Financial bailout? We Don’t Need the Crooks to Save Us

Amen brother! The must be a better way! Don’t reward to crooks!

I could not agree more.

Some great ideas Will. I just don’t think that anyone in Washington is listening. I have contacted my congressmen. There seems to be a GREAT concensus that this “bailout” is wrong on many levels, but it is going to happen anyway. I wonder what Bush has for us next…

Here is a link to RP’s “answer to the President”
http://www.ronpaul.com/2008-09-25/ron-paul-my-answer-to-the-president/
we can blog all we want about the “truth” but, I have a feeling all we are accomplishing is getting on the “no-fly” lists…

Will,
Those are some good ideas. I like the way you think. Below is what I wrote my guys last night. And I think I am already on the harrass before flight list.

“Dear Senator XYZ,

I believe renewable energy deserves our support because it will boost our economy and can eliminate the huge transfer of wealth out of our country. Thanks for your support of it.

I don’t believe a $700bn plan to help the economy by helping those who made bad decisions is a good idea. Instead, why not use the newly nationalized Fannie Mae and Freddie Mac or somebody like B of A to fund refinances of those pinched by the predatory ARMs? What lending them unlimited funds at 2.25% was not good enough to keep them going? Come on. Surely, they could refinance ARMs to fixed mortgages at 3.25 to 4.25% and do allright for themselves. The mortgage holders payments would drop, the lenders would be repaid, the funds would become available to lend again, people could keep their houses, and the government would be acting to benefit the people, not some CEO. For the people.

Thanks for reading this.
Sincerely,
Jon”

Thank you for your posts and for all these alternative ideas to the nonsense that is being proposed. This was a big one that drove me to email my representative and congress. I had trouble getting to the congress and rep links on the post though-

We must start all over. Back to basics. Back to real value. Back to the true values of American capitalism based on a free market that embraces truth, honesty, and integrity. A leader must emerge who will lead the charge and inspire our people.

Will,

That’s more like it. The American Dream project can be a venue for brilliant ideas. (You thought of that first.)

We can fix this country. We can restore our respect. “Life, liberty and the pursuit of happiness” are words that used to inspire us as a people. We need to renew old principles and develop new principles for the challenges we face. This is the place and time for them to begin.

Brilliant, positive, inventive and creative people are attracted to this web site by the words written here. Those public servants in Washington are looking for good ideas. This is the place where they can find them.

Kevin

I absolutely agree we have no business bailing out Wall-Street for $700 Billion. For one thing we don’t even have that much money in our Treasury. Most don’t realize this but our government is going to borrow this money from the International Market, mostly from China, to turn around and give it to the same crooks that got us into this mess.

How about instead if our Congress got together and decided to cut or eliminate corporate taxes, capital-gains taxes and let companies do business and invest without government intervention. Another thing government could do is insist these banks and mortgage companies renegoiate terms with home-owners who are currently at risk and having their homes foreclosed and instead of a 15-20-30 year mortgage extent their mortages to 40-60-80 years reducing their mortgage payments substantially to allow them to keep and stay in their homes. The banks could even raise interest rates on these loans to 10% or 12% and the banks would make money, the economy would continue to hum along and everyone could afford their mortgage to stay in their home.

Wall-Street bailout is insane and was invented by the very same crooks that got us into this mess. They are looking at the American people as the Goose with the Golden Egg and think we are stupid.

Terry

Terry,

Wouldn’t cutting or eliminating corporate and capital gains taxes just be another way or rewarding the people who got us into this mess?
New corporate taxes are just passed onto the consumer, but cutting corporate taxes does not result in lower prices to the consumer or more investment. It usually means higher bonuses for top executives.

Will, as always, enlightening.

Your concept of distributing that $700B to worthy localized institutions could completely change the nature of local business.

And the rent-to-own housing position could radically improve the lives of worthy but marginalized individuals.

What else? Dude, don’t stop here! C’mon, I know you’ve got more where that came from.

Thanks for being a resonant voice of our forefathers.
AYS
ME

This is the first option that is making sense to me. I have been listening to all the talk over the past day and thinking, “Whoa” slow down-what are some other options? It’s good to be decisive, but the power of waiting when we are confused, is that we make a better decision. Remember Iraq?

As a retiree from the investment banking business, I can say for sure that the investment bankers’ income has been “colossal” and their expenses “lavish”. The watchdogs danced along on their banquet. Most of the leading figures in politics were welcomed into the investment banking firms as a high-ranking officer.
The nature of an investment banking business is psychologically headquartered in Las Vegas. For this very reason, the Glass-Steagall Act was enacted in 1932 to separate investment banking from commercial one. There are some countries adopting a universal banking system, but not in the U.S. because of its own character. Any attempt to merge these two different types of banking needs to be seriously reconsidered.
The worst prevailing notion of the investment banking community is that they regard their staff as an expendable commodity.

Housing does need to find a bottom (real values). In my opinion, letting the current financial system implode is not the way to go about it.

My understanding of the “bailout” is that the Feds will buy Mortgage Backed Securities that have already been knocked down about 70% from their original values. Essentially, they are buying mortgages for 30 cents on the dollar. Only 5% of all mortgages are said to be at risk of defaulting (that is an awful thought, but as a number, it is relatively small). So the Feds will use our money (not really our money, say China’s money that costs 2% interest) to hold these securities for a couple of years until the real estate market stabilizes and then sell them for a potential profit.

Of course we need to have oversight and checks and balances. Make certain that the fat cat CEO’s can’t line their pockets from the program. Don’t let Congress divert the repayment to special interest groups and pet projects.

I may be completely wrong in my understanding of the bailout, but if I am not, I cannot see the wisdom in NOT taking this action.

Scott Gentry
Chattanooga, TN

Greetings All!

Here’s my simple, four-point plan for for Congress to deal with this financial situation:

1) Require all companies holding mortgages to cease all foreclosure proceedings immediately.
2) Wipe out ALL penalties, late fees, re-finance fees, etc… associated with current mortgages in arrears.
3) Convert ALL ARM’s to FIXED, 30-year mortgages.
4) Renegotiate a sensible monthly payment and interest % rate with the current tenants.

All other “profit” they were seeking will be wiped out and they’ll have to live with what they’ll make in profit over 30 years. Let’s be clear: GREED got them into this mess. Compassion and rationality can get them out.

Peace

Unless they change something at the last minute it appears to me that WE THE PEOPLE will not have a chance to see this piece of legislation before it gets voted on by Congress. If that is the case, it is criminal in my eyes and should be stopped. We should have at least several days to review and analyze the bailout package as it will be voted on. I can only imagine, otherwise, that the lobbyists from the ABA and other interested parties will have inserted their softballs when this is supposed to be hardball. I am getting personally tired of getting stabbed in the back by someone with a big smile on their face, otherwise known as a U.S. Congressman. They all have no shame no matter what they say. It is what they do that tells the truth.
Steve

Will,

You’re right that $700 Billion could be put to better use, but you’re wrong if you think the US government should actually borrow money from China to try to put it to a better use.

You’re right that we need to protect the spirit of free enterprise and reward good judgment, but you’re wrong if you think this problem was created by “greed” or deregulation.

The ONLY proper, fair and free enterprise solution to this is for the Government to do NOTHING.

I can hear you screaming “Oh My God! – WHAT ABOUT THE ECONOMY?!”

Well – the free market economy will take care of itself very nicely thank you.

The institutions that hold these bad debts will have to decide whether they want to hold them or sell them on the open market (just like every other financial asset).

Pretty soon someone will figure out how to auction these instruments off in an effective and efficient way (maybe put them on the Internet – or even eBay, who knows?)

Then ordinary people along with institutions (even foreign ones) can BID for these assets at a price that they think is fair. These “speculators” are the proper source of liquidity for all markets – they risk their own capital voluntarily rather than by force.

Et Voila! The free and unencumbered market provides everyone with the most “fair” outcome – and NO BAILOUT IS REQUIRED.

Investors holding bad debts can take a proper and tax deductible loss, and can even sue the investment banks for FRAUD if certain risks were not fully disclosed.

The Speculators will pocket any profit resulting from taking this risk; the US Government should not be in the business of risking tax payers money OR competing with speculators for the chance to make a profit.

BTW, it is also amazing to me how the Democrooks in Congress thought they could sneak the largest pork barrel deal ever conceived passed the American taxpayers (I suppose it was just a coincidence that the bailout vote came up on the last day that Congress was supposed to be in regular session even though this has been brewing for over 2 years.)

Thank God at least the House Republicans were brave enough to step up and cry “foul!”

John McCain can take some undeserved credit if he wants to, but at least he was on the right side of the deal.

Back around the time of the ‘87 crash I was in graduate school. I had an econometrics prof that preached running out of fossil fuels and being forced back to centralized economies because we couldn’t afford to live like we were. We would be forced to work and purchase our goods and services from those around us in our communities. For years I laughed and laughed. I guess he’s laughing now. Gas at $4.50, nameless corporations taking advantage of people for their profit, government insisting they can fix it all. Let it fall, bring our dollars back to people who know us, don’t spend what we don’t have, and be grateful that by strictly an accident of birth we live in a country that still provides us a better standard of living that most. We can make it better. Maybe this is our awakening to do so.

I read an article in the past 10 days that pretty clearly explained how you can take toxic waste and repackage it to look like AAA paper. http://www.advisorperspectives.com/commentaries/millenium_092008.html

This article by advisors for advisors butI believe it is important that people be able to read and understand these concepts. Here is an article on SIV’s http://www.marketoracle.co.uk/Article2516.html.

You see the problem isn’t really just the greedy banks … It is the oligopoly that is the credit rating industry, and the government oversight that we all think is there but really isn’t. It is crony capitalism at it’s best. Meanwhile, the more I dig, the more I find out NOBODY KNOWS what’s going on - except maybe a few power brokers in Washington, but they are not telling anybody.

Imagine going to work and finding out that you just lost your job. Of course, this is not a big problem for you since you’ve already paid off your house and have six months savings in the bank to live off until you get another job. You have no credit card debt, and your car is already paid off. You really have not seen the need for credit as you only buy what you can afford and pay for it with cash.

As you go looking for work, you find out that not only are there no jobs available, businesses are closing and food and goods are in short supply. What is going on?

By allowing banks to fail and the credit markets to lock up, businesses cannot get loans for capital equipment to keep running, farmers cannot get loans for equipment or seed to grow food, and manufacturers that make large durable goods can’t sell them because nobody has the cash to pay for them. The small regional banks have no money, because nobody has any extra to save and, for that matter, are living off what they have already saved. The downward spiral has already started, and there is no end in site. Much like the great depression, government will still need to bail us out.

Either way, we will be dependent on the government whether we do it now, or later. Yes, unregulated Credit Default Swaps should never have been allowed. Yes, the mortgage brokers that trusted people and made the bad loans should never have done so. Yes, people should pay for the mortgages they contracted to pay. Yes, households should not borrow against their equity and further increase their debt service. Yes, people should pay off their credit card and not incur such onerous debt. With the exception of the Credit Default Swaps, the whole house of cards collapse is due to people not paying their mortgages. I understand that people CANNOT pay them, but that is the definition of buying more than one can afford.

I firmly believe that our values are misguided. Everyone feels entitled to live like rock stars and blame others for their inability to do so. It is my hope that the government purchase of the bad debt will keep the Credit Default swaps from being triggered and unfairly enriching those who bet on the failure of the loans. I hope that the management of the failing banks and those that made the bad loans will lose their jobs with only 2 weeks severance pay. I hope that the govt will restructure the loans that are due to 30 year mortgages at a low interest rate so that every dime can be recovered. I also think it is criminal what we have done that will add to the financial burden of our children, but we have to work from where we are now and go forward.

I would encourage everyone to do the research and make sure they understand the crisis, what led to it, CDS, CDO, trauches, and the effect on our economy and the world economies and how they will affect us, and then make the necessary decision that is best for America even if we may not personally like it. Discipline requires that we do what we need to do, when we need to do it, whether we like it or not. My 2 cents.