Another socialist blog

We all know we’re about to be robbed blind, that’s a given.  People who work for the rich are in power, and the rich are definitely going to land on their feet, no matter what it costs you and me, no matter the rhetorical gymnastics they have to use to call it something other than robbery.  Republicans and Democrats will do what the bankers tell them to.

But it could be different. Imagine for a moment that American voters suddenly got fed up and elected a socialist government.  Imagine the financial system, deregulated and over-leveraged and full of worthless housing loans, had managed to limp along until it was dumped on the new socialist Congress and the new socialist President.  Would socialists really have any different idea of how to solve the problem that confronts Congress today?

You bet we would.  An economic program that was all about meeting the needs of people, rather than creating corporate profit, would look completely different, even while cleaning up the mess left behind by the discredited capitalists.

I think a socialist government would start refinancing homes right now.  Not investment properties, just homesteads, and just for people who can actually pay a mortgage.  Of course the new mortgages would have very low interest, so people who are doomed by their current usurious loans would stand a reasonable chance of getting out from under.  And we wouldn’t pay the existing loan off at its face value, either:  predatory lenders would be forced to accept a large discount on their portfolio.

The victims of predatory lending would be made whole in this bottom-up approach—the ones who still have homes, anyway.  The people who bought mortgage-backed securities will lose some money, and the ones who bought the worst of them (with the most sub-prime loans at the worst terms) will lose the most money.  The people will end up making (low) interest on their investment, which would be secured by real estate.

Contrast this to the Bush administration top-down approach, in which we save the very people who created the mess, by buying up securities known to be worthless, and people paying impossible interest rates will still lose their homes.

There’s more to it, of course.  The people who victimized borrowers in the first place, and the people who sold loans they knew were crap, need to go to prison and pay big fines.  By “big fines” I mean they can’t come out of prison rich.  In the longer term, corporations would no longer be considered persons, and businesses would be mostly worker and community owned rather than worker- and community-victimizing.

But this government won’t do that.  Next year, when you hear Congress talking about how there isn’t enough money to fund basic human services, remember how they tossed a trillion bucks of your money to a bunch of crooks.