Tuesday, October 19, 2010


When the Titanic sank on April 14, 1912 one of the grimmer discoveries were reports that the lifeboats carrying survivors were only a little over half full. There were many stories as to why this happened, but several reports focused on the ghoulish fear of lifeboat occupants who didn't want to be swamped and even capsized by hundreds of floating survivors who were still in the water.

Whatever the rationale, one thing is clear: Even if all of the lifeboats had been filled to capacity (almost 1,200 seats), there was still only enough seats to accommodate about 35% of the Titanic's maximum passenger and crew load of 3,511. There was no way to prevent a high death count when the Titanic sank.

Why is this important? Because it tells us that not only can the experts become myopic in their thinking before a disaster, but that fear, selfishness and outright stupidity can lead people to do the wrong thing. Worse, the Titanic experience helps us see how fearful and selfish people can turn their back on others in need after they've narrowly escaped disaster.

I bring the Titanic up because it helps us understand how President Obama's economic stimulus package is in the process of becoming Titanic-like, in that the survivors who got into the life rafts have been turning their backs on the rest of us still in the water.

Specifically, as our economic disaster continues, the bailout-stimulus package has been exposed (1) for allowing Wall Street's biggest market players to act like the survivors who made it on to the Titanic's lifeboats, and for (2) not being big enough and sufficiently developed to deal with other non-bank market players who need help.

Put another way, we need to force the banks to make some loans with their bailout money and/or provide more lifeboats in the form of another economic stimulus package.

I know, I know ... Fox News and the Party of NO likes to report that the stimulus package has done nothing. Let's check out the facts.

If we look at recent reports coming out of the Congressional Budget Office (CBO), we find that - in spite of Wall Street's best efforts - a good deal of Main Streeters actually made it on to the economic lifeboats made available by the economic stimulus. The CBO's August report makes it clear that President Obama's stimulus package not only added between 1.4 and 4.1 points to economic growth (which prevented the GDP from going negative) but that the stimulus package also produced (or saved) between 1.3 to 3.3 million jobs in 2010.

In addition to adding economic growth (GDP) and jobs, the stimulus package also provided more than $200 billion in tax cuts for you and me, and went directly to help develop numerous critical programs.

Put another way, rather than complaining about the half-filled economic lifeboats that made it back safely we should be thinking about building more lifeboats for the rest of Main Street. This means another economic stimulus package.

To be sure, Wall Street's lifeboat survivors, who are now on shore living the high life, seem more than prepared to throw the rest of us an anchor. And why not? Now that they've gotten their bailout and other government guarantees, they're sitting on trillions and don't want to build any more lifeboats. As our nation's biggest Wall Street banks read the news, every thing's just fine ...

Regardless of what Wall Street thinks, and in spite of the gains that have been made (mostly keeping the nation from going into negative growth rates), things are far from good. Like the survivors of the Titanic who were cruelly turned away by others who made it on to the available lifeboats, there are many survivors still floating in our turbulent economic seas.

Like the banks, they need a lifeline.

- Mark

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