I actually had never heard of economist James Galbraith until I stumbled upon his testimony before Congress in an article in, of all places, Mother Jones. So you gotta figure the guy is pretty liberal, but in his testimony, he comes across as having some solid answers that the Obama team overlooks or rejects.
Actually, most of our problems–except for foreclosures–could be solved quickly and simply if we just resurrected the Resolution Trust Corporation (RTC) of the late 1980s and early 1990s. Since that was a Bush initiative (see Bush, George Herbert Walker), however, the Democrats are loath to give it any credit, let alone emulate it. They’d rather let the economy go to hell and stay there–and then blame it forever on the other President Bush (see Bush, Dubya).
Meanwhile, the stock market continues to tank in the face of governmental indecision and inaction, taking with it the retirement dreams of millions of Americans. (Will they still vote for Obama if their savings remain wiped out for years–or forever?)
Anyway, back to Mr. Galbraith. He actually broaches an RTC-type solution in his testimony.
Galbraith sees no alternative to putting “several very big banks” that are “deeply troubled” into receivership, breaking them up, firing existing management, and selling them in parts or relaunching them as “multiple mid-sized institutions.”
Galbraith also tackles the foreclosure problem on two fronts. The first front is to establish a modern version of the New Deal’s Home Owners Loan Corporation. Since the New Deal, to me, was nothing but a complete failure and only exacerbated the depression, I’m not sure about that idea, but his other idea has merit. He proposes having the government buy up all foreclosed homes and renting them back to their foreclosed owners, even with the option of future repurchase. This would at least keep the housing stock from further deteriorating. (Of course, this is not something you could do retroactively either.)
In sum, it’s refreshing to find an economist, especially a liberal one, with solutions that hold promise. Now, I wish I could say the same for Obama’s twin pillars of indecision, Timothy Geithner and Lawrence Summers. Then again, it’s probably the unrealistic expectations that Obama and his liberal operators place on the whole economic dialogue that leads to the indecision in the first place.
After all, the head man and his team are still looking for that magic wand to wave over the economy–and health care–that will make all the problems disappear while a pile of loot arises magically from the top five percent of taxpayers in America. More likely, “Rome burns while….”