In order for consumerism to succeed we need consumers By J. G. Fabiano
Federal Reserve Chairman Ben Bernanke said Tuesday that President-elect Barack Obama's proposed fiscal stimulus package could help the economy, but he added that additional bailouts of financial institutions may also be needed to bring about a sustained economic recovery.

So far, as far as I know, we have bailed out the banks, Wall Street, giant investment firms, insurance companies, and the automobile industry. Remember the bail out comes from our tax dollars. If our government does not have the money they will borrow it. This means we will not only have to pay back the principle but will also be responsible for the interest. We are told if we don't do this dire consequences will happen that will make the Great Depression look like a weekend in Burmuda.

The new administration is discussing ways in which the tax payer can get some help from the disaster that was caused by the people who caused the economic downturn. These are the same concerns we are being asked to bail out. Some ideas include giving everyone a $500.00 deduction and extending unemployment insurance. These programs would help but they would not turn the consumer around to buy more and thus pull all of us out of the recession.

I have an idea. This concept should be popular with the millions of people who are having a difficult time paying their credit card debt. This will not be popular with the banks even though it could liquidate many debts and thus make the banks more liquid. I understand the banks would rather have a bail out with few strings attached but so would the people who are paying for the bail out today and well into their futures. Hell, well into the futures of their children.

I propose a means the credit card customer could negotiate a payment that would eliminate the balance on the card. For example, if a consumer has a rolling debt of $5000.00, they could negotiate with the banks of giving them a payment of $3000.00, that would eliminate the debt. The credit card company would then limit the credit line to $1000.00 until the customer proves that he or she can handle the debt. This would allow the consumer to consume again. Today the consumer is only allowed to negotiate the finance charge on the debt. If a person falls behind on payments these charges could make it literally impossible for the consumer to ever pay it off.

Obviously the banks would lose some money. But, lets talk about the alternative. If the credit card customer is unable to handle the debt of $5,000.00, and goes into default the credit card company would be forced to bring the customer to court. This would cause an expense to the bank. One might say the customer would be forced to pay the expense but remember they couldn't pay the debt in the first place. In court the judge would ask the credit card company and the consumer to make a deal so the customer could pay the debt. This is usually 50 cents on the dollar. What I am stating is the bank would end up losing more money than they would if my proposed idea were put into effect.

The banks that refuse to help their customers would not get any money for a bail out. The bank card customers would also not lose standing in any credit bureau. There would be no penalty for the consumer as there is no penalty to the banks for a bail out. Each individual bank and consumer would work their own deal. If a customer has a poor credit rating then the deal would be equated using their credit standing. If a customer has a good credit rating then a better deal could be made. A watch dog agency would have to be used to make sure both the banks and creditors live up to their agreement.

If the banks decide to refuse this proposal I sincerely believe we, as tax payers should refuse to give them money as a bail out. Our nation is built on consumerism. If our population can't consume because of financial restraints this massive recession will never go away. In fact, it will grow into something our children and our children's children will have to deal with throughout most of their lives.
Jim Fabiano, a teacher and writer who lives in York, is a past recipient of the Maine Press Association’s award for Best Weekly Column. You can E-mail Jim at: jfabino@maine.rr.com.

- by James Fabiano