Posted on 09/25/2008 8:40:37 AM PDT by Reagan Man
New York -- It is beyond irritating to watch President Bush, Treasury Secretary Henry Paulson, and Federal Reserve Chairman Ben Bernanke gift-wrap their $700 billion early Christmas present for financially irresponsible bankers and the overleveraged borrowers who love them. These “three wise men” consider theirs the only method to stop the turmoil roiling trading desks from Gotham to Tokyo.
“Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy,” Bernanke told the Senate Banking Committee Tuesday.
But this mother of all government interventions is unlike a long, cold hypodermic needle in the belly: an inescapable misery, but preferable to death by rabies. There actually are desirable alternatives to building socialism and saddling every American man, woman, and child with another $2,300 in unjustified federal spending.
One option is to instruct the geniuses from Fannie Mae to Wall Street to deal with it. They made this mess; they should mop it up. Cut back, sell assets, develop fresh services, or get new jobs. Absent a federal bailout, Lehman Brothers sold parts of itself to Barclay’s Bank. Facing Uncle Sam’s cold shoulder, Merrill Lynch ran into the loving arms of Bank of America. Merrill’s customers will survive, and its employees will work for B of A or seek their fortunes elsewhere.
It may take time and tightened belts, but padlocking Washington’s bailout window will offer a generation of “masters of the universe” lessons that America’s Mr. Rogers-in-Chief cannot teach:
-- Keep your winnings, but own your losses.
-- If you fall on your face, especially after dancing drunk on the roof, Uncle Sam may empathize, but he no longer will rush in to swaddle you in silk sheets and place your bruised head on pillows stuffed with crisp $100 bills.
While it lacks the bracing appeal of this sort of financial Darwinism, another option is highly attractive.
Rep. Jeb Hensarling (R -Texas) chairs the Republican Study Committee, the congressional caucus of idea-driven, free-market stalwarts. These practicing Reaganites seem appalled to watch their GOP president morph before their eyes from GWB to LBJ to FDR. At a Capitol Hill press conference at high noon Tuesday, Hensarling and a dozen RSC members expressed deep misgivings about Bush’s $700 billion baby. Preferring to drown it in the bathwater, Hensarling and his band of true believers rejected Bush’s collectivism and offered their own proposals for escaping this rubble and returning America to a path of robust growth:
-- Give the capital-gains tax a two-year vacation. “Suspending capital gains taxes would bring as much as a trillion dollars of capital sitting on the sidelines back into the market,” Hensarling said. Also, as the Tax Foundation proposes, cutting America’s 35 percent corporate tax -- the industrialized world’s second highest, after Japan’s -- would boost U.S. global competitiveness. Since equity prices partially reflect long-term after-tax profits, lowering corporate levies should buoy stock markets.
-- Denationalize then privatize Fannie and Freddie. “These troubled financial Frankensteins -- created in a government laboratory -- are not creatures of the free enterprise system,” Hensarling said. “We must ultimately take their monopoly powers away and return them to the marketplace.” Why not array Fannie’s and Freddie’s loans according to mortgage holders’ surnames? They then could be divided alphabetically into 26 units and auctioned off.
-- Waive “mark-to-market” accounting. As the Competitive Enterprise Institute’s John Berlau argues, when distressed mortgage-backed securities sell at bargain-basement prices, unhelpful new bookkeeping regulations require that similar instruments elsewhere -- including viable loans -- be valued at equally low prices. This needlessly stains balance sheets.
-- Strengthen the dollar. Bernanke should boost U.S. currency, not pose as America’s uber-stock broker. A strong dollar lowers inflation, cheapens oil, and soothes world markets.
Bush’s bailout bonanza began with $29 billion for Bear Sterns and has reached $700 billion, seemingly for the entire financial-services sector. (Now the credit-card and auto industries await their slabs of bacon.) This cavalcade of giveaways and takeovers monumentally betrays the Republican Party’s most sacred tenets.
Even worse, Bush’s hyper-statism offers nothing imaginative. It takes brains to generate interesting ideas like Hensarling & Co.’s. It takes mere muscle to nationalize companies and toss handfuls of cash into the air. Just ask Eva Peron.
Actually ... all he does is prove that he doesnt’ know what he’s talkiong about. I’m not in favor of the 700 billion debacle, but there are other ways to solve this issue. Just ignoring it isn’t a viable alternative because the “regular guy” is the one who will bear the brunt of it.
If we must bail them out with 700 billion, I propose the following:
Purchase $700 billion in newly issued preferred stock at the current prices.
Deposit the stock with and assign dividends to the Social Security trust fund with guarantees that it will remain there.
I would like to see a two year suspension of the Capital Gains tax starting tomorrow at 4:00.
$700 billion
$700 billion
$700 billion
On what topic have we heard THAT number thrown around???
OH YEAH...that’s the SAME AMOUNT we are sending to the Saudis for Oil.
Am I the only one who’s noticing this????
Please tell me it’s just a coincidence.
Let's be quite clear here: Bear-Stearns, Lehman Bros., and all the rest were destroyed by their own bad behavior. Sure, they took advantage of the government's stupidity -- but then they compounded it by several hundred percent.
Just because they're "the market" doesn't make them honest. In fact, the magnitude of this problem pretty much convinces me that they're not.
These astronomical giveaways are simply lazy, fat assed politicians attempting to save their hides by delaying the INEVITABLE Unites States financial “awakening”. Of course they’ll grab as much $$$ along the way.
$700 billion
On what topic have we heard THAT number thrown around???
OH YEAH...that’s the SAME AMOUNT we are sending to the Saudis for Oil.
Am I the only one who’s noticing this????
Please tell me it’s just a coincidence.
*******************************
It’s also what we spend on “education”
It’s barely even a coincidence.
How about paying off the mortgages of those of us who pay them instead of bailing out the companies that screwed up?
That would add liquidity...without rewarding stupidness.
The phones are ringing off the desks in Congress to fight the bailout.
This is what you get when 75% of the government are members of the Globalist Council on Foreign Relations. Unfortunately, both presidential candidates are also members.
Cant we just take the FHA insurance program and extend it across these sub-primes? Maybe it costs 40 billion. Can’t that 40 be raised by other private entities and made into a loan?
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 bon-a-fide 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 billion 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?
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.
Kindest personal regards, 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!!
So divide 200 million adults 18+ into $85 billion that equals $425,000.00
Do that little bit of math again except ask a republican to do it this time.
This bailout is just a rape of America
KILL THE BULLSTREET BAILOUT, THEN SHOOT IT IN THE HEAD.
THE DOW is healthy, its almost 4000 points higher than after 9/11s bottom at 7700. Gime a break.
McCain can win the election THIS week if he shows America that it can withstand this BULLSHEET BAILOUT / SAVE US 800 BILLION / AND SEND THE PUNKS TO JAIL.
You are correct, I should have checked the math at the very least.
The correct number is $425 each, not the much larger amount in the e-mail.
Damn decimal points.
That email is all over the net.
What we need is for McCain to win this election THIS week by stopping the bullsheet bailout dead. Saving US 800-2 Trillion dollars.
Under the proposal, the government would provide insurance to companies that agree to buy frozen assets, rather than purchase them directly as envisioned under the administration’s plan. The firms would have to pay insurance premiums to the Treasury Department for the coverage.
“The taxpayers haven’t done anything wrong,” said Rep Eric Cantor, R-Va., adding that rather than require them to bear the cost of the bailout, the alternative “pretty much puts the burden on Wall Street over time.”
We shouldn’t have to pay a cent. And we don’t have to. This Country has weathered much worse financial situtations before. Markets like the weather go hot and cold. No reason for US to do anything but stay resolute and march on.
AND PUT THE CRIMINAL IN JAIL.
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