A friend is reiterating his point: The stock market is nothing more than an elaborate Ponzi scheme that if perpetrated by ordinary citizens would be cause to send the whole bunch to jail. But investment banks and corporations go untouched. You can’t explain the difference; he’s delivering a full-throated rant.
At home, some neighbors stop you to offer their two cents about the financial crisis, the broad elements of which even you, without a degree in economics, saw several weeks earlier as similar to those that led to the 1929 crash. The proposal to create an entity like the Resolution Trust Corporation that rescued the savings and loan industry has enraged these working and middle-class citizens. (Wasn’t Neil Bush involved in the S&L? Didn’t Daddy — President George H.W. Bush — sign off on that rescue?)
You don’t share that history; everyone is sufficiently agitated.
One neighbor recalls federal legislation that made it nearly impossible for average people to declare bankruptcy. But it’s fine to allow the whole of Wall Street to get out of nearly $1 trillion of bad debts. “How many zeros is that, anyway?” she asks.
Another neighbor doesn’t have any confidence in the proposed stabilization plan. Quoting from the movie “The Godfather,” she shouts, “It’s time to ‘go to the mattresses.’ ”
Does she intend to battle the government? Or does she intend to stuff money under mattresses as some fearful citizens did following the Great Depression?
This is real trickle-down economics at work, you say with a smile. No one smiles back.
The damage also rolls down to local governments. Maryland and Virginia are facing multimillion-dollar revenue shortfalls. The District is next in line.
On Tuesday, Chief Financial Officer Natwar Gandhi will present the mayor and City Council with revised revenue projections for fiscal 2009, which begins Oct. 1.
“We are vulnerable in the area of commercial real estate taxes. That’s where we’ve been getting all of our money,” says Jack Evans, council chairman pro tempore. But there also likely will be drops in personal income and capital gains taxes. District residents should prepare for possible reductions in the budget — and possible cuts in services.
Thankfully, the government hasn’t experienced a loss in its own investment income; the city has a large cash reserve. Lasana Mack, the District’s treasurer and deputy chief financial officer, says more than $1 billion in AAA-rated money-market funds was moved to “ultra-safe investment vehicles backed by federal government security.” That means a lower rate of return. But the city will meet its interest income projections for 2009.
“We budgeted that pretty conservatively,” Mack adds.
Still, if the belt gets any tighter around your waist, you won’t be able to breathe. You think taxpayers should receive profits from the sale of those bad loans. You know achieving that dream takes help from up high. Yesterday, you started distributing prayer cards.
