Letter to the Editor
Get the deed
Published Tuesday, September 30, 2008
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To the editor:
I don’t so much mind the government “bailing out” the big banks and insurance companies to the tune of $700 billion. What gets me is, it seems to be a give-away. If we the taxpayers are on the hook for all that money, then we should get “the deed to the store, and the keys to the door.”
If the managers running those companies ran them so far into the red, they should be forced to resign, and the encumbered properties nationalized. Then put in some hard-nosed managers, get the businesses back in the black, and sell the companies back to the private sector at a profit, and get us on the road to deficit reduction.
It appears that federal regulators have let companies become too large for the britches of the U.S. economy. No country in the world should have businesses so large that if a few of them fail the countries economy becomes in jeopardy!
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No, no, no. No nationalization of any American businesses. Loans, not buyouts.
They are finally talking about the other problem, credit. Credit from bank to bank, giving credit to people who can never in their life pay back what they owe, giving credit to speculators to make profit, credit to a business to make payroll, etc.. Are businesses making profit, or just paying off the last credit line used. What they are really afraid of is that we will be forced to become a nation of cash, not plastic.
How many out there could make it this week if you do not use a credit card and would have to use cash only? That includes not using a credit card for a cash advance.
Free
I could! I use my CC for miles only and pay off each month. I use wood to heat, eat lots of salmon and have a modest but sufficient house.
I believe in Alaska the people are more responsible but I could be wrong. This bubble will burst sometime it is just how many more greedy people will make 18 million for three weeks of work before it does. Bailout = failout. If we disagree with the politicians it is always because we don't understand.
I could.....I like debit but cash works just as well for me.And I really don't like credit cards even if you dont use them you have to pay for it.
Throw me into that list, no credit, no problem. Cash and carry works for me.
I don't make enough to pay cash for my house, but I don't go in deeper than I can afford either.
How about instead of using that 700b to "bail out" these corporations we divide that money up amongst the America citizens?
Just did the math and it's roughly $2,300 each.
And the debt keeps piling up! The US Treasury will have to pay interest on that debt and the US taxpayers are the ones who end up footing the bill.
I hope that this is finally enough to penetrate even the thickest skulls into the smallest pea brains that the Republicans are not fiscally competent, let alone fiscally responsible. It took decades of voodoo 'trickle-down' economics, deregulation and lack of enforcement of remaining regulations combined with allowing a greed-based money grubbing culture which allowed businesses to corruptly set their own regulations to set up this catastrophe.
It will take years of work and financial pain to fix it. I certainly don't trust those that caused the problem to be the ones in charge of fixing it. Vote Democratic.
I love how everyone blames deregulation on the Republicans.
It was Chris Dodd who, in 2005, introduced & supported a bill, to BLOCK REGULATORY action against Fannie Mae & Freddie Mac! This bill was passed through congress by DEMOCRATS! So, here we are, both of those companies who regulatory action was blocked against, are main reasons why we are in this mess.
It's not just republicans to blame!
I have not had a credit card in over 20 years.
cash and carry is the way to go...
Its actually $2380.20 going by the 2007 Census, if you don't count its estimated 11.2 million illegals. I am not sure what the percentage is of kids in the country, so I cant figure it for adults-only.
Gee for 700 Billion we could get a brainwashing box.. er 40 inch HDTV for everyone!
I am going to start a project tomorrow, and I encourage everyone to try it. I am going to cut up my Debit card (I do not own any Credit cards) and go cash-only. I will keep $40 at home and $20 in my purse for emergencies. I will only carry one check with me, also in case of emergency (or opportunity). I am thinking that I will spend a lot less if I am forced to goto the bank every time I "plan" on buying something~
Twingirl: How, exactly, did the Democrats pass a bill through Congress in 2005? They were several seats short of a majority, and thus, would not have been able to pass something without the aid of numerous Republican congressmen.
Kool Aid Drinkers,
If you truly believe that the Republicans are solely responsible for this present crisis, you are severely naive. The problem has Rep. Barney Frank (D - MA) so deeply involved, he ALONE could be blamed for the Freddie Mac/Fannie Mae problems.
Quit trying to sell us the Democratic Party line!
Let's look at the problem for what it is and find a solution. It will take both Parties. In addition, the partisan rhetoric (as displayed by Rep. Nancy Pelosi (D - CA) yesterday) is not conducive to bipartisan efforts. Is that what is meant by reaching across the aisle?
BKB
More,
I posted this on another Thread, but it is very relevant, so I am posting again here:
I realize not everyone is a Newt Gingrich fan, however he has presented some VERY interesting ideas to resolve the present Financial Crisis (at least reduce the required Bailout by a significant amount). Specifically, he proposes a change in the Mark to Market Accounting rules presently required by these Institutions. I did not understand exactly what was meant, so I GOOGLED it:
http://en.wikipedia.org/wiki/Mark_to_mar......
The Wikipedia explanation helped me with a basic understanding, however it does not explain the specific impact these rules place on Mortgage Accounting Method. Mr. Gingrich does a very good job explaining the process and how it impacts the Mortgage Industry.
http://www.forbes.com/home/2008/09/29/ma......
If you read this article, be sure to read the Comments that follow. Several individuals (that appear to be smarter than me) have made arguments both Pro and Con for suspending Mark to Market Accounting. Most of the more intelligent Comments agree that Mark to Market does not work in the Mortgage Industry.
Are there any INTELLIGENT Economists out there that can explain this further? Especially, I am interested to understand what the downside of suspending Mark to Market Accounting might have. The upside (according to Mr. Gingrich) seems very appealing.
BKB
"Twingirl: How, exactly, did the Democrats pass a bill through Congress in 2005? They were several seats short of a majority, and thus, would not have been able to pass something without the aid of numerous Republican congressmen."
This is a silly statement, because nothing is passed through Congress without the aid of the other party.... I figured that was a given.... apparently not. Just because Democrats are a minority in Congress, doesn't mean they aren't a deciding factor on whether something gets passed or not.
Anywho, had a DEMOCRAT not represented this bill, it would likely not have been introduced. Regardless, this bill was set into motion by a DEMOCRAT!
The crisis will hit main street in the fact credit from bank to bank has gone from 2% interest to 6.9 per cent. This tells banks that they do not trust one another when it comes to lending money to each other. No credit is being extended at this point from bank to bank. Small business and eventually large ones who depend on borrowing money to make payrolls and purchase supplies will not get the loans needed to maintain their business. In one day $1.5 trillion was lost in stocks. How many have checked their 401 K to see what your are holding. Mutual funds in what? Home sales are at a stand still. How many at this time have enough cash in savings to last a year, two. possibly three years to cover your expenses? How many are willing to say, I will not invest, but spend any additional funds in paying off my debt. How many are willing to make major lifestyle changes?
Here's an idea from Berkeley economist Brad DeLong. For discussion:
Time Not for a Bailout, But for Nationalization
Brad DeLong
John McCain and the House Republicans have blown up the Paulson-Dodd-Frank compromise--for that's what House Republican Whip Roy Blunt says that John McCain did:
Roy Blunt: Everybody else seemed to be rushing for a deal and John McCain came back and said, 'Wait a minute, I think the House Republicans have the taxpayers in mind and I'm with them'...
Now it's time to go back to three principles. There are three options:
* Do nothing.
* Bailout (a la Paulson)
* Nationalization (a la Sweden 1992)
Do nothing was last tried in 1929-1932. The result was called the Great Depression. Let's not do that again. Let's decide between bailout and nationalization.
Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer. And it is the best way to deal with the moral hazard problem.
It might work like this. Congress:
* grants the Federal Reserve Board the power to take any financial firm whatsoever with liabilities and capital of more than $25 billion that is not well capitalized into conservatorship,
* requires the Federal Reserve Board to liquidate any financial firm in its conservatorship when it judges that the firm is insolvent (paying off in full or not paying off in full the liabilities of the firm at its discretion), unless
* the Federal Reserve Board finds that preservation as a going concern is in the interest of the taxpayer, in which case Congress
* grants the Federal Reserve Board the power to transform equity stakes in the firm into junior preferred stock at par value and then transfer ownership and custody of the firm to the Treasury,
* requires the Federal Reserve to terminate conservatorship if the firm becomes well-capitalized once again.
In addition, Congress:
* grants the Treasury the power to issue up to $500 billion of troubled asset redemption bonds, the proceeds of which are then to be loaned to the Federal Reserve to be used to cover the liabilities of those liquidated firms that the Federal Reserve judges it is in the interest of the taxpayer to have their liabilities paid off in full.
Paulson had his shot. It's time for the Democrats to pass a nationalization in the taxpayers' interest bill and dare Bush to veto it. If he does, then announce that the congress will pass it again the day after the election. And if he vetoes it again, announce that congress will pass it yet again on January 21, 2009.
AKpatriot,
First of all, the quote from Rep. Roy Blunt has been taken out of context. Here is the entire quote:
"I think we need to be together on this and work together on this, but it means more than take it or leave it. We have been down the take it or leave it road, and you know, until John McCain came back to Washington this week, the House Republicans were very much on the leave it side of it and we were arguing for more insurance or loans and protections, but everyone else is rushing for a deal and frankly John McCain came back and said, the House Republicans have the taxpayers in mind and I am with them."
Otherwise, you have at least presented some valid arguments for debate.
I agree that the Government probably cannot take a DO NOTHING approach (though I am still not completely convinced of this). However, it certainly goes against my personal philosophy of the role of Government to Nationalize the system. I believe it was too Nationalized to begin with.
Why not a compromise? Relax the accounting rules (Mark to Market), increase the FDIC Maximum to $250K (this is strictly an action taken to calm investors - it is not directly relevant to the Housing Mortgage Crisis - just helps prevent a Bank Run), and provide LOANS similar to that provided to the Chrysler Corporation several years ago.
I just don't have faith in the Federal Government's ability to manage a system like the Home Mortgage Institutions. As pointed out in several posts, look how well the Social Security System has been managed.
Leave the partisan rhetoric out of your argument and you have my attention. Good points to ponder on the solutions you presented.
BKB
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