Out of touch, anyone?

President Obama announced yesterday that any senior executives who receive a federal bailout will have their pay capped at
$500 000/year. Expense accounts, stock options, and other benefits don't count, so they can still earn millions. Wow. Even for a symbolic gesture, that's unbelievably timid. Let's review the score: failing corporation X will get a billion dollars in free money, and in return the senior management needs to tighten their belts down to a million dollars a year. Does the president realize that hundreds of thousands of non-incompetent Americans lost their jobs and savings and can't pay for food and rent?

I shouldn't have to point this out, but there are real problems with their economy which brought us this pass. Among other things:

1. Out-of-control deficit spending by some individuals, corporations, and governments caused a massive debt bubble, an economic house built on sand. We still don’t know how much of their apparent wealth is bad debt. They need transparency and lending reform before the bubble bursts.

2. A lack of oversight of the financial system led to billions of dollars of fraud. This isn't new, but it gets worse every year.

3. Creation of credit is entirely in private hands, so when bankers panic en masse as they did last fall, they cause major economic damage (”credit crunch”). Capitalism has a gun to our head. There should be a public body which can also lend money and keep commerce running smoothly in such situations.

4. North America's productive economy is linked to an unproductive and volatile speculative economy and an equally unproductive war industry. We should invest more in things which are durable and improve quality of life.

5. There is deep and persistent wealth inequality, which distorts political decisions and causes unnecessary suffering for "the rest of us". For a start, billionaires need to start paying taxes so we can fix our health care, EI, and pension systems.

I don’t want to see anyone punished “as an example”--I want to see financial criminals put on trial and systemic reform so this doesn’t happen again.