Why should the Treasury do all the investing in banks?

The Federal Government should create bonds which pay an interest of 8% (fairly sizable in these times of low inflation). Funds accumulated from the sale of the bonds would go into a pool which would be used by the Treasury to recapitalize banks (much as with the TARP funds).

With tax payment time just ahead, the IRS could promote these bonds and allow tax payers to declare on their tax forms how much of their tax return they wished to use to purchase the bonds. People who had to pay in taxes could pay extra to receive bonds.

The whole thing would be promoted as an INVEST IN AMERICA’S ECONOMIC RECOVERY effort.

If interest earned was tax free for most people (all except the very wealthy), there might be great interest in participating and the pool might be quite large (maybe even big enough to save CitiGroup).

If people are willing to pay money for war bonds, why shouldn’t they be willing to pay money for bonds to save America’s financial system and the economy which depends on it?

Whatever is needed, I would agree with you. Let’s bite the bullet and properly capitalize the banks NOW so that they can start lending and we can get over this crisis of confidence in the financial sector.

Think about it in terms of ethanol. Investing in ethanol SEEMS like a good idea–it’s supposed to be green, and it’s supposed to free us from overseas oil dependence. If it works. But there’s the rub. Because ethanol isn’t actually greener than normal fuel once production emissions are taken into account, and it’s extremely doubtful that it could ever free anyone from any type of dependence because a) it takes a lot of energy to produce ethanol, and b) ethanol has less energy per unit than regular gasoline. So then, ethanol really only works as a corn subsidy. Which is fine… unless you just lost your job, and you need to buy corn. In which case, I bet you wished that the price hadn’t been driven up by laws that force the production of ethanol.

I’m against neither green energy nor infrastructure investment, but I’m against “green” energy that doesn’t really help the environment, and I’m also against infrastructure investment that won’t eventually provide a positive return.

Investments in broadband and the electric grid strike me as two good ideas I’ve heard. What do you think? (I’m not in private practice and I’m not representing anyone seeking gov’t $$$).