Economic Bailout

[Maggie]

Wall Street can create great wealth but it also must allow for failure as well.

My initial reaction to all of this is as follows: When the profits are good and the bonuses are huge – they are yours; however, when you take a risk and it doesn’t pan out – the loss is mine? Pardon me – but that is a bunch of bull.

“Regulation” is the problem here but not in the way people commonly think of “regulation” – the root of the problem is our representatives in Washington did in fact “regulate” in a manner of speaking. They attempted to influence the free market for what they thought be to the “common good” and it backfired big time (as it almost always will).

Maybe BostonWu can enlighten me – but my gut tells me let them die and take the pain – the American people voted for these representatives that created the situation we find ourselves in – and those same representatives are now running around trying to justify their existence.

I believe the market, if left largely to its own devices, will survive.

I'm going to assume when you say "let them die and take the pain" you are referring to investment bankers and/or politicians. Let’s all well and good but you should also include Johnny Paycheck in that pain when he loses his job, is nearing retirement as his 401k/IRA is shot, loses his house, the house isn’t worth the 2nd mortgage, can’t buy a house or let alone get a loan for anything.

Again I think you’re missing the bigger point. This is not a fairness issue towards rich Wall St/banking executives/board members. Yeah it’s not fair and it’s not right what’s going on with these greedy bastrds along with corrupt DC politicians – but life is never fair.

The point is this: What is the best course of action for Johnny Paycheck? You can draw your own conclusions about what would happen in the event of no government interaction – in effect letting the capital markets run their course. I honestly believe it would spell global economic armageddon. When regular folks can’t secure a loan or place faith in cash deposits with banking institutions or place faith in the stock market for retirement savings then that is a scenario that I think we can all agree that we want nothing to do with. Any other alternative course of action would be better than that.

This thing got too big and effed up that there will be no perfect solution. People will get hurt and the job is to minimize the impact.

I hear you….and that is what my “brain” tells me but I can’t help getting emotional. And I do recognize the larger issue – your points have great merit.

My brother-in-law works(ed) for Lehman – and the first thing I said to my wife is how bad I felt for all the administrative staff (not my brother-in-law) that had nothing to do with the everyday decisions – they lost everything as majority of the bonus awarded to employees was restrictive stock.

As for the capital markets --- they should have been allowed to run their course in the first place --- this would have never happened. Therefore, I am loath to acquiesce to additional government intervention.

“No perfect solution” --- I think you are right.

[engrshock]

One has to only look at the amounts of money paid to politicians to realize that the money talks. We few voters will only get our voice at election time and the choices are bought and paid for that have any chance of winning.

http://www.opensecrets.org/

[RoyalShock]

One has to only look at the amounts of money paid to politicians to realize that the money talks. We few voters will only get our voice at election time and the choices are bought and paid for that have any chance of winning.

http://www.opensecrets.org/

The reason they are the only ones with a chance of winning is because we keep voting for them.

I will continue to say it. Voting for a 3rd party is not a wasted vote. It's a protest against the current, corrupt system and the first step toward changing it. We have become a nation of sheep. 80% of the people need to see that the other 20% are willing to fight before joining (the ol' 80/20 rule).

Which group are you in?

[Maggie]

One has to only look at the amounts of money paid to politicians to realize that the money talks. We few voters will only get our voice at election time and the choices are bought and paid for that have any chance of winning.

http://www.opensecrets.org/

The reason they are the only ones with a chance of winning is because we keep voting for them.

I will continue to say it. Voting for a 3rd party is not a wasted vote. It's a protest against the current, corrupt system and the first step toward changing it. We have become a nation of sheep. 80% of the people need to see that the other 20% are willing to fight before joining (the ol' 80/20 rule).

Which group are you in?

I’m still not with you brother. Change can happen within the two party system. How do you think Reagan was elected?

[RoyalShock]

I know Reagan is pretty highly regarded and thought to be a great conservative.

In the late 70's the federal budget deficits ranged from $40-$74 billion per year.

Under Reagan, that range was $74-$221 billion.

Under Clinton's watch that number peaked at $290 billion but eventually turned into a surplus of $236 billion by the time GWB took over.

http://www.cbo.gov/budget/data/historical.shtml

A key, if not THE key, to conservatism is a small, limited government. The Reagan administration oversaw an accelerated growth of government.

[Maggie]

I think you need to take into account certain factors, including but not limited to, inflation, congress (they actually deal with the budget), the cold war, etc. when it comes to Reagan.

As for Clinton and Bush (both of them) – I wouldn’t call them conservative.

[RockChalkWUShock]

I don't want to pretend to know all the in's and out's but if we (taxpayer's) are bailing out these companies then we, should be given ownership and profit share based on ownership position. Not individually but nationally through the treasury.

I also agree with Royal that the individual home loans need to be looked at and written down, they don't have to be affordable but reasonable for that house to sell to another buyer if the one in the house can't afford it.

[WstateU]

Now here’s a plan I can embrace... at least it puts $85 billion into better perspective. :D

"Whoever T. J. Birkenmeier is, I sincerely salute him.

I’m against the $85,000,000,000.00 bailout of AIG.
Instead, I’m in favor of giving $85,000,000,000 to America in
a We Deserve It Dividend.

To make the math simple, let’s assume there are 200,000,000
bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free. So let’s assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads
Put away money for college – it’ll be there
Save in a bank – create money to loan to entrepreneurs.
Buy a new car – create jobs
Invest in the market – capital drives growth
Pay for your parent’s medical insurance – health care improves
Enable Deadbeat Dads to come clean – or else

Remember this is for every adult U S Citizen 18+ including the folks
who lost their jobs at Lehman Brothers and every other company
that is cutting back. And of course, for those serving in our Armed Forces.

If we’re going to re-distribute wealth let’s really do it...instead of trickling out a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed by one of our candidates for President.

If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!

As for AIG – liquidate it. Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.
Here’s my rationale. We deserve it and AIG doesn’t.

Sure it’s a crazy idea that can “never work.”
But can you imagine the Coast-To-Coast Block Party!
How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion
We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC.

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

Birk T. J. Birkenmeier, A Creative Guy & Citizen of the Republic
PS: Feel free to pass this along to your pals as it’s either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!"

[SubGod22]

I like it :D

[engrshock]

I am not an accountant but when I divide 85 billion by 200 million is $425 per person. Hardly enough to put my kids through school much less pay off my house etc. ;-)

[AG1219]

I am not an accountant but when I divide 85 billion by 200 million is $425 per person. Hardly enough to put my kids through school much less pay off my house etc. ;-)

It appears as though "T.J" is not smarter than a 5th grader. :whistle:

[Awesome Sauce Malone]

Hell i would take 425 right now I really need it.

[SFL]

Hell i would take 425 right now I really need it.

Me too! :good:

[RoyalShock]

But $700 billion would be $3500 per adult!

[Aargh]

BostonWu is making some great points. So is Maggie.

When my paycheck hits the bank, the first thing they want to do is loan the money out and start making money on it. Now the bank has to hold on to my money. They were expecting a mortgage payment that isn't coming in and they have to use my paycheck for their own capital.

Businesses rely on bank loans to get through periods of low cash flow. If that source of funds dries up, businesses have no choice but to shut down. That leads to depressed stock prices. Then the construction companies default on their loans because their investments tank and there's no income to be made from continuing to build housing. Then banks have even more need for capital and need to keep even more of Johnny Paycheck's money or they go broke and have to go out of business.

There are 2 choices - neither is pleasant.

1) Bail out the big boys and confirm that free enterprise applies to common people and "big business" operates under Socialism. I refer to this as the "reverse Robin Hood Theory".

2) Let the free market operate. It will recover and adjust. This is the one I'd prefer, but I'd hate to be alive in this country while it happened. It would be incredibly ugly.

A big problem with the second option is that foreign markets for Treasury Bills would disappear. There wouldn't be a source for our government to borrow money to cover interest on the debt. The next step is that the nation's creditors would start demanding payment on our national debt. Texas would probably be the first state to secede from the Union and the USA would end up very much like the former USSR.