Doug Henwood:
"It does, but I don't think the most urgent need for the U.S. economy right now is borrowing to finance fresh borrowing. It should be to promote an orderly deleveraging, a humane austerity program (meaning that it should fall on the top 5-10%), and a long-term transition away from consumption and towards (social) investment."
JG:
Right, this recognizes both the imperative of inflated asset deflation (i.e. fictitious capital destruction), and the class justice of making the arbitrage artists and kindred species pay for most of it.
The way to prevent continuing epidemic mortgage defaults is not to stabilize a bubble that needs further de-bubbling, but to get mortgage defaulters an income stream. Many of the already defaulted and to be defaulting have residential properties in ghastly low-density single-purpose exurban subdivisions. Create a public investment program to "smart growth" (ugh) these "communities" (ugh) and to equip them with green tech power, heating/cooling sources too; employ "community" (ugh) members (i.e. potential defaulters) as active participants in the whole scheme. This would help address the income stream, mortgage default, economic stimulus, energy crunch, greenhouse gas -- and democracy deficit -- issues all at once.
(Apologies if this sounds too Van Jonesish, 'cause somehow I'm thinking it doesn't...)
But even if this proposal were not utopian to begin with, the moment has been squandered. Where was the much-ballyhooed "pressure" on Obama that his "critical supporters" kept on promising in early November?
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