Buyouts ??

Posted Tuesday, September 23, 2008, at 10:55 AM

The pending buyout of certain financial institutions is a tragedy but I think misunderstandings and political rhetoric have masked the real situation. The facts are, I suggest, as to Fannie Mae and Freddie Mac, we are not necessarily giving "them" anything. Their share holders get nothing and we, the American people, own both Companies which had their genesis as government operations. Nowhere have I seen reported the fact that Fannie Mae, for instance, has many, if not all FHA and VA mortgages in the Country. As such, we the people were and are at some risk as the Federal Government guarantees both mortgages. As owners of these companies, we cannot lose the 100s of billions of dollars that have been cavalierly talked about. Never said is we could even make a profit if and when we take the companies public again.

Also misunderstood, I think, is the buyout of AIG. We are extending huge loan guarantees to this company, note, not giving them money. For the guarantees we own approximately 80% of the company. Again, with astute management, oversight and a little luck, we could make money in the form of profits from operations as well as when the company is returned to public ownership.

As to blame, I hope we let history decide for there is surely enough to go around to all peoples and parties involved in the operation of government. If ever there was a bipartisan issue, this is it, calling for a united front to tackle a problem whereby delay can potentially cause misery we have not been able to envision for generations. We need to immediately address this problem, find the best solution without regard to blame for the problem nor credit for "fixing" it. In the 1990 Sweden and Japan both had similar situations. Sweden moved quickly and minimized the permanent or long term damage. Japan on the other hand "thought about it" for an extended time and suffered much more greatly than Sweden.

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I do not know exactly what programs you are referring to that encourage so much of our workforce to stay home and drink all day. If we had a system like that at one time, it is not that way now. I doubt the majority of the money stayed at the beer markets or lottery stations. It may have gone on to the government or beer producers, advertisers and so on, but the markets just got a small cut, in effect, creating a middle class. I fundamentally disagree with you regarding ideas of money flow and am perplexed how it could stay on the ground and most people still have little or none, as witnessed by average savings in this country, but I am currently more interested in hearing what programs you are referring to. I do not doubt you, but there is an age difference between us and you may have a better history of entitlements than I do.

-- Posted by memyselfi on Sun, Oct 5, 2008, at 1:05 AM

memyselfi,

When it trickles up generally it moves up maybe a level or two at most and the majority of it stops at the beer store or lottery stations.

First hand I have experienced the end results of some of these trickle up ideas or "programs". Years ago we were involved in the masonry business and depended on a lot of general laborers. We reached a point where we actually had to plan our work schedule around some of these "programs". It has been years and I can not remember the exact day of each month but we did have to mark our calendars with 12 "Mothers Day" and try to accomodate these celebrations.

You see, all the men would not work on these days because they wanted to be there when the mailman ran and get the "check". Occasionly I would forget and show up to pick them up. After blowing the horn and waiting on "them" they would finally stick their overhung head out the door and say "Marvin, you know it is Mothers Day." Actually we would have been better off to have acknowledged it as "Mothers Week". It took them 3-4 days to blow all the check before they would be broke enough to have to work again to buy the buzz.

In a good and true economy the dollar is bouncing and active. Everytime it moves or "bounces" in general there is a profit made and a contribution made. If the ball was held high enough the energy created by gravity pulling it down will allow the ball to bounce again and start the process over again producing a profit and a contribution. The more it "bounces" and moves the more the profits and contributions.

Let the ball roll along on the floor and it gathers little more than dust and creates a dirty little ball someone will need to clean up.

The mortgage ball is dirty.

-- Posted by parkerbrothers on Sat, Oct 4, 2008, at 8:49 AM

PB, I believe "trickle down" is a paradox. The wealthy corporations do not trickle anything down without the promise of a larger "trickle up forthcoming". The only purpose for capital is to earn profit. I do understand that corporate wealth generates income to the workers, but only if the workers have enough "trickle up" to sustain the growth and profits.

The trickle up is most commonly in the form of real wealth from labor/resources or entitlements while the trickle down is commonly found to be created money, entitlements or capital from previous uses of created or public funds. In the end through, trickle down or up is irrelevant. The question is: Who ends up with it?

-- Posted by memyselfi on Fri, Oct 3, 2008, at 6:26 PM

Richard,

I have to disagree with you a little on that comment. This mild crisis we are peddling through is pretty much the result of a Democratic idea to put everybody in a home at a time the government choose for them.

There was no sense in changing standard lending practices and guidlines in an effort to create a "program" that would move everybody in to home ownership. We would have been much better off to wait until everyone matured on their own into wanting to accept the responsibility of home ownership and went through tried and true standards and guidelines.

Slick Willie had almost made it where the only requirement to get a homeloan was having a pulse. That 2.4 trillion must have been burning a hole in his pocket.

-- Posted by parkerbrothers on Fri, Oct 3, 2008, at 5:35 PM

It doesn't trickle down when you have people at the top who want more for themselves and less for everybody else. That's the problem.

The current economic crisis was created by both parties. That's why they are both trying to pass this bailout, to cover thier behinds. This must be the bipartisanship Carl keeps talking about. The parties working together to screw Americans.

-- Posted by Richard on Fri, Oct 3, 2008, at 2:29 PM

Your e-mail is apparently painting the economy as a party issue. Please do not believe that PB. This has been around for many more decades than shown. At the very least, do not expect for me to believe this is a party problem. The current administration had every opportunity to actually do something for several years

Posted by memyselfi on Thu, Oct 2, 2008, at 11:33 PM

memyselfi,

A careful prodding of the past will show that Republican members of the current administration did try to do something.

2001: Republicans try repeatedly to bring fiscal sanity to Fannie and Freddie but Democrats blocked any attempt at reform; especially Rep. Barney Frank and Sen.Chris Dodd who now run key banking committees and were huge beneficiaries of campaign contributions from the mortgage giants.

2003: Bush proposes what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago". Even after discovering a scheme by Fannie and Freddie to overstate earnings by $10.6 billion to boost their bonuses, the Democrats killed reform.

2005: Then Fed chairman Alan Greenspan warns Congress: "We are placing the total financial system at substantial risk". Sen. McCain, with two others, sponsored a Fannie/Freddie reform bill and said, "If congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole". Sen. Harry Reid accused the GOP ;of trying to "cripple the ability of Fannie and Freddie to carry out their mission of expanding homeownership" The bill went nowhere.

2007: By now Fannie and Freddie own or guarantee over HALF of the $12 trillion US mortgage market. The mortgage giants, whose executive suites were top-heavy with former Democratic officials, had been working with Wall St. to repackage the bad loans and sell them to investors. As the housing market fell in '07, subprime mortgage portfolios suffered major losses. The crisis was on, though it was 15 years in the making.

2008: McCain has repeatedly called for reforming the behemoths, Bush urged reform 17 times. Still the media have repeated Democrats' talking points about this being a "Republican" disaster. A few Republicans are complicit but Fannie and Freddie were created by Democrats, regulated by Democrats, largely run by Democrats and protected by Democrats. That's why taxpayers are now being asked for $700 billion!!

Of particular notice the comment on the 2003 proposal by Bush that was deemed by the NY Times as the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Also there is a known tradition of Party that we can not escape.

The Republicans will basically try to provide an "opportunity" for someone to move up to a level the individual desires.

The Democrats will basically give everything to everybody through "programs" and "entitlements" starting at the bottom in order to keep them down where the government see fit.

In general one believes it trickles down and the other in gushing up.

Watch the act of nature during the next rainfall and see which way it tells you things should flow.

-- Posted by parkerbrothers on Fri, Oct 3, 2008, at 12:36 PM

I also wonder how many houses you refused to build since you knew the outcome 4 years ago. It seems to me your conscience would have motivated you to do what little you could do to stem the tide.

-- Posted by memyselfi on Thu, Oct 2, 2008, at 11:33 PM

memyselfi,

We actually seen this coming over 8 years ago when Clinton thought everybody belonged in home ownership.

The only houses that ever came into issue were existing built homes for us. And yes, I did refuse to close on homes that I felt were inappropriate. A careful look at our track record would show less than a half of a percent of our homes ever ended up in foreclosure by the purchaser, if that. As FHA would say, "that's impeccable".

-- Posted by parkerbrothers on Fri, Oct 3, 2008, at 12:23 PM

I agree PB, if anyone has a comfort level that is only appeased by living in a mansion, they should be able to work and achieve it. If however, their drive for success is based on practices that put smart men in the position of living in a box, those with high maintenance comfort levels may need to try the box out themselves.

I also wonder how many houses you refused to build since you knew the outcome 4 years ago. It seems to me your conscience would have motivated you to do what little you could do to stem the tide.

-- Posted by memyselfi on Thu, Oct 2, 2008, at 11:33 PM

For anyone interested in how we came to where we are with the currunt finanial issues I have posted from a friend of mine what I beleive says it as best it can be said. I knew from first hand experience in the field that we were slowly coming to this point. We were sending letters and calling the agencies 4 years ago crying wolf but no one would listen to us. We told them exactly what would happen and it has indeed happened. Almost to the tee.

The sooner the Demoncratic guys figure out that not everyone is "entitled" to everything and all the "programs" are removed the sooner we heal. But wait, they already know that.

All people will tend to work to a point of "their" comfort if left alone. I for one do not think the government needs to be involved in telling anyone where "their" comfort level should be and creating all these "programs" to try to move everyone to where the "government" feels they would be comfortable.

It is just as wrong to try and take a guy who is "comfortable" living in a shack and put him in a mansion as it is to take a guy that is "comfortable" in a mansion and put him in a shack. The real problem lies in the fact that we as a society have been slowly brainwashed into "thinking" there is some measurable difference between the two men. Both are equal in the sight of God and should have remained equal in the site of fellow mankind. The problem really started when we took God out of everything and instituted our own created new sets of values.

Enough of my rambling. Here is the informative email I received:

Dear Friends,

I am sounding an alarm! For the life of me, I cannot figure out why this is not being discussed on the media or why conservatives are not making their case: IT IS SO IMPORTANT!!!!! The following is a condensation of a series from the Investor's Business Daily explaining "What Caused the Loan Crisis":

1977: Pres. Jimmy Carter signs the Community Reinvestment Act into Law. The law pressured financial institutions to extend home loans to those who would otherwise not qualify. The Premise: Home ownership would improve poor and crime-ridden communities and neighborhoods in terms of crime, investment, jobs, etc.

Results: Statistics bear out that it did not help.

How did the government get so deeply involved in the housing market? Answer: Bill Clinton wanted it that way.

1992: Republican representative Jim Leach (IO) warned of the danger that Fannie and Freddie were changing from being agencies of the public at large to money machines for the principals and the stockholding few.

1993: Clinton extensively rewrote Fannie Mae and Freddie Mac's rules turning the quasi-private mortgage-funding firms into semi-nationalized monopoies dispensing cash and loans to large Democratic voting blocks and handing favors, jobs and contributions to political allies. This potent mix led inevitably to corruption and now the collapse of Freddie and Fannie.

1994: Despite warnings, Clinton unveiled his National Home-Ownership Strategy which broadened the CRA in ways congress never intended.

1995: Congress, about to change from a Democrat majority to Republican, Clinton orders Robert Rubin's Treasury Dept to rewrite the rules. Robt. Rubin's Treasury reworked rules, forcing banks to satisfy quotas for sub-prime and minority loans to get a satisfactory CRA rating. The rating was key to expansion or mergers for banks. Loans began to be made on the basis of race and little else.

1997 - 1999: Clinton, bypassing Republicans, enlisted Andrew Cuomo, then Secretary of Housing and Urban Developement, allowing Freddie and Fannie to get into the sub-prime market in a BIG way. Led by Rep. Barney Frank and Sen. Chris Dodd, congress doubled down on the risk by easing capital limits and allowing them to hold just 2.5% of capital to back their investments vs. 10% for banks. Since they could borrow at lower rates than banks their enterprises boomed.

With incentives in place, banks poured billions in loans into poor communities, often "no doc", "no income", requiring no money down and no verification of income. Worse still was the cronyism: Fannie and Freddie became home to out-of work-politicians, mostly Clinton Democrats. 384 politicians got big campaign donations from Fannie and Freddie. Over $200 million had been spent on lobbying and political activities. During the 1990's Fannie and Freddie enjoyed a subsidy of as musch as $182 Billion, most of it going to principals and shareholders, not poor borrowers as claimed.

Did it work? Minorities made up 49% of the 12.5 million new homeowners but many of those loans have gone bad and the minority homeownership rates are shrinking fast.

1999: New Treasury Secretary, Lawrence Summers, became alarmed at Fannie and Freddie's excesses. Congress held hearings the ensuing year but nothing was done because Fannie and Freddie had donated millions to key congressmen and radical groups, ensuring no meaningful changes would take place. "We manage our political risk with the same intensity that we manage our credit and interest rate risks," Fannie CEO Franklin Raines, a former Clinton official and current Barack Obama advisor, bragged to investors in 1999.

2000: Secretary Summers sent Undersecretary Gary Gensler to Congress seeking an end to the "special status". Democrats raised a ruckus as did Fannie and Freddie, headed by politically connected CEO's who knew how to reward and punish. "We think that the statements evidence a contempt for the nation's housing and mortgage markets" Freddie spokesperson Sharon McHale said. It was the last chance during the Clinton era for reform.

If you doubt any of this, just click the links below and listen to your lawmakers own words. They are condeming!

http://www.youtube.com/watch?v=68D9Xrqyr...

http://www.youtube.com/watch?v=pIgqfM5C8...

http://www.youtube.com/watch?v=H9juJr8CS...

Postscript: ACORN is one of the principle beneficiaries of Fannie/ Freddie's slush funds. They are currently under indictment or investigation in many states. Barack Obama served as their legal counsel, defending their activities for several years.

________

Back to my ramblings:

For Gods sake. Do not vote for an idiot who wants to give everything to everybody and think it will work. Vote for someone who believes in giving only an "opportunity" for someone to earn whatever it takes to move themselves to "their" own comfort level. And by all means view your fellow man as equal to you no matter if his comfort level is different from yours.

The guy living in the cardboard box under the bridge is much smarter that you will give him credit for.

-- Posted by parkerbrothers on Thu, Oct 2, 2008, at 9:28 AM

I think this is a great explanation of why not to vote for the bailout.

"Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.

CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer."

-- Posted by jaxspike on Tue, Sep 30, 2008, at 9:05 AM

Exactly Dianatn . . . I am like most people and do not want to bail out the mistakes of private corporations but what consequences do we suffer if we don't help them out? Are we cutting off our nose to spite our face? If we as Americans decide not to help bail out Wall Street then we need to be ready to suffer the consequences of those actions and I am afraid that could be worse than anything we could imagine and it will be in part our fault.

That is what is so discouraging about this problem and even the election . . . the right answer is almost impossible to see.

-- Posted by jaxspike on Tue, Sep 30, 2008, at 7:14 AM

The only Right reason there could be is it is Not the responsibility of the American taxpayers to bailout private financial companies.

But the biggest question is yet to be seen "What effect will the stock market crashing have on our everyday life?"

-- Posted by Dianatn on Mon, Sep 29, 2008, at 8:04 PM

"Light, sweet crude fell $11.39 to $95.50 on the New York Mercantile Exchange as investors feared that a worsening economy would slice into energy demand. If the decline held, it would be oil's largest ever one-day drop."

Diana, thanks for that link... I found this to be ABSOLUTELY amazing... How in the world can this drop be based on a fear of weakening demand? Wall Street is based primarily on speculation, isn't that the entire point of betting on the futures of a stock or commodity? That should translate into a major drop at the pumps. Driving into Murfreesboro, gas is currently .20 cheaper per gallon (as much as .30 cheaper at some stations) than in Shelbyville...

-- Posted by darrick_04 on Mon, Sep 29, 2008, at 2:24 PM

I am glad they said no... I hope they came to such conclusions for the RIGHT reasons!

-- Posted by darrick_04 on Mon, Sep 29, 2008, at 2:19 PM

The House says No to the Bailout!!!

Is this a good thing or not?

http://news.yahoo.com/s/ap/20080929/ap_o...

-- Posted by Dianatn on Mon, Sep 29, 2008, at 1:42 PM

I hope the reason there are no new postings this morning is because everyone is too busy calling, faxing, and e-mailing our "leaders" to stop them from selling us down the drain. If you don't have contact information - it is available at the link below.

http://globaleconomicanalysis.blogspot.c...

I am "so" worried. They are going to once again be doing this behind closed doors over the weekend so they do not have to deal with angry taxpayers who want to hold them accountable for their actions.

-- Posted by GeeWoman on Fri, Sep 26, 2008, at 9:17 AM

Here we go - China cut off the credit tap

http://www.foxbusiness.com/story/markets...

And they're funneling money into overseas money markets

http://www.cbc.ca/world/story/2008/09/24...

-- Posted by GeeWoman on Fri, Sep 26, 2008, at 12:23 AM

Honestly, did you even read that email post before you regurgitated that up all over the blog?

At least, thanks for proving the point most people simply repeat just about anything told to them without even thinking.

-- Posted by Mike_10 on Thu, Sep 25, 2008, at 10:50 PM

nathan..I do know that. It just bothers me that they are giving this money away. I am sure everyone agrees that it cost more to live every day. Americans are forced to follow all of the rules put in place by corporate america. Payments rise, terms tighten, "you got downsized? Tough luck! Pay me or I will take your house".That attitude is thick throughout corporate america. Now our government that we elected wants to take our tax dollars and save them. When have they saved us. I was downsized! I lost my home! I have four children! Who helped me? Nobody! And that is okay because we are okay now. Corporate America has no heart. I sent them the money that I was behind and they sent it back to me saying it was too late. IT WAS TOO LATE TO KEEP A ROOF OVER MY FAMILY'S HEAD!? I think if they look thouroughly through the records and investigate properly, most CEO's would face prison time. Let the government bail them out with our tax dollars. We will turn the other cheek like the good book says. But do not set them up to tear us down again. Instead of giving us stimulus checks, give us ownership of Wall Street. Let us pick the leaders of these companies that drive our economy and that hold our livelyhood in their hands.

-- Posted by fed up with government on Thu, Sep 25, 2008, at 9:59 PM

I think what bothers me most about this whole thing is the people who run these companies have "known" where their books were headed for quite some time because "someone" - "somewhere" in their company would have seen their accurate books all along. No matter what thier books are saying "now" they would have safeguarded their "valued" assets somewhere before it got out of hand and cried "bankrupt" Even if they were left to go belly up - they will probably be doing business tomorrow as another company - without any bad debt to look back on.

Our un-employment rate is soaring. How are we supposed to produce enough income to generate the taxes to pay for this?

-- Posted by GeeWoman on Thu, Sep 25, 2008, at 8:49 PM

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

-- Posted by fed up with government on Thu, Sep 25, 2008, at 5:05 AM

Unfortunately, as you have already pointed out, this plan uses faulty math. Dividing 200 million adults 18+ into $85 billon that equals $425 not $425,000.

-- Posted by nathan.evans on Thu, Sep 25, 2008, at 8:21 AM

fed up with government... SUPERB idea!!!! Let's submit this to our lawmakers. However, we can find the accurate numbers so they will see the exact positive effect this would have on the economy.

It just amazes me that they assume some globally intertwined company got their without the American people... How do you hand these companies money without addressing the actual problem? That is what I hope the Democrats and Republicans ask the Fed and Treasury again and again and again... I think their SHOULD be gridlock on this passage, because this is too important to just rush into something without weighing all options. Remember, we did that with Iraq and now we can't seem to win, and have yet again thrown so much money at something, expecting it to be solved...

-- Posted by darrick_04 on Thu, Sep 25, 2008, at 7:45 AM

obviously the numbers arent right but how great would that be

-- Posted by fed up with government on Thu, Sep 25, 2008, at 5:05 AM

SOUNDS GOOOOOOOOOOD TO ME !!!!!!!!!!!!!!!

=====================================

Hi Pals,

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. 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 Davis plan only really costs $59.5 Billion because $25.5 Billion is returned

instantly in taxes to Uncle Sam.

-- Posted by fed up with government on Thu, Sep 25, 2008, at 4:19 AM

Michell Malkin hits it hard on the bailout today - and she didn't leave anyone out of the blame loop - read all about it: http://michellemalkin.com/

-- Posted by GeeWoman on Wed, Sep 24, 2008, at 9:11 PM

Bush is to speak his concerns tonight about the Wall Street Crisis:and I assume to tell us they intend on bailing out Wall Street whether we want to or not

White House yields on chiefs' pay, Bush to speak

http://news.yahoo.com/s/ap/20080924/ap_o...

-- Posted by Dianatn on Wed, Sep 24, 2008, at 2:41 PM

Top Recipients of Fannie Mae and Freddie Mac

Campaign Contributions, 1989-2008

Name

Office

Party/State

Total

1. Dodd, Christopher J

D-CT

$133,900

2. Kerry, John

D-MA

$111,000

3. Obama, Barack

D-IL

$105,849

4. Clinton, Hillary

D-NY

$75,550

-- Posted by jaxspike on Wed, Sep 24, 2008, at 10:21 AM

Too much control and power in the hands of too few. We, the people of the United States, totaling more than 300 million citizens, ought to exert our power and prominence over 12 Federal Reserve Presidents and a greedy corporate world.

This is a unique time in American history, and future rests solely in the hands of we, the citizens, who do not work for our government. They work for us, so it is our job to stand up to this rhetoric and nonsense, and stop lining the pockets of the guilty.

-- Posted by darrick_04 on Wed, Sep 24, 2008, at 8:44 AM

Nathan - great link. There may be some hope yet. Michille Malkin is posting this morning the phones of our elected officials are starting to ring off the hook in protest of this plan. So perhaps "we the people" are not going to stand down quietly while we are overloaded with debt we have no money to pay and for a growing number of us - no ability to earn in order "to" pay.

It is my belief this has been done with a great amount of deliberation in order to crash our currency because bankrupting us and creating a sense of deperation on a "massive" scale is the only way they can perpetrate the North American union they "aren't" creating. http://spp.gov/

-- Posted by GeeWoman on Wed, Sep 24, 2008, at 6:21 AM

Could be, won't disagree with you on that. It would be the government attempting to "think" they knew better than the taxpayers. I saw something of TV today that made me think of all out Govt. regulations. Now don't laugh, but it was on Little House on the Praire, an episode where Pa represents the grange at a meeting. The crutch of it was, did the farmers want to deal directly with the rich railroad folks or did they want government regulations. Pa voted for government regulations. I realize that was totally fictional, but it seemed to mirror what has been discussed on these blogs. "We the People" at some point in our history allowed to government to take over parts of our lives and now a we have a nanny government willing to "assist" us everytime something goes wrong.

-- Posted by Sharon22 on Wed, Sep 24, 2008, at 12:57 AM

I would say we are and have been reaping the "fruit" of FDR and his alphabet soup presidency for the past several years. Fannie Mae was established in 1938 as part of the New Deal to help bailout the mortgage companies after the great depression. FDR was a good president and left a wonderful legacy, but what worked in the 1940's most likely will not work in 2008.

-- Posted by Sharon22 on Wed, Sep 24, 2008, at 12:25 AM

I believe it all started with Woodrow Wilson when he signed the Federal Reserve Act.

http://en.wikipedia.org/wiki/Woodrow_Wil...

In Wilson's "The New Freedom: A Call for the Emancipation of the Generous Energies of a People" (New York and Garden City: Doubleday, Page & Company, 1913)

"A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men ... [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world--no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men."

Wilson also wrote:

"Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it."

-- Posted by nathan.evans on Wed, Sep 24, 2008, at 12:38 AM

Last thought on this subject..

This comes from Chris in Florida on the Cafferty Files (CNN):

Why is it that we socialize losses and privatize profits? If these mega-corporations were booming they wouldn't share the profits, so when they fail why should we share the loss?

Oh.. and yes Paulson received a $20 million dollar BONUS from Goldman Sachs in 2007... one of the companies which would receive money from this buyout... Lol, absolutely incredible. The American people should be persistent in their disdain for belligerent carelessness.

-- Posted by darrick_04 on Wed, Sep 24, 2008, at 12:27 AM

-- Posted by Sharon22 on Wed, Sep 24, 2008, at 12:25 AM

Nathan... I could NOT agree more. Interesting video...

Forget Paulson, and his failed "expertise"... Ron PAUL was trying to warn every American months and years ago. Now we fully understand why the media ignored him. Too much truth to handle at once, huh?

-- Posted by darrick_04 on Wed, Sep 24, 2008, at 12:15 AM

Is it the government that we are up against?

http://www.youtube.com/watch?v=jx-lXwl9T...

-- Posted by nathan.evans on Tue, Sep 23, 2008, at 11:46 PM

Sorry about the name......You would think I would get it right by now.

-- Posted by cmcclanahan on Tue, Sep 23, 2008, at 10:58 PM

Lol, there are worse problems in the world... obviously ;)

No big deal.

-- Posted by darrick_04 on Tue, Sep 23, 2008, at 11:24 PM

cmcclanahan

I fully understand this must be done I do not like it as most tax payers. But I do not want to hand out 700 billion over to Wall Street to erase their bad debt and not get anything in return.

Getting 700 billion in bad debt is not getting their assets.

Fannie Mae and Freddie Mac was entirely different they were government agencies to begin with and we actually bought into AIG but this is completely different.

We will only be buying the bad debt..80% of zero is still zero anyway you look at it.

From the way I am hearing this: the bailout will be much like an entity account these financial companies will be able to dump their bad debt into this account (not actual money) but the government will then own 700 billion dollars of bad debt, an entity with a negative balance which will be added to our National debt.

Then these companies will be able to show nothing but profit because they will no longer be bogged with bad debt nowhere does it say we will acquire the actual property from these debts.

-- Posted by Dianatn on Tue, Sep 23, 2008, at 11:02 PM

Sorry about the name......You would think I would get it right by now.

-- Posted by cmcclanahan on Tue, Sep 23, 2008, at 10:58 PM

"(They) have been wrong about nearly everything since this crisis began years ago," said Barry Ritholtz, director of research at New York investment firm Fusion IQ. "Why should we trust (their) judgment on the largest bailout in American history?"

Last year, everyone of those asking for this buyout said there was absolutely no problem and nothing needed to be addressed....

My questions is this, how can we give them so much money when there CEO's were awarded (combined) of $100 million, for.. bankrupting their country. Now our message is, well you obviously can't run a business, so we'll set the sky as the limit and give you compensation for your mistakes. What other developed country in the world does this?

I don't hate the current administration. I despise the sneaky, illegal and obviously out of touch syndrome each and everyone one of them possess. They are the exact opposite of conservatives. The same people who accuse Obama of simply wanting to throw money at all of our problems are championing this idea of handing over a nearly $1 trillion check without even addressing the PROBLEM.

And it is quite obvious, my name is does not have two "a's" in it... Just saying.

-- Posted by darrick_04 on Tue, Sep 23, 2008, at 10:50 PM

Darrack...I don't believe this issue is the scapegoat. And the trust is not in the government, it's in the process, but I disagree about trust in the government in general. Much if not most of our debt is in government instruments owned by people, governments and institutions around the world and they are held, in my opinion, due to the ages old trust in "the full faith and credit" of the United States Government.

I wouldn't for one minute defend the present adminstration for their part in allowing this situation to come to the end that it has. I just maintain the problem is much larger and of longer festering than this administration. The problem has been comming for probably at least near twenty years so there is plenty of blame to go around. My position is the fix must come first, then determine totally and exactly what caused the problem and act to assure this is the last time, no matter whose head rolls.

Darrack, I think your hatred for the present administration sometimes colors your rational though processes. Strong word hatred and my word not yours. You are certainly free to feel thus, just I believe when one is driven by deep emotions, others often will not afford their positions with the respect and credibility they may otherwise recieve. Not intended as a negative accessment, just an observation I hope you might find useful.

-- Posted by cmcclanahan on Tue, Sep 23, 2008, at 10:44 PM

http://news.yahoo.com/story//ap/20080924...

If only the FBI had conducted these "investigations" years ago, when some of these companies had to change their books a few times.

-- Posted by darrick_04 on Tue, Sep 23, 2008, at 10:31 PM

I don't think this administration has garnered an OUNCE of trust... What makes this issue the scapegoat?

-- Posted by darrick_04 on Tue, Sep 23, 2008, at 10:29 PM

Dianatn.....I respectfully disagree. We will own Fannie Mae and Freddie Mac outright and 80% of AIG. I certainly wish we weren't in this situation but we are and must make the best of it. Once the deed is done and the pressure is off, we must then immediately determine why and what safeguards are needed to assure it will NEVER happen again. I hope the people will insist this be done and at the first indication of placing the blame or taking credit for fixing, they will rebel like never before and demand those who so move be recalled and forever banned from public office.

Darrack.....I agree that would be a nice solution but I think the entire reason for the need for a "buyout" is these companies cannot move fast enough to sell their portfolios of loans due to buyers lacking in trust of the process. That is why, I believe, the government is the only one who can purchase the company and "sit on" the assets until a more favorable market comes along.

The necessity for the action quickly or at all is maintaining trust in the system. We are all tought never to enter into any financial dealing without a written contract. This is sage advice but the fact is capital markets move billions upon billions of dollars a day, all on the nod of the head, the pointing of a finger or a voice on the phone. For these markets to function and capitalism to work there must be trust in the people and trust in the system. This is the parameter the market is now lacking and only the government, unfortunately, can quickly restore trust by assuring promises made are kept in the mortgage industry.

-- Posted by cmcclanahan on Tue, Sep 23, 2008, at 10:14 PM

cmcclanahan

here's the entire problem:

The proposal does not require that the government receive anything from banks in return for unloading their bad assets

-- Posted by Dianatn on Tue, Sep 23, 2008, at 9:47 PM

That should have been combined assets of *$5,383,000,000,000...

-- Posted by darrick_04 on Tue, Sep 23, 2008, at 9:45 PM

AIG, Merrill Lynch, Lehman Brothers, Fannie Mae, Freddie Mac, Washington Mutual, Countrywide Financial, and Bear Sterns have combined assets of over $5,383,000,000 (5.3 trillion)...

I realize only a few of those are involved in this round of "buyouts" but why can't they sell these assets to other people? Why does our government need to control a stake in ANY of these corporations?

There will be no profit gained from this proposed buyout unless the taxpayers are protected in some form or fashion. Why? Because, when they people these companies serve are broke, what good is giving them hundreds of billions of dollars going to do?

-- Posted by darrick_04 on Tue, Sep 23, 2008, at 9:44 PM

Here is one of the less talked about consequences of this bailout

http://www.telegraph.co.uk/finance/econo...

-- Posted by GeeWoman on Tue, Sep 23, 2008, at 9:38 PM

I repeat, we are not "giving money" out willy nilly. We are buying assets that will never go to zero as the underlying instruments have some value. If for instance a mortgage goes in to forclosure and it is sold for 80% of its value, we have only lost 20%. Not the whole value of the mortgage. If the real number is $700 billion and this scenario eventuates our exposure will be 20% of 700 billion or $140 billion dollars at most. As I mentioned, by holding these assets for a period of time and astutely marketing them, we could make a profit.

Remember the Chrysler guarantee? We made $300 million dollars on that situation yet it was not widely reported. Remember we must make the government look bad at all cost. It seems it has come to the point that is the American thing to do. Kinda sad how that has happened.

-- Posted by cmcclanahan on Tue, Sep 23, 2008, at 9:31 PM

I say, let them all fail... let them learn from their mistakes. If you continue to handout money to people who have too much, then they will never learn to conserve.

Ironically enough, it is a CONSERVATIVE administration, that wants to give money to corporations that obviously forgot how to practice fiscal conservatism.

-- Posted by Vindicated on Tue, Sep 23, 2008, at 9:16 PM

The CEO's of all of these 'Failed' companies have shown profits enough to hand out bonuses in the millions of dollars..Severance Packages in the millions of dollars. Yet they want the government to bail them out without any conditions!

I say No Way No How!!!

Just read how much money they have put into their own pockets over the last couple of years.

http://abcnews.go.com/Business/MarketTal...

-- Posted by Dianatn on Tue, Sep 23, 2008, at 3:45 PM

http://www.youtube.com/watch?v=UrTwUD6ud...

-- Posted by nathan.evans on Tue, Sep 23, 2008, at 3:42 PM

http://www.minyanville.com/articles/C-ci...

http://www.minyanville.com/articles/MER-...

http://www.minyanville.com/articles/Paul...

http://www.youtube.com/watch?v=nHmY-awlt...

http://www.youtube.com/watch?v=S7TmKXLZw...

-- Posted by nathan.evans on Tue, Sep 23, 2008, at 3:24 PM

This situation stems from the conservative mantra that markets are self regulating and need no oversight. We did not learn from the savings and loan debacle, and unfortunately, it has come back to haunt us in spades.

The free market capitalist economy is based on competition much like a game. However, for the competition to be fair, there must be rules by which to play and a referee (the government) to enforce the rules. The conservatives basically threw out the rulebook and made the referee powerless.

-- Posted by volfanatic on Tue, Sep 23, 2008, at 1:55 PM

Does anyone else think the reason Paulson is pushing this bailout so hard is because Goldman Sachs is one of the companies that is about to go under? Paulson just so happens to be the former head of Goldman Sachs.

-- Posted by Dianatn on Tue, Sep 23, 2008, at 1:14 PM

I agree with some of the stuff regarding Fannie Mae and Freddie Mac but the other private ones needs to fail.

Who is we? the taxpayer? No Carl, we are footing the bill as loan guaranters and the companies/countries that buy those loan securities make the profits. All we are doing is getting shafted over and over again. We are losing the country, our freedoms and our jobs. Name 1 good thing that has happened in this decade?

Oh we got Bin Laden? Did we get oil? Did we get WMDs? Did we get better paying jobs? Has the cost of living gone down? Did we secure our borders?

Really is ANYTHING FIXED?! Not one thing has been accomplished but less personal freedoms, higher taxes, high food costs, higher fuel prices, Higher unemployment rates, damn it is almost funny how one administration destroyed an entire country in less than one decade.

Since it has already gotten this far, I say, Don't bail out these companies, let them rot. Freeze all executive and all board members assets and seize all of their properties. Since they made the decisions let them pay for them, I am sick of paying for decisions of wealthy people that have nothing to lose. I am sick of losing when I had no control over it their companies. It is ridiculous, let the economy fix itself and let the FREE Market, NOT the socialized market America now wants.

-- Posted by Evil Monkey on Tue, Sep 23, 2008, at 12:20 PM

I agree with most of what you write, but looking back, I do not think it could have played out any differently from the beginning. These loans did in fact help the economy when they were given in the first instance. I just wonder why the end result was put off for so many years. I do not argue politics, but if I did, I would wonder why the current administration depended so heavily on these questionable loans as opposed to another, perhaps more transparent, way of propping up the economy when it was in such dire circumstances.

-- Posted by memyselfi on Tue, Sep 23, 2008, at 12:04 PM

Politically Incorrect

Carl McClanahan

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Near lifelong resident of Bedford County. Will comment on the issues of the day in, hopefully a cogent and certainly an honest manner. Will propose discussions not usually fully addressed in the mainstream media.

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