Dear Dr. Democrat:

Befuddled in Biloxi

Dear Befuddled:

The coffee can idea is probably not a great long-term solution due to the risk of forgetting where you buried the cans.

The “root cause” of the problem we’re facing is not monetary policy. It’s the fact that we’ve outsourced our manufacturing to Japan, China and the Third World. We don’t make anything. We just reassemble debt into portfolios and provide services to each other.

The solution to this is a gubmint incentivized program to make the U.S. the world’s leader in green technologies. This is an idea I’ve been kicking around for a while. I call it the “Los Angeles” project, which refers to the Manhattan project, the program rushed into existence during World War II to create the nuclear bomb. The objective is not to solve all the energy problems at once but to pick one or two major components — say, cruise ships, trains or airlines — and put $1 billion or whatever into finding a new energy source for that large-scale fossil fuel consumer. A part of the deal with taxpayers for funding the research would be that every component in the new technology would have to be manufactured in the U.S. for set period of time.

The cause of the present crisis is deregulation of banks that allowed them to make unsecured housing loans and then sell that “toxic paper” over and over. We were a good loan bet when we bought our condo in 1999, and our mortgage was sold five times in the first five years. In that same period, our condo doubled in value, even though we have not fixed a single broken tile or done anything other than repair leaky faucets.

There is no upside to letting the U.S. banking system fail. Personally, as a “regulatory capitalist,” I believe that markets that misbehave need to be spanked. It’s time for the mortgage industry to go to the woodshed. And when we’re done with that whuppin’, we should haul the health insurance industry in while the paddle is still warm.

Republicans have gamed the system, as usual, by calling any effort to regulate “socialism.” They don’t mind socialized fire-rescue, law enforcement, education, libraries and military. But regulating financial services and health care is the first step to communism. Right.

What we as a society should learn from this, as Barack Obama said, is that trickle-down economics does not work. (This is a lesson we learned already, at the end of the first Bush administration.) What works is balanced regulatory capitalism.