Posted on 09/24/2008 8:23:24 PM PDT by NorthShoreGibby
Here is what I don't understand about the bailout. Why is it necessary for the American taxpayer to foot the bill for this? How on earth does it make any sense to "solve" a problem by giving MORE power to the self-interested boneheads that created the problem in the first place? What I haven't heard anyone talking about yet is what happens when this $800 billion or so is wiped out. How is it that our economy is $800 billion short of success? Is it just me, or does the logic that this infusion of taxpayer dollars will suddenly make disasters alright seem far fetched? Why do I feel like our government wants me to be scared and willing to accept any level of their feckless tinkering with our economy? Why do I feel like our government is "day-trading our economy" as a friend so succinctly put it? I wish I had the answers to these questions, but I don't. What I do know is that our economy needs a dose of common sense and capitalistic non-intervention to help us help ourselves. Here are a few ideas that might help us get the rest of the world to become buyers of America:
1. Reduce corporate income taxes: Our corporate income taxes are among the highest in the world. Return the incentive for profit and you have done much to bring the world's capital back to the USA.
2. Repeal Sarbannes-Oxley: I thought this post-Enron legislation was supposed to protect us from this kind of mismanagement. Let's get rid of this useless millstone around corporate America's neck.
3. Suspend Mark-to-Market regulations: Mark-to-Market is an accounting methodology that is meant to improve the accuracy of the measurement of assets. In a market that is correcting this can have an exacerbating effect on downward moves. Suspending this temporarily will halt many forced liquidations that are creating sell pressure on our markets.
4. Keep Wall Street at a 12-1 leverage ratio: This means that Wall Street firms should be limited to a market presence of no more than 12 times what their actual asset value is. 30 or 40-1 as has been OKed by the SEC for the big houses is dangerous. At 40-1 when a position is down 2.5% I am out of money. That is asking for a crisis.
5. Put Barney Frank, Chris Dodd, Franklin Raines, and Jim Johnson in handcuffs. They are criminals.
6. Eliminate or Sharply Reduce the Capital Gains Tax: A ZERO PERCENT capital gains tax will bring a flood of money into our markets. Let's showcase American ingenuity and productivity. Let's encourage the world to invest in America.
7. Let the Free Market Reign: If we follow these steps we won't have a crisis.
What we need is for the government of our great nation to get out of the way and unleash the power of American creativity and brilliance. Perhaps one day our politicians will realize that our solutions aren't in Washington, but at the dinner table at home. Our way out of this crisis lies in the men and women that start businesses and create products, the inventors and the dreamers. Washington, please don't kill our dreams.
Add retroactively outlawing Credit Default Swaps to that list, which would immediately nullify the trillions of dollars of debt these banks owe to speculators.
So if the gubimint buys them, they can pull a very volatile instrument out of the economy, and sit on it through some market fluctuations.
Of course, if they did what the Forbes article suggests, the private sector could handle this on its own.
no, the free market isn’t going to work because it has been sabotaged like a virus by freddie/fannie. So just cutting taxes won’t help. We should still cut taxes of course...
Agreed. It’s tomfoolery to throw good money after bad. I didn’t hold a gun to their heads to sign on the dotted line so it’s not my fault and as such I have no obligation to bail them out.
You don’t know how CDS contracts work. Stop talking nonsense.
How about, cut $800 Billion in government spending, and then give the $800 Billion that was freed up back to the TAXPAYERS, that is, those who actually paid taxes, to pump back into the economy for things such as loan payments.
Just a guess that this might help?
I don’t know. I’m just a dumb truck driver.
Letting the free market reign right now means an immediate drop in the stock market of a minimum 20% with everyone freaking out, running to the banks, withdrawing the 401ks et al. Banks are already hoarding money because they are scared to death. Massive bank failures above the level that FDIC can handle. No money to be had from any source for business, who then go out of business leading to massive unemployment. It isn’t hyperbole.
Besides, it technically isn’t a buyout because the US Govt is BUYING mortgages for 10 cents on the dollar, they will get paid on at least some of them. Over time it is actually possibly they will make money on the deal.
The alternative is the collapse of the financial system. There is already a bank run going on in Hong Kong due to a rumor. We were THIS CLOSE last week to 1929 until Paulson announced this plan.
If some form of this doesn’t pass, as Jim Cramer just said on Mad Money, say hello to the stone age, bend over and kiss it all goodbye.
I don’t think people realize this isn’t the “oh we can stall and come up with a plan to save a disaster later”, it is THE DISASTER that no one wanted to get passionate about for 15 years. It started in 1993 (or you could go back to Carter) and here we are.
There are no good choices here. Watch an episode of House...all those decisions they make to almost kill the patient to save him? Welcome to it.
Are you saying that giving one guy hundreds of billions of tax dollars along with immunity from any oversight is a bad idea? Crazy talk.
I have a modest proposal.
Instead of being part of social security, I would like to opt out of that system and become an equity holder in the "bad credit buy out"
I don't want more "toxic" debt than the entire basket.
I want the grab to be privatized in a 8 year program, selling 10% a year of the full mix to roth ira ability
If my investment falls, I want to be able to match it back out to 100% + inflation and still keep it roth as a roll over from 401k or ira.
Simple Sweet Easy
And I’ll add a lot of those things mentioned need to be done too. Tax cuts, massive spending cuts, mark to market changes etc etc etc.
This has to be an opportunity to change a lot of flaws, but we all waited until the day of death to do it. There isn’t time to eat right and make yourself better.
Ben Stein proffered an interesting comment on a Los Angeles radio station after President Bush’s address this evening. He asked ‘why must we bail out (give) the $700 billion? Why doesn’t the federal government instead LOAN the money?’
But if you do that there will not be a bailout a couple of years down the road. LOL
How would changing the laws to require the speculators to actually hold the asset in order for the contract to be valid not work?
Ding!
Chances are slim to none. The cost to taxpayers in the S&L bailout was $85 billion. That cost will pale in comparison to what the final bill will be on this government intervention.
>>>>>The alternative is the collapse of the financial system.
BULLoney! This is a government boondoggle that will only grow in scope and size and as I said, the taxpayers will foot the bill for rescuing investment banks from bad business decisions.
No bailout!
TRUE!!!!!!
The problem isn't that the banks owe speculators for CDS's, but rather that speculators sold lots of CDS's to banks and now owe the banks huge sums of money that they're never going to pay.
Suppose Nocturnal Airways Insurance sells a hundred flood insurance policies for $100,000 each in a certain area, at a cost of $1,000/year; the company has $1,000,000 in assets. Everything will be great until there's a flood. Once the flood hits, home owners will find themselves $90,000 short. Would the solution to the problem be to retroactively void the flood insurance?
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