizing the banks at least for the short term is a big mistake.)
    But if the firestorm of foreclosures (and job losses) isn’t stopped soon the whole neighborhood will burn to the ground, including yours.
    Perhaps a compromise is in order… What if the government bail-out money was used somehow to replace some of the high interest loans with low interest or even no interest limited time loans (say five or ten years), with the property as collateral? (Of course taking anything away from the banks won’t be as easy as giving them free money to redecorate with I suppose) That might give the country the breathing space it needs “if” the other things that need to be done such as bringing jobs back or creating new ones, reducing dependence on oil (not just foreign oil, all oil)…many things need to change that can’t be postponed any longer.

  10. texasmike  January 29, 2009 at 2:23 am

    Well, Warren…I know a couple who are in the process of shortselling their home because the gentleman got laid off…as in some creep in upper safe management decided to make himself look good and fired half of what makes the product. Nevermind that orders still have to be processed. Beancounters never worry about actually delivering a product only delivering numbers.
    In any case, I think it’s irresponsible to accuse this gentleman of being an idiot who got in over his head. I’d say more than a healthy proportion of short sells and foreclosures are due to job losses. The days of the twenty year job has long gone. I always get a chuckle from those who assume someone is a bum for foreclosing on a home loan. Maybe they are but maybe they aren’t. There is something basically wrong in this country with society. They treat laid off people like they have some sort of leprosy. If 75,000 people get laid off tomorrow, do you think they just disappear in a whiff of smoke? Why pretend they don’t exist anymore?

  11. Warren  January 29, 2009 at 10:15 pm

    I was laid off 5 weeks ago. Still paying my mortgage and I expect to continue to.

  12. Jim Shelton  January 29, 2009 at 9:36 am

    …doesn’t the viability depend on the kind of debt? That is, the unfortunate loss of income or irresponsibility?

  13. DJM  January 29, 2009 at 12:29 pm

    I think the main difference with the way people think about “rewarding bad behavior” is that old personality trait of authoritarianism. Those people who are authoritarian followers are inclined to believe all people in positions of power are innocent until proven guilty (and often not even then) and that all poor people (and in fact every person who doesn’t share their culture and beliefs totally) are guilty until proven innocent (and often not even then). In my opinion as long as otherwise good people ALWAYS believe that ordinary people in need of help, got into that situation by their own poor judgement and that, that means they and their families should be thrown to the wolves(punished for mistakes and/or illness or some other form of bad luck?!?!) Then I know our country has lost it’s moral compass completely ….and that Gandhi was right when he said; “I like your Christ, I do not like your Christians. Your Christians are so unlike your Christ.” and again when he was asked : What do you think of Western civilisation? he replied ; ” I think it would be a very good idea.”

  14. jgw  January 29, 2009 at 6:02 pm

    I too think its a pretty good idea except for one little problem. It will not solve unemployment or spending in that folks will remain unemployed and will continue to borrow simply to live – even after all their current debt is paid off. Even if the banks were not holding bad debt its also unlikely, now, that they are going to be willing to loan money to the unemployed or bankrupt. This, of course also means that the problems will continue. Frankly, bailing out the banks seems an exercise in futility in that it actually fixes nothing.

    From what I hear, and read, Bush basically threw about 200 billion on the street with absolutely no oversight. Now, Obama, is going to do it with a LOT of oversight. I suspect the results may end up being approximately equal except that we will now be able to see what happens to it.

    The general consensus of economists is that this thing cannot be stopped. This seems to be a historical fact. Most economists say that what must be done is that gov must throw a LOT of money at it, WHEN IT HITS BOTTOM. This will act as a self multiplying stimulus so that recovery is much faster. Anything, before hitting bottom, will only serve to probably extend the misery (there is some evidence of this when one considers the results of Roosevelt’s economic intercessions).

    This is, however, an absolutely great opportunity to fix some of our rotting infrastructure. I, personally, don’t think they are spending even half of what is needed on infrastructure and question some of the feelgood projects in the proposed legislation. People are driving over bridges that should be condemned and living below dams likely to burst. Water supply infrastructure, nationwide is in jeopardy, air traffic control is in serious trouble, etc. (the list is endless). Given the state of our regulatory bodies (the FDA, for instance) there needs to be a serious will to put boots on the ground in these areas before we all die! Even our food supply is at risk!

    We should also not forget that we have, obviously, a seriously rotten and inept financial infrastructure. Perhaps, given that they are not loaning out money, even when its given to them, for free to do that with. Perhaps they should be allowed to fail, right now, when they are worthless, so that we can actually rebuild that infrastructure too. From everything we are told they currently serve no real function anyway (due to their refusal to do what they are supposed to).

    I also suspect that the current situation is seriously mitigated by Social Security, savings insurance, etc. None of this existed in 1929 and, I think, will tend to lessen our problems, at least somewhat. Please also remember, even if we get to 10% unemployment, or even 15%, that would mean that 90%, or 85%, are still working!

    I would also remind folks that we have elected a president who seems to have an infallible sense of timing. Hopefully that will continue.

    jgw
    Port Angeles, WA

  15. Warren  January 29, 2009 at 10:14 pm

    Which assumes that the credit market is ‘frozen’. It’s not. Lenders are now demanding ability to pay that they had not before, but should have. It’s actually quite robust for reasonably qualified applicants.

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