This is not a political blog.? I have political views, but I try to keep them out of my writing here, because they aren’t relevant to my readers.? This is a rare point where the two worlds collide, and I have to take a political stand.
Let me state this plainly at the beginning of my piece, so that you know where I am going: I am asking all of my readers, and all of the financial bloggers that read me (whether here or at Seeking Alpha) to call their Congressmen, and ask them to oppose the Bailout Plan as currently structured.? I am also asking the financial bloggers to ask their readers to do the same thing. I don’t do things like this often, so understand that I think that this bailout plan is very ill-conceived.? I also think that opposing the bailout should appeal to all, regardless of party affiliation.
Okay, now let me explain why, and propose an alternative.? Some links to begin:
- Here is the proposed bill
- Here is a summary of the main points of the bill
- Here is a relatively neutral article from the Wall Street Journal on the issue.
- And another from Marketwatch
- Finally, a blog post from Paul Krugman, opposing the bill. (If Paul Krugman and I agree on something, there is something weird going on.)
As I stated in my last blog post:“The possibility of a new RTC could be a good or a bad idea.? The main criterion is whether it is proactive or reactive.? My answer my surprise many: reactive is good, proactive is bad.
What we don?t want to do is provide a place for companies to dump lousy assets at inflated prices.? Instead, a new RTC should be a last resort place that the assets of failed companies go to until they are disposed of.? Common and preferred equity should be wiped out, and bondholders should take haircuts.? New loans should be senior to all old loans, similar to the situation with AIG.
Anyone going to the new RTC should feel pain, and a lot of it.? It should be the last resort for companies that are failing.? It should not try to keep companies alive, but merely conserve the value of assets, and prevent contagion.? Remember, if the risk is not systemic, the government should not try to bail it out.”
The current proposal is proactive.? Proactive solutions are expensive, and do not fairly distribute the losses to those who caused them through their shoddy lending practices.? The owners of bad assets should risk their equity before taxpayers put up one red cent.? The government should not try to prevent financial failure, but prevent financial failure from spreading as a contagion.? Common and preferred stockholders of failed institutions should be wiped out.? Subordinated debtholders should take a haircut.? But depositors and senior debtholders should be guaranteed, in order to protect other financial institutions that invest in those instruments, thus avoiding contagion effects.
Second, the proposed bill is vague, and offers the Treasury a “blank check” to do pretty much what it wants.? Section 8 states: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” Who are we kidding here?? I don’t care how great the emergency may be, the other branches of government should be able to act as needed.
Third, there is nothing to assure that fair market value will be paid for assets.? If an investment manager is hired, who could tell if he plays favorites or not?? Clever investment firms will take advantage of the government and its agents, and only sell overpriced assets to the government.
Fourth, there is no easily identifiable upside for taxpayers here.? If we bail out a firm, it should be painful, as it was for the GSEs and AIG, where most of the equity gets handed over to the government in exchange for a senior loan guarantee.
Fifth, though the name of the Resolution Trust Corporation has been invoked here, this is nothing like the RTC.? The RTC only dealt with insolvent S&Ls.? It did not try to keep existing S&Ls afloat.
This proposal is an expensive boondoggle and should be opposed by all.? As one bit of evidence here, how many noticed that mortgage rates went up on the day the deal was announced?? Here is a graph for Fannie 30-year fixed-rate mortgages:
x
The announcement of a bailout may have caused mortgage credit spreads to shrink, but it caused Treasury yields to rise even more. The announcement was not a positive for the mortgage market, and my guess is that it will get worse from here.
My Solution
Bring back the Resolution Trust Corporation, for real.? Don’t do deals with solvent institutions.? Let them figure out how to best maximize their financial positions on their own; after all, it was their great decisionmaking skills that got them into this.
But do do deals with insolvent companies.? Take in their illiquid assets, reposition them, and auction them off once they are more saleable.? To the extent that we bail out whole firms, make it so costly to the firms that it is clearly a last resort, as with Fannie, Freddie, and AIG.
I am willing to testify before Congress on this issue, not that I think that will happen.? If anyone from Congress happens to read this and wants me to testify, please contact me here.
Finally, to any readers or financial bloggers that take me up on my request, I offer you a hearty thanks. 🙂
The bailout is ridiculous, and not needed, and only taxes future generations. (And both candidates want to increase govt spending?) NESARA as drafted by Dr. Barnard is the only way out of our fiscal and monetary mess. Force balanced budget, abolish income and capital taxes in favor of 14% sales tax on everything else except rents, groceries, insurance, and medical services; new monetary tools to ensure 0% inflation; abolish compound interest on secured loans in favor of simple monetization fee, and require principals be paid before before banks are allowed to collect on the monetization fee. No payment no matter how small will always reduce a debt to zero, banks more willing to prevent foreclosures and will turn around funds for more loans sooner. No more of this pay for 2.5 houses just to own 1. Pay for just 1.5 and be done with it in 17 years. National debt paid off in 30 years while standard of living doubled within a generation. NESARA (not the hoax, but Dr. Barnard’s original version). A 21st century engineered solution for a 21st century economy. Google the NESARA Institute.
Hi David.
Great post. Thank you.
When you write that the goal should be to “prevent contagion”, I don’t think you’d get a disagreement from the proponents of this bill (their actions notwithstanding). In fact, I think they’ll simply respond with a succinct “Precisely”. They’ll go on to say that Paulson’s blank check is the one thing that will prevent the contagion.
You have an uphill battle. You’re argument rests on convincing the patient that he is going to die if he doesn’t take his meds, “but, oh yeah, just don’t take too much of the stuff, OK?”
The proponent’s argument, on the other hand, simply says, “the patient needs medicine, and if 2 pills are good, well then—four pills are even better”. With all the fear and uncertainly, they’ll simply rely on the fact that we musn’t dilute the cure, and if we over-medicate–so be it.
Keeping in mind that I agree with your assessment of the Bill–and that I am aware that you were not one of the more hysterical bloggers, my repsonse as a government official would be:
“For the past 18 months bloggers have been screaming that this issue is far more serious than we think. We were warned of apocalyptic scenarios and told of the Great Depression Redux. We didn’t listen. Finally, we’ve heeded your call, and we propose the Mother of Governmental Responses, and now you are saying ‘Whoa cowboy! Let’s ease up on this.'”
It’s a delicate balancing act: Convincing the patient that he is VERY sick, while telling him that the road to recovery lies in moderating the proposed “cure”.
Congress is faced with 2 competing scenarios: The Great Depression vs. The Great Boondoogle. On which side will they err? There’s little doubt–they’ll risk ripping off taxpayers. It’s not like the American Public isn’t used to it.
Good luck in convincing them that this “greatest of all financial meltdowns…this onset of another Great Depression….” should be treated with a cure heretofore reserved for—a garden variety recession.
And this is the problem with hyperbole and with Bernanke’s Depression “scholarship”. We are facing “soup lines and having to hoard guns and ammo”, therefore we can’t take any chances. Additionally, we are assuming that just because the Great Depression was the worst financial crisis we’ve ever faced that it was the worst possible outcome that we could have faced.
Maybe we’ll soon find out that it wasn’t.
They are bringing this to the Floor so quickly, that there is no time for any hearings or testimony. The most likely place to block legislation is not in the House, but the Senate. 60 votes are required for a cloture motion. Without that, a dedicated minority can filibuster.
Agreed, on all fronts.
Regarding “(If Paul Krugman and I agree on something, there is something weird going on.)”, I almost said the same thing myself. But while I often disagree with him, he’s clearly a bright man, and when he’s right, he’s right.
David: would the plan that you envision open the credit markets back up in a timely fashion? As I understand it, it is the inability or unwillingness to lend even short term that could cause this thing to spiral out of control. If your ideas would allow for the avoidance of a depression, I would be willing to write my senators.
Relax.
If the plan goes through as advertized, Gold is at $50,000/oz. and the U$ is in a latrine somewhere. It ain’t gonna happen.
I hope.
Is it possible to force subordinated debtholders to take a haircut without triggering their right to declare the company insolvent and begin a liquidation?
i think it’s a mistake to think this is even intended to help stabilize the economy. it’s cynical and calculated, to benefit the same people. sigh.
this is the moment they were waiting for. the economic equivalent to 9-11. foment panic, then force adoption of your policy objective.
their overall goal has been loot the treasury (see Iraq war). the strategy is still working amazingly well.
What do you think of the idea from Calculated Risk?
His idea is less thoroughly reactive, in that there is an initial recognition phase to value L3 assets and identify insolvent institutions. Once identified, the government would make a capital injection that could be payed off later.
His discussion is here:
http://calculatedrisk.blogspot.com/2008/09/some-thoughts-on-bailout.html
This Plan can work! I believe that over the next 3 to 5 years, taxpayers will be handsomely rewarded for saving the financial system. My guess is ? all in ? the taxpayers will have gained $100 to $200 billion from this bailout; which is clearly against the conventional wisdom prevailing in the media. But a bet against the short to medium-term viability of the US economy is a sucker’s bet. At least until China takes over the world in 30 to 50 years.
Absolutely agree. Did you see Bill Gross salivating and offering himself as a white knight to “help” the government. This plan only encourages more oversized greed and mismanagement.
This is so outrageous, that the whole I.O.U.S.A. looks like a fairy tale, America is turning into the U.S.A.R.
Keep it up, best trading,
Jorge
Wall Street stole 1.3 Trillion on the Internet Bubble and few people were prosecute. Today they have stolen close to 1.3 Trillion dollars with fraud and corruption at all levels and the Robin Hood from Wall Street (Bush) will give them 700 Billion from his risky behavior.
If they are so concern about the economy, Nationalize the Banks and Wall Street, Clean the Mess and Sell the Banks and Walls Street again. It is so easy to pay with someone else money but It is so hard to do it if this were your own money. I guess that this is the new Capitalism. Help the corrupt and take it from the honest people. We need to organize a demonstration against the bailout.
When you think back, how many times have you been the victim of a hustle sales deal where the urgency has been great to make a decision, to act now, this deal is so good,I can’t hold it open overnight. Now think again on how many times this need for speed actually was in your best interests. Our system of government is not a democracy, it is a republic. It is constructed in such a manner that it requires debate and prevents quick decisive legislation. THIS IS A GOOD THING! The framers of the constitution were geniuses who created a miracle of government that had never existed before. We really need to get back to that mindset before we lose everything. A few years ago when the Iraquis were casting about trying to hammer out their constitution, one wag was heard to comment, “Why don’t we just let them have ours, we hardly ever use it any more.” We are in danger of losing everything we have. We need to wake up as a country and reflect on the wisdom of our founders. The comment “Reactive is good, proactive is bad” is unbelievably wise. :Let them try to work it out the best they can first, then if all else fails… We need to get back to the idea of the government just providing a framework of security and justice. The idea that we can “manage” the business cycle and prevent recessions and “we need to do this now or this awful other thing will happen” is just leading us in an infinite loop of unintended consequences and tomorrow’s failed experiment. There are any number of people who saw this train wreck coming for years, and now that it is here we need to drop everything and write a check for a trillion dollars this week? Por favor!
This bailout is nothing more or less than an excuse for a massive feeding frenzy at the hog trough. If they really want to do something they should tar and feather those congressmen who took bribes to gut Glass-Steagal and then took bribes from F&F to allow them to loan money to anyone just so the Congressmen could buy votes.
I will never ever vote for an incumbent politician again. By the time they have been elected they are bought and paid for.
Lets not forget who is to blame. The banks!!! Compare lending practices of 10 and 15 years ago to the practices that started in the 2000-present time frame. The standard was always 10-20% down conventional and the only no money 100% loan was a VA loan!!
The banks relaxed lending practices to make money!!! The result became an artificially inflated market that fed off of the banks failure to accurately assess individual?s ability to pay back loans, assess collateral/equity and lowered their lending standards. They created new lending practices that further fueled the inflated values of our property. The 80/20 loan, adjustable rates and the interest only loan. The interest only loan should be illegal!!! If you can not buy it you should not own it. The banks failed to stick with the oldest practice of having collateral/equity in what they finance and fueled their own demise by giving away easy money. It is the banks responsibility to protect their assets and if they fail to do so they go bust!!! We should no longer call it lending practices they exercised gambling practices and lost!!!
One of my friends told me 3 years ago that he could not believe that he qualified for 1 million dollars in interest only loans and he only made $80K/ year. Over the past six years he flipped six houses and was foreclosed on 3 other ones when the bubble burst. Another victim of the banks easy money scandal.
All current lending institution that are in trouble is due to their own GREED. Every CEO and seniror manager in these companies that had a hand in lending (giving away) money that could not be paid back should be fired!!! Cut the pay checks of everyone involved in lending money. When the airlines have problems they cut the pilots, stewardesses, mx, and counter salaries. When the car companies are in trouble they cut everyone?s paycheck except management.
Where is the accountability? Help the people not the banks. Fix rates and make the banks eat 0% interest loans in lieu of foreclosure.
It is the banks responsibility to protect their assets and if they fail to do so they go bust!!! Many people?s houses were artificially inflated in value and they took out equity loans to buy more stuff and they got them selves in trouble from the lure of the banks low interest criminal practices (loans). Once again people started to live beyond their means buying, cars, boats, vacations and TVs because of easy money. If the banks would have exercised proven lending practices they would not have artificially induced false economic prosperity that has now crushed our economy.
The banks did it by lending money irresponsibly. It is their fault. FIND A BETTER IDEA THAN A BAILOUT. If we bail them out, we better get our money back!!! Nationalize their salaries nobody needs to make the big bucks in a failing bank.
Maybe we should nationalize the oil companies that are making record profits and give it to the banks. The rich continue to exploit the middle/working class to make money and then continue to dip into our pockets through a taxpayer bail out. Before we give away one dime I want to know what the new lending practices are going to be!!!
The banks are at fault and self stimulated our economy to ruin over the last 7 years!!
Think about it. Why are we rewarding them and not punishing them?
Why does?nt the news media investigate who screwed up? Why were lending practices relaxed? Blaming the administration is bogus and a cop out unless you want more government regulation. The banks lobbied their positions and overextended themselves. They did it to themselves. The bottom line was greed. I am willing to bet than many of the executives probably never lived through the hard times of the 1920?s-1950?s. How does a bank make money by lending money.
If money is easy to get they can lend more money and make more money. If people can buy and sell more and more houses they artificially drive up the housing markets. What happens when all your profits are based on credit???? Economic collapse.
DO NOT REWARD THE BANKS!! Do not give away my money! I did not screw up!
IF THE BANK GOES BUST?.MY HOUSE IS FREE UNLESS THEY CAN SELL MY LOAN. Nobody needs a new car or house this is a luxury.
Dissolve the troubled banks and take their assets!!! We pay the government taxes, we can pay the government for our home loans.
I do not want the banking criminals to handle our money. They got us in this they will not be able to get us out.
FOX please find the answer!!!!
Mike in Florida.
David,
Great article! First off, all Americans should be outraged at the audacity of our government. There should be a million man march on the White House lawn over this issue right now. Who gave them the authority to give taxpayer monies to incompetents on Wall Street. Lastly, what about Social Security, Medi-Care, and MediCaid? How much further into insolvency will this action influence these promises by our federal government. The least we can do is oppose this proposal with all that is within us!
Cody,
honestly….you can not handle the pressure…go back to your parents house and work at McDonalds….if we follow your advice you’ll be lucky to keep that job!!!
I would think that a more simple and less costly plan would solve this credit freeze. The cause is the number of mortgages re-setting their interest rates.
Since both the borrower (homeowner) and lender (mortgage companies) signed a contract, they should both be held to its terms and conditions, with only a slight modification: Freeze mortgage payments at today’s levels – prevent ARM adjustments – turn these toxic mortgages into viable loans.
Previous adjustments that have forced foreclosure proceedings should be adjusted downward to last year values. Mortgage companies/banks eat 50% of this offset, the US Gov’t covers the other half. Homeowners need to reimburse the Government for their offset when the property is sold at a profit.
US Taxpayers shouldn?t be buying these “troubled assets” (many of which are subordinated debt positions that will be wiped out by senior debt positions) with the hope that the banks (sellers) will start lending again (wishful thinking). The whole point to securitization and CDS was to spread the risk around, but now Paulson and Bernanke want to consolidate the risk under the US Taxpayer. Billions upon billions of private capital is waiting to buy these ?troubled assets? at appropriate prices to earn appropriate risk-adjusted returns; the current holders just have to get realistic.
If the US Taxpayer needs to get involved to ?keep the markets moving?, then US Taxpayer’s trillions should be used to temporarily invest/guaranty similar ?assets? newly issued or originated (and properly underwritten, priced, and credit rated, etc. and preferably unsubordinated, senior positions) AFTER September 17, 2008 (and not prior to September 17, 2008 as described in the Treasury plan). This may actually result in banks lending sooner as opposed to later, and the US Taxpayer will own assets with a value much closer to the price paid.
This bailout as structured is robbery. These assets will never be worth anything. It’s just shoveling our hard-earned tax dollars at the people who need them least.
And it won’t work anyway because the system is bankrupt by about $40 trillion. They’re just trying to stall collapse until after the election so that the next administration has to deal with it.
I am totally opposed. This is the worst rip-off of Americans by politicians in the history of the country. They put the foxes in charge of the trillion dollar line of credit henhouse.
Stupidist thing I’ve ever heard of, it’s a naked assumption of power, socializing our complete financial system.
citizen
i know very little about economics, however, after day trading for a year i came to the conclusion that the free market has nothing to do with the reality of supply and demand.
financial institutions have created an illusionary market where a stock goes up and down based solely on their manipulation of it.
even if the system is bailed out, collapse in the future is inevitable until there is a new paradigm.
THE BUREACRATIC SYSTEM THAT BUSH HAS MADE GOES FROM WORSE TO WORSER. I AM AN REPUBLICAN. I WAS APPALIED OF THE 9-11 BOMBING AND HOW SUCH A GOV CAN NOT SEE THAT.IRAQ AND AFGANASTAIN I DONT CARE OF OTHER COUNTRIES, STAY IN OUR BORDERS. I WAS IN THE MILITARY 1980-1992 NO ISSUES EXCEPT THE IRAQ THING. WHY CANT WE MAKE A GREAT WALL? NOW THEY WANT TO HELP THE BANKS WITH 70B, I DONT THINK SO! WE THE USA SHOULD GET A VOTE.. THEY ARE COMPANIES THAT MADE BAD DECISONS AND MUST REAP THE PLUSES AND MINUESES. THE GOV SHOULD MAKE ALL THOSE LOANS FIXED AT 6 PERCENT. A NEW LOAN COMPANY WILL EMERGE AND TAKE OVER ALL THOSE LOANS LEARNING OF THE MISTAKES OF THE GREEDY ONES. PLESAE NO $$ TO A COMPANY THAT JUST WANTED TO SCREW THE US BUYER IN BUYING A HOUSE. THAT?S UN-AMERICAN AND WHO EVER VOTES TO APPORVE WILL BE MINUS MY VOTE COME NOV, SENATOR, HOUSE, PRES. GET FRIGGIN REAL PEOPLE, WE ARE HELPING THE RICH.. LETS MINIMIZE THE LOANS TO 6% SOME ONE WILL BUY THE LOANS, THE OTHER COMPANIES WILL GO AWAY AND WE DONT USE 70B US DOLLARS TO HELP A COMPANY BEACUSE OF GREED.. THAAT IS THE ANSWER. COMPANIES THAT MAKE BAD DECISONS GO AWAY?!!! AND THERE WILL BE OTHER TO REPLACE.. I COULD GO ON AND ON.. BUT BOTTOM LINE, NO $$ FOR A COMPANY THAT ENTICED THE US CITIZENS THAT CAN AFFORD MORE THAN THEY COULD. THEY BASED PEOPLES POSSIBLES EARNING IN FIVE YEAARS TO BUY HOUSES AND AT THAT RATE WE ALL BE IN MANSIONS AND WE ALL BE DRIVING BMW?S. IT IS SICKING.
I am a veteran of the armed forces after 9 yrs and currently going to college. If this plan passes, I am going to expatriate as soon as I get my degree! This is ridiculous!
The bailout plan is a bad idea on so many levels. Government is intervening in the natural consolidation of the financial sector after a huge runup (1/3 of US corporate profits were from this sector in 2006)
Dave R
http://www.islandersoftware.com/weblog/2008/09/27/just-say-no-to-the-bailout-plan/
I suggested a Federal Bailout plan back in Jul this year. But this is not exactly what I was suggesting. Now its evident to see more greedy professionals at work behind the scene. The TAXPAYER GOT RIPPED OFF (and we are going to take it where the SUN DONT SHINE and our CHILDREN ARE TOO!!!), the government just sold off WaMu directly to JPM!! WAIT!! WAIT!!! WAIT!!! THIS PLAN IS NOT THE ANSWER… why, we have been undergoing an econmic crisis since 2005, when the housing bubble busted… um, homeowners have been losing their homes, why a PLAN all the sudden??? Oh yes, the financial industry is going to hell… wait, were they not the ones that suggested the MARKET TAKE ITS COURSE. Oh but when LEH goes bankrupt – we see the top federal governement officials along with their fraternity brothers come to the rescue with a Government Bailout – for the sake of their livelihood!! HELL NO!! THIS PLAN IS GOING TO RAPE US!!! RAPE OUR CHILDREN!! We should let the market take its course, homeowners are already hurting, this bailout plan is for only the rich via their business entities and how does this help the homeowner? Lets not forget there were homeowners who bought homes in 2005, right when the housing bubble cracked, those (3/1 and 5/1 ARMS) are just starting to reset… this means the shake-out for a whole lot of homeowners starts now … but is this plan for the homeowners or them? Why give the money to them, because they know how to handle money and the common person does not? B.S. Even if that was the case, if you gave the money directly to the people, there would not be a reason for government oversight. Which is now required, but just how? Another government task? With what? Another government instition? – one that requires more government people? What to hang out at the same parties? I guess we do nothing, and just take it, take it where the sun don’t shine and watch our children get raped as we look for them to support us because we’ve been taxed soo much and we were unable to retire… but these lawmakers and their buddies (and their children) get to retire in style!!! Oh, and to believe both Democrats and Republicans are in with this plan, only further suggests our Politicians are supporting corrupt industries!! This Election, lets remove all of them and replace them with the opposite party, just to radically change things up. Rationally, the most practical approach would be to establish a system that allows homeowners to trade their homes, i.e. MyHouse4Trade.com or http://www.TrySwappingIt.com , freeze all ARMs, zero out the debt with those who lent money to the banks, return the remaining amount back into the treasury. Then ask where is this financial crisis, Wall Street? If so, let the market takes its course there!!! Those equities were overinflated since the brokers and fancy investors have been chasing earnings since the 90’s – its time we get back to value investing!! All this Plan will do is screw the common man, and further put our country into debt!!! GOD SAVE AMERICA – PLEASE!!!
Did you know many of the fat cats who circulate from board to board and from job to job throughout the financial industry, are also members of the Bilderberg Group and or the Trilateral Commission? When someone takes your money and steals your car, it makes an impression. When they belong to such secret political cliques, it leaves an indelible impression. Many elected officials even belong to these cabals, hence the secrecy. When Bill Clinton eased banking restrictions, he dished out $8-billion dollars for community reinvestment loans. When the financing schemes fell through, as is their wont whenever 30-million Mexican nationals buy inflated properties and default, it left banks in the lurch. Hillary Clinton counted on the loan giveaways to buy votes. Interestingly enough, had Hillary secured the nomination; she, instead of Barack Obama would preside over the bailout. So, where?s that $8-bilion plus dollars? Where?s Hillary? The Global Initiative people (code speak for car thieves) took my money; they stole my car. If you or I did half the things these people have done, we?d be serving consecutive life sentences. Wise up, get angry, and let the bubble burst. Remember, Ben Stein says you?re going to be just fine. You have my word on it. Gentlemen, I want my money back: http://theseedsof9-11.com
Why doesn’t anyone here look at the larger picture behind this or mention the fact that for the first time since the Civil War we will have an armed military with weapons aimed at US Citizens come the beginning of October? This fact seems to have slipped through the media outlets like all things we aren’t supposed to take note of. Here’s a good report on it http://www.afterdowningstreet.org/node/36358, was originally reported in the army times. So behind all the scenes of all this we have an armed military coming to the US to police us. Perfectly illegal according to our now non existent constitution. How bout the fact that the major net service providers are seeking to or have already banned information sites that provide information contrary to what big brother produces as Propaganda. Internet 2.0 should eliminate our ability to get objective information. How bout the fact that Youtube just dropped video’s with 100 million views and banned all of the people that were providing ‘truth’ videos of contrary viewpoints to issues like 9/11, the London Bombing, government mind control experiments, HAARP weather control and it’s striking correlations of operation during major weather events (Katrina and the China Earthquake) Chemtrail spraying, etc. Controlled events like this and the Great depression are just ways to keep people from seeing behind the scenes, . Why has everyone forgotten that states like West Virginia have 70% option arms that wont start adjusting for another year or so? The media seems to be hush hush on the fact that there’s millions of homeowners still paying 1%, or 3% or 4.5% on their 7.5% mortgages with negative equity tapping on every month. Mortgage brokers got paid 5 points to push these loans. No mention of the hundreds of military internment camps for US citizens like Rex 84 that are fully active waiting for non violent political dissidents to fill them up. Wake up America, there is a lot more going on than this realignment of wealth to other wealthy people, money doesn’t just disappear, if a bank loses 7.5 billion dollars, that means someone else made 7.5 billion. Whats the agenda the Media isn’t talking about?
I say that we use the “Trickle-Up” effect. The government can give every legal american making less than $500,000 – One million dollars each. They can take out taxes, leaving about $900,000. The people can then pay off their mortgages, car loans, credit cards and even put money into the market. It will help out the banks and the market AS WELL AS we the people. The government wouldn’t even be spending the $700 billion dollars they are looking to spend. The may only spend $500 million using this plan, plus getting the tax money back. Sounds Good here in Delaware!
I’ve been thinking about this a lot (as we all have) and it just occurred to me tonight… I’m be more than happy to agree with the “rescue” plan if Congress will do two things…
1. Hold themselves accountable (by name… not House or Senate but by individual names) if this thing doesn’t work. I want to know who screwed up!
2. Agree to some punishment if their plan doesn’t do what they are promising it will do. Punishment and an agreement that they will resign their post… Immediately!
I want to see some accountability before I will agree to this approach.
Sadly for your approach, the plan is now passed. But here’s a hilarious song about it called “Bailout Man” to lighten a grim subject: http://evamoon.net/blog/2008/10/02/bailout-man/
I dont know about you guys but I think the bailout proposal is the only way to calm the market down. However, I would take difference approach. Here are my proposal:
1. Only major companies would eligible for this plan.
2. The eligible company would follow these guideline.
a. Only necessary, do not layoff more than 1% per year for 5 years.
b. Do not outsource for the next 5 years.
c. Investors have a right to know company balance sheet.
Bailout 2008, a poem by David Jeffrey
Like a bloodied warrior,
laying broken and torn.
Like a dying soldier, hopeless and forlorn.
But the blood, it be green,
the color of money.
And the soldier is an economy,
and it is anything but funny.
Broken are it’s people and shattered are their dreams.
Thanks to the ultra rich and their full proof schemes.
It is a tragedy with more pain to come.
Finance will be Hell, and their wills will be done.
“Like a dying soldier, hopeless and forlorn.
But the blood, it be green,
the color of money.”
sounds like OBAMA and the Iraqi wars with the Predator.