Tunnel vision is only helpful when you
are sitting in the chair at the eye doctor's office. (By the way,
what do you call an eye-doctor? Is it optician, optometrist, or
ophthalmologist?)
Back on subject. The eye doctor or her
assistant instructs you to "Rest your chin here, close your left
eye and look straight through there."
That single focus can help get you the
right prescription lenses, if you need them, but this kind of one-way
view can be very limiting and costly in the real world. And the high
cost of tunnel vision is magnified a billion times over when we are
speaking of something as massive as the trillions-of-dollars mortgage
sector of the American economy. Yet until now, a tunnel-vision
approach is exactly what the treasury department and the Bush
administration has been trying to foist upon the American public.
"Give us $700 billion, or we're all going to hell in a hand
basket!"
But is there really no other way out of
this sticky, scary mess?
According to National Public Radio,
between economists and politicians who know what they are talking
about, a back-door infusion of money into these failing banks and
investment firms need not be our only option. We've got choices to
consider.
Alternative #1: Instead of sneaking the
money through the back door, the government can come boldly through
the front door and buy shares directly into the mortgage banks and
investment companies. This idea is being floated by Mr. Simon
Johnson, former chief economist at the IMF, and currently professor
at MIT. Mr. Johnson also recommends...
Alternative #2: The government should
lend money to the companies and use the distressed securities (the
mortgages) as collaterals for the loan. That way, the government is
not buying the bad mortgages directly. Treasury Secretary Paulson
criticizes this option as "The Japanese Plan", which
resulted in Japan's prolonged recession.
Alternative #3: Force the investment
banks to stop paying dividends. If they stop making investment
interest payments to their investors, they can build up capital
(piles of cash).
Alternative #4: For the the investment
companies at risk, the government can suspend capital gains taxes.
Give those companies a break, a grace period, when they do not pay
taxes on the profit they make on the troubled investments and their
other assets. Yes, the government will lose those tax dollars, but
won't that be much less than the $700 billion bailout price tag?
Alternative #5: Instead of giving the
money to the companies, provide funds to help the millions of
homeowners facing foreclosures, due to the scammy NINJA loans. That
way, the mortgagees will be able to make their payments. After all,
it is these pending foreclosures that have wiped out the value of the
mortgage-backed assets.
Though the administration still has its
sight set on the expensive bailout, it's encouraging to see that some
alternatives are now part of the debate and discussion. Though each
alternative has its own set of pros and cons, each should be looked
at to see if even a combination of some or all elements from the
various alternatives can be used to solve this complex problem, so
that the final solution is fair to taxpayers, while making the
culprits carry some of the load for turning this thing around.
