Give the Public $600 Billion |
The administration talks a big game about economic stimulus packages and claims that the public is the winner when taxes are low or they are simply given a handout to spend. So take $600-plus billion and give each man, woman and child $2000 each. That will distribute all this money. A family of 5 would have a nice $10,000 nest egg for a down-payment or to rent a house and pay off their credit cards thus sending the money back into the system.
The trickle-down bail-out is designed to go to the same people who gave themselves huge salaries and ran these firms into the ground? It gets them off the hook. They can then slither out of town when they all should be tarred-and-feathered.
Why not let the public buy up the mortgages at these low-ball prices and move in? Why can’t that be arranged? Use the FHA to do it if the banks cannot. Why do the crooks get to re-buy the bad mortgages at the low price? So they can gouge later?
There has never been economic stimulus from the top down when the money is given to these weasels. These are people who will sell dollars and buy Euros, or horde the money or move to Switzerland to spend the money there. All of the CEO’s of these failed companies have offshore villas. The average Joe spends his money in the USA, not Europe. It stays in circulation. Good things happen.
According to the pro-bail-out “experts” the economy should have melted down on Tuesday hurling us into a depression. Instead the market went up. So how does that work?
Start looking at this bail-out and you start to see that it is an exit strategy for Paulsen and his friends at Goldman, Sachs. There was a need to rush it through before anyone discovered what it was all about.
No oversight, a finance Czar, more free reign than ever.
Exactly why is there such a rush? It’s like the sleazeball salesman telling feeble-minded customers that they MUST buy now. It just makes no sense.
Related link:
Paulsen’s ethics problem
Here’s an idea, stop spending money you don’t have! Even the public’s money.
I’ll go with John on this one. Of course both men running for president favored the messed up bill.
I agree with John too and oh wait so did Ben Stein last night on Larry King live. I enjoyed watching the other expert roll his eyes as Ben suggested a bottom up approach but that doesn’t work for Wall Street therefore Washington.
Actually, I don’t mind a bail-out bill as long as the assholes only get a market percentage of the value of the loans.
They should deposit the bad loans, the government gives them an immediate 20% of the loan value — but allows the bank to keep the remainder on their books as a receivable for up to ten years.
If the loan is resold or settled at a profit, the company gets the full 80% back, the government gets the remainder. If the loan cannot be sold or restructured by the 10 year mark, the company has to write off the amount as a loss.
That way, losses would be on the books but wouldn’t have to be taken for up to ten years. The lenders could write-off the loans at any time to the government and take the loss.
Now, while the government has these loans, they would then negotiate with the mortgagees to give them better terms to repay the loan. Perhaps through tax credits for those that have just cause for inability to pay, or reduction of principal if the value of the property was overstated to begin with.
Hit two huge birds with one stone. Spread it out over a period of time and then let things slowly trickle through the economy so it’s not a huge shock.
You are so right, the solution is perfect. It will of course will never be implemented. The Bush admin has already shown with their initial tax cuts that they only care about the rich getting richer. Its amazing how you Americans ever elected him again.
I’m reading international newspapers and especially in Germany they think a Bailout is a good thing and hope a second vote happens. Either they have no clue about politics or they… have no clue about politics and finances.
In the long run it’s gonna just be worse.
whizkid, Bush was NEVER ELECTED !!! First, he was APPOINTED BY THE SUPREME COURT, IN AN ACT OF ***TOTAL INTERFERENCE WITH STATE’S RIGHTS***, AND THEN THE REPUKES ***STOLE THE SECOND ELECTION*** WITH CROOKED ELECTRONIC VOTING MACHINES !!! So don’t blame the American Electorate !!!
Not plausible at all… No way to make the money back… At least the bailout could potentially make the money back plus profit…
I like #4 Jim’s idea. It good and smart. Too good and smart to every become reality, unfortunately, given the greedy nitwits we have in office.
Or at least now that Mrs. Genius Nancy Pelosi has made it a partisan issue.
If Representative Pelosi is the genius you characterize her to be, how did she stop the steamroller?
If there was actually $700 billion of real money, just sitting around, waiting to be handed out — then I’d agree with John.
But instead, the $700 billion will be borrowed – in effect it’s like taking $2,000 from everyone, and then giving everyone $2,000.
My alternate plan: take $1 billion from each of the 400 people on Forbes top-400 richest people. All of them are billionaires. Some are multi-billionaires. That gives us $400 billion. That’s $1,142 each. A family of 4 gets $4,568 – that’ll cover a few mortgage payments, maybe a new TV.
And by the end of the year, most of the people on the Forbes 400 list will probably have earned their own money back.
Heh.. that was my first thought…
Hmmm 350,000,000 that’s about 1700.00 a piece.. Why not benefit the masses let the corporations go bankrupt… then what? No one can get a loan
? So… I could use 1700.00 bucks..
john, i’m with ya. i wrote this friday:
With Secretary Paulson’s T.A.R.P. plan, the $700 billion used to purchase mortgage backed securities from financial institutions does not guarantee a correction of the four large concerns for our economy – 1) stabilization of the market, 2) improved liquidity for people or businesses, 3) increased investor (both foreign and domestic) confidence in the U.S. economy or 4) payment on the nearly 1.4 million mortgages currently in default in our country.
If there is to be a government sponsored nudge for our economy, perhaps the best way to spend the $700 billion would be to loan the money directly to the homeowners at a fixed, 30-year rate.
That way people get to retain their largest asset and consumer confidence grows, the banks get their money providing an increase in confidence in the banking sector, the investors of the mortgage backed securities get their money and their confidence – along with the confidence of all other foreign and domestic investors – not only stabilizes but increases and the U.S. economy is pulled out of its tailspin.
I believe there will be Social Security for us poor folks when we need it. I just wish the medications I need didn’t cost $1500 a month and the loaf of bread wasn’t $20 and the gallon of gas wasn’t $19.50.
@#$: “Now, while the government has these loans, they would then negotiate with the mortgagees to give them better terms to repay the loan. Perhaps through tax credits for those that have just cause for inability to pay, or reduction of principal if the value of the property was overstated to begin with.” – And back we go to the same insanity. Govt. should give “mortgagees” back what they have put in (downpayment and any principal paid off) and sell off the property for what it is worth now. I don’t want my tax money to be given to the WS fatcats but I also don’t want it in the pockets of willing speculators.
Still doesn’t fix the credit market. Simple as that folks.
John I think you are right on as usual!
Let the Bankrupsy’s Begin! All over extendended will go under and all that are in reason will win.
No one should be getting this printed money from the government. Not business and not the people. Both obviously showed that they can’t have a little extra cash in their pockets. I live in Janesville Wi, where one of the closing GM plants is. I sickens me to see these barely high school graduates making 50-60 thousand a year for putting tires on an SUV. Now this town is about to fold up and blow away. There are foreclosure auctions almost everyday of the week now. And you can pick up a fully loaded 2yr old SUV for almost 50% of the purchased price. These people live pay check to pay check. And everyone is right give big business the money and they will just try to screw everyone to make more.
I say take out your money put under your bed and get ready for the beggers. The economy will fix its self, quit asking for hand outs.
Well, I wonder if it is too late to sell off my hoard of Gold American Eagles? I heard there are some nice islands in the Pacific for sale. We could establish the “Semi-Autonomous Sultanate of Dvorakia”.
Cripes I should have just got my MBA and joined the winning team — now I’ll just have to bend over and take it like every other American sap.
#4, a bank can renegotiate a mortgage any time it wants. They don’t need to sell the mortgage to the government to do that. Under your plan, the banks will keep the good mortgages, and sell the bad ones to the government.
Great column. This is right on. The Democrats who push this awful Paulson Plan make me sick, and I’m a left-of-center anti-war Democrat.
Exactly! My wife and I talked about this last week. Are these guys, Paulsen, Bush, Cheney, Bernanke, etc… filled to their eyes in hubris or is it just greed?
Clearly, a bottom-up approach would work best because people will spend it and at the very least put it in the bank where the banks can tap into it to give out loans.
In addition to this, how about interest-paid on mortgages getting converted to principal-paid. Mortgages can then be adjusted against the unpaid principal. The unpaid principal after the conversion will likely be closer to the true value of the home anyway.
This could help out homeowners in danger of losing their homes or at least ease some of the pressure on those making their payments but maybe having a tough time doing it.
What is most amazing is just how quickly and out-of-nowhere this whole credit debacle showed up. Yes, there are plenty of “Monday morning Quarterbacks” saying they saw this coming (mainly right-wing talk radio charlatans like Savage and Limbaugh), but the reality is that this came out of nowhere. The situation is so bad that it couldn’t be held back, or at least reduced in importance for a two months, until after the election. As-is, this has given us some clear views of what a complete disaster the ‘trickle-down’ economic programs of the Republican administration have been for the American economy and social fabric.
Makes you wonder what other dirty secrets are hidden behind the Bush administration curtain, stuff that will show up only after the next president takes power.
Regardless of who wins the elections, all proposed programs and policies will have to be placed on hold, and the next four years will have to be spent trying to undo the damage caused by the last eight years.
You want to put more money in the pockets of people that will actually spend it? Vote for Obama… his proposed program will reduce taxes on those in the $37,000 to $66,000 by $1000, while McCain’s program only reduces taxes $320 for the same ‘regular folk’ tax bracket.
You want proof that McCain is more of the same? His proposal reduces taxes by 4.4% for those making $2.9 Million or more, while giving a 0.7% reduction for those that are in the above mentioned $37,000 to $66,000 bracket. That’s six times the tax reduction for the wealthy over the common folk. McCain just rewards those same people that have put us in the situation that we are right now.
Though I know that this will never happen, I for one would totally love it.
About 4 months ago my wife and I(after saving for about a year) decided that we would take the plunge and go back to school, We paid for our books and classes up front with our savings, and we were both working part time jobs to pay the bills.
A Month later we were both laid off(bad idea getting jobs at the same place to save gas). Now not being able to afford gas to get to class we have both dropped out, and are now struggling to stay afloat. Our internet, phone, and electric/gas, are days from being turned off. 2000 bucks could help us move to a better job market(we are currently in NM and there are absolutely no jobs), and hopefully get out of this situation.
But then again if wishes were horses huh?
Me and my blue coller buddys came up with the same solution this AM. Give the real home owner, not the speculater and landlords a 4% 30 year fix rate loan. If they can handle the payment. if not move them out. Sell the rest to the highest bidder. only when we find out what the property is really worth will this problem be solved.
Oh come on Mr. D, don’t tell me you’re an idealist!? Worse yet, if your conservative friends read this they’ll be calling you a Commie. Somehow they turned american pride into american greed. Ambition is a good thing if you got values, if not… I said it before but will repeat it for the peanut gallery. This ‘crisis’ was no accident. The people behind this haven’t lost control for a second, and believe me, they’re gonna sponge it all up and make a tidy little sum at that.
As I’m watching all this story from France, I think I don’t get all the political and economical facts properly ( but, does someone really understand them?). It seems to me that the Gov’t wants to simply buy the mortgages, at a lower price, of course, hoping to be able to resell them later. Have you heard of the Swedish example? They’ve had more or less the same problem, with troubled mortgages and bankrupt banks, in the 90’s. What they’ve done is buy( nationalize) the banks, and fire their CEO’s. Only the real people at fault ( the bank’s shareholders) lost money, and, after a few years, the banks were back afloat, and Sweden could sell them (privatize) again, for a good price. Why don’t the Americans do the same thing ? Is it for ideological reasons ? (though shall not interfere with the market…)
Sure, give $700 billion to the American public; the same people that caused the housing market to collapse, caused a huge credit crisis, and continue to spend their way into bankruptcy. Smart move. It’s already been proven that the People are far worse at balancing a budget than the federal government.
#28 – Tim
>>Sure, give $700 billion to the American
>>public; the same people that caused the
>>housing market to collapse
Uhhh, it wasn’t the “American public” that caused the housing market to collapse. If it was just some deadbeats missing mortgate payments, that would be manageable.
It was the predatory lenders, the financial “wizards” with their smoke-and-mirror mortgage scams, collateralized debt obligations, mortgage-backed securities, derivatives, default credit swaps, and all the other unregulated or poorly regulated financial “instruments” that no one understands.
Your point is noted, though. We’re giving the $700,000,000,000.00 to the same same financial dimwits who were responsible for the crisis in the first place.
I had the same idea a few days ago and it makes great sense. Here is my Bailout.