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Bailout: Interesting Choice of Terminology

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The financial bailout bill has been passed and markets all over the world continue to sink. I wouldn’t expect a real plan to work immediately, but if part of the reason using public funding to save these failing businesses was supposedly necessary was to boost investor confidence and stabilize the markets, the effect should have been almost immediate, and obviously we’re just treading water here.

The term agreed upon for this measure, bailout, comes from the concept of using a bucket to remove water from a sinking ship. This is an excellent choice of terminology. I can’t think of a better metaphor for what’s happening to the economy. And the problem with this bailout plan is that the original $700 billion will not be enough.

The problem is that when you’re bailing water from a sinking ship, you don’t stop at one bucketful. You have to keep bailing water until you reach the shore, and if your boat’s going nowhere, you’ll be filling and emptying buckets until your back breaks, and then your ship will sink.

The undersea hull of this ship, the basis of the economy, is rotting through. The problem is systemic, and no amount of bailing will solve it. Water is leaking in from all sides, and governments all over the world are considering similar bailout measures, and will probably continue pumping public money into private corporations and financial institutions all over the world. But the problem isn’t in the financial institutions, the financial institutions have issued and traded amongst themselves the debt of a working class which is suffering job losses and a devaluation of the worker in the job market. These banks were counting not on the workers being able to use the loans given them to build a middle class life for themselves and grow economically, but on being able to make a profit on the collaterol provided by those who couldn’t pay off their loans in a growing housing market.

The problem for these financial institutions was that the housing market fell through, but the systemic problem in our economy is that our economy as it stands today is based on a middle class, which the economic movers and neoconservative government have been attempting to destroy. The real problem is an extreme and widening gap between the rich and poor. Market adjustments happening because of this and financial institutions falling because they made the wrong bets in this kind of unstable market are completely secondary to what’s really important, the fact that the restructuring that the economy is currently going through is a restructuring in favor of a rich/poor income disparity economy rather than the New Deal middle-class economy.

When we demand that our government do its part to fix the economy, and many Americans are vehemently against what both parties have agreed upon as the solution, basically a big giveaway of public funds to the same financial institutions whose unmonitored activities contributed to these problems, we need to be asking that the system be fixed, not the institutions that made a bad play. We need to actively work toward focusing public discussion on the fact that the new trend of reversing the kind of changes made during the New Deal to build a strong middle-class-based economy needs to be stopped and new ideas need to be formed with the goal of making an economic system that works for everyone.

The best idea out there right now is requiring that employers pay a living wage – although it would mean an economic adjustment, which is going to happen anyway, business is never just going to stop in its tracks. If an economic adjustment is going to happen anyway, we have to choose whether the new economic climate that comes out of it is favorable to the worker or to the people who are already wealthy and will come out able to provide for their families no matter what happens in the end. I favor the worker on this one, but if we let things stand as they are and don’t demand change, we’ll miss an opportunity here.

If all we do is keep giving money to failing businesses to keep them afloat without solving the real economic problems, the middle class will suffer no matter what the outcome, and even the market itself is unlikely to come out unscathed. What will fall next in our debt-based economy? Other important, everyday items in people’s lives like food and fuel? Other items used for collaterol, like automobiles? Less immediate necessities like technology?

Whatever business gets dragged down next, will we end up paying for it with public funds as well? What else will we bail out before we fix the systemic problems in the market? The middle class is already feeling the effects of the economic crisis, and when job losses and other economic problems among the populace get out of hand, we will have run out of resources to help them if we bail out all the big businesses first. And I know some may disagree, but the people affected by the economic crisis are more important than the institutions. We have to fix the hole in the boat before we start bailing water.

The debt-based economy is a great way of keeping the workers in the pockets of the wealthy and widening the income gap, but the percentage of people coming out on top will get smaller and smaller as time goes on, and it continues to puzzle me how anyone other than the 0.1% of the population that this is good for could possibly be happy about the capitalocratic system we live under.

Here’s a Modest Mouse fan video.

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Written by Alex (Capitalocracy)

October 8, 2008 at 1:36 am

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