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Wednesday, September 24, 2008



I'm increasingly convinced that the events taking place in Washington around the financial "crisis" are a complete charade. Yesterday, for example,
In blunt terms, Mr. Bernanke warned the senators that if they failed to pass the $700 billion plan, they risked causing a recession, increasing joblessness and pushing more homes into foreclosure.
Oh please. We're already in a recession, even if they don't want to call it one, and Bernanke is well aware that increased layoffs and foreclosures are going to happen no matter what. This is sounding more and more like an exercise in blame (and blackmail). "Give our rich friends money or we'll blame you (Congress) for the layoffs and foreclosures which are going to happen anyway (and if you do give us the money, and they happen anyway, we'll blame it on your not giving us exactly what we asked for; if only you had given Henry Paulson complete, unchecked authority then our plan would have worked)."

I've posted the last few days in general terms about what $700 billion could be used for. But there's no need to be generic. Today, for example, Arnold Schwarzenegger signed the California budget, after first using his line-item veto to eliminate $510 million in spending from the budget. $510 million, less than one-tenth of one-percent of the proposed $700 billion bailout. And what could California have done with an extra $510 million? Among the items slashed by Schwarzenegger - "more than 10,000 workers laid off around the state this summer will not be hired back." So instead of hoping that bailed out financial firms would now have money to loan to hypothetical companies who might ask for a loan so they could hire more workers (a rather unlikely scenario in this economy in any case), very real workers could have been given their very real jobs back for a fraction of the money. The scenario is repeated in state after state, city after city. The city of Oakland, with a $30-$50 million budget shortfall (that's one-hundredth of one percent of the bailout fund), is also preparing for layoffs, which means more jobs which could be saved.

Wall Street is always talking (laughably) about "pay for performance." Here's my proposal. Let Henry Paulson and Ben Bernanke set goals for the number of jobs that are going to be created by their bailout. For every job shortfall in reaching that goal, each of them has to pay a dollar into the Treasury. 100,000 jobs less than they predict, they pay $100,000. A million jobs less than they predict, they pay $1,000,000. Let them put their money where their mouth is. Let's see how many jobs they predict will be created with this hanging over their heads.

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