U.s. Banking Crisis: Capitalism "gone Wild"?

[Naam]

But that said I have never heard anyone say that the 700 billion would solve all the problems. That 700B is in addition to the 85 to AIG and the billions they have dunped into Fannie and Freddie.And even if it does solve the problem it should not be paid for by the taxpayer when the Wall street firms are ripping off everyone big time. And as you mentioned the people looking for a free ride in the housing market. If it has to be a loan to bail them out that is one thing but buying their bad debt and leaving them with the good mortgages does not make sense.

I'm not near smart enough to know the solution to the problem, I'm not even sure I understand the problem. But I do recognise when everyone is being ripped off big time. The politicians aren't looking after the people so who is going too?

in principle i agree with you (couldn't you select a more simple name? ) but the jury is still out deliberating whether it makes sense or not. a potential breakdown of the banking system, not only in the U.S. but globally, is in the cards if all of us decide suddenly to withdraw our money because we don't trust our banks anymore. a lot of people are not aware that NO BANK on this planet is able to satisfy even a fraction of its customers if all of them want their deposited money back.

in my [not so] humble view a mere loan would not restore the badly and soon needed necessary confidence in the system.

[lannarebirth]

So Wall Street, with its multi-millionaire brokers and investors, will get rescued from bankruptcy because they are too rich to fail, while Ma and Pa Sixpack's home is foreclosed. Ma and Pa can live under the bridge and be ThaiVisa trolls.

PB, let me act as advocatus diaboli and present the other side of the coin with fiction and facts.

fiction (but highly likely):

Ma and Pa Sixpack had most probably already a home which they could afford. then they decided to buy a bigger one or refinance the old one to withdraw the surplus because Pa wanted to replace his big ol' truck with a shiny new Cadillac, Ma the latest model of plasma big screen TV (amongst other things they bought) and then they spent two weeks holidaying in Cancun. now they don't have a home because they could not afford what they bought.

facts:

the lion part of the money did not flow into the pockets of greedy bankers but into the pockets of those who sold their home to suckers because it appreciated 100% in a couple of years!

real money (besides the usual fancy commissions connected to mortgages) flowed into the bankers' pockets only after they repackaged shitty mortgages, sold them to each other and of course to investors who were tricked by AAA ratings of the meanwhile infamous triplets Poor Standards, Moody Blues and Bitch&Co!

You're not wrong Naam. Most likely went for the Cadiiac pickup (yeah, they make one).

You know people talk about this as socialism, which I have to disagree with(the label, not the economic system). What I see looks like sociopathism. You have a bunch of fiduciary terrorists (not the suicidal kind) extorting the poulace amid promises that they'll take the whole thing down if they have to. yeah, we'll pay up, but I just wish people would remember how these people made them feel today, next time they vote.

Edited September 26, 2008 by lannarebirth

[BEENTHEREDONETHAT]

So Wall Street, with its multi-millionaire brokers and investors, will get rescued from bankruptcy because they are too rich to fail, while Ma and Pa Sixpack's home is foreclosed. Ma and Pa can live under the bridge and be ThaiVisa trolls.

PB, let me act as advocatus diaboli and present the other side of the coin with fiction and facts.

fiction (but highly likely):

Ma and Pa Sixpack had most probably already a home which they could afford. then they decided to buy a bigger one or refinance the old one to withdraw the surplus because Pa wanted to replace his big ol' truck with a shiny new Cadillac, Ma the latest model of plasma big screen TV (amongst other things they bought) and then they spent two weeks holidaying in Cancun. now they don't have a home because they could not afford what they bought.

facts:

the lion part of the money did not flow into the pockets of greedy bankers but into the pockets of those who sold their home to suckers because it appreciated 100% in a couple of years!

real money (besides the usual fancy commissions connected to mortgages) flowed into the bankers' pockets only after they repackaged shitty mortgages, sold them to each other and of course to investors who were tricked by AAA ratings of the meanwhile infamous triplets Poor Standards, Moody Blues and Bitch&Co!

But what about the ones that have lived in the same house for 15 or 20 years and have been putting $ into there 401K so they could retire with a reasonable lifestyle. Now the house value has dropped and the 401K is in the mud. They did nothing wrong and they get shafted right along with everyone else. Now they have to put off retirement for a few years or skrimp and save rather than living a comfortable lifestyle. Those are the people I really feel for and there are a hel_l of a lot of them out there.

[Naam]

I also don't give a rip about the banks, or for greedy Wall Streeters either for that matter. And I hate and oppose any form of government bailout for them. But I do care very much about Main Street-ers, the general populace (both in and out of the states). If the problem could be contained to the banks I'd say in a heartbeat, like you, let them just go belly up - $crew 'em. But the tentacles of this problem are everywhere, worldwide. IMO almost everybody would suffer as a result of a devastated overall economy, even those of us having no financial portfolios. For that reason I see no alternative but to hold my nose and hope for some sort of a reasonable plan, and quickly.

BINGO!

[LaoPo]

facts:

the lion part of the money did not flow into the pockets of greedy bankers but into the pockets of those who sold their home to suckers because it appreciated 100% in a couple of years!

real money (besides the usual fancy commissions connected to mortgages) flowed into the bankers' pockets only after they repackaged shitty mortgages, sold them to each other and of course to investors who were tricked by AAA ratings of the meanwhile infamous triplets Poor Standards, Moody Blues and Bitch&Co!

Well said and very clear.

I recall -serious- questions raised about the triple AAA ratings by the ones you mentioned...but NOBODY took it serious and thus Banks, ALL over the world, were indeed tricked and fooled (better: scammed) by their bankers/insurers/institutions' colleagues, back on Wall Street, who they trusted for many many years.

The bankers who bought those products however are ALSO to be blamed as they should have investigated more and better WHAT they bought but GREED was the ultimate word in their braincells.......HOW HIGH will my Xmas check be....?....enough for a Ferrari for me or a Range Rover for my baby; maybe BOTH !?

LaoPo

[Naam]

But what about the ones that have lived in the same house for 15 or 20 years and have been putting $ into there 401K so they could retire with a reasonable lifestyle. Now the house value has dropped and the 401K is in the mud. They did nothing wrong and they get shafted right along with everyone else. Now they have to put off retirement for a few years or skrimp and save rather than living a comfortable lifestyle. Those are the people I really feel for and there are a hel_l of a lot of them out there.

property prices go up and down. nobody can rely on fake promises that property always goes up. if somebody considers his home as nest egg for retirement, he/she takes a big risk and nobody else should be blamed. something similar applies to 401k tax deferred savings which is in most american cases in corporate equity because of the wide spread gospel "in the long run equities can only go up!"

i'm sorry to say that i do not pity those who must have realized that for the last decade (and longer) widespread equity (DOW, S&P, Nasdaq, and you name them) has not even earned a yield that compensates for the inflation rate but kept on adding to their 401k buying immobile (because too big) unspecified funds because the Jones' next door did the same.

[BEENTHEREDONETHAT]

But what about the ones that have lived in the same house for 15 or 20 years and have been putting $ into there 401K so they could retire with a reasonable lifestyle. Now the house value has dropped and the 401K is in the mud. They did nothing wrong and they get shafted right along with everyone else. Now they have to put off retirement for a few years or skrimp and save rather than living a comfortable lifestyle. Those are the people I really feel for and there are a hel_l of a lot of them out there.

property prices go up and down. nobody can rely on fake promises that property always goes up. if somebody considers his home as nest egg for retirement, he/she takes a big risk and nobody else should be blamed. something similar applies to 401k tax deferred savings which is in most american cases in corporate equity because of the wide spread gospel "in the long run equities can only go up!"

i'm sorry to say that i do not pity those who must have realized that for the last decade (and longer) widespread equity (DOW, S&P, Nasdaq, and you name them) has not even earned a yield that compensates for the inflation rate but kept on adding to their 401k buying immobile (because too big) unspecified funds because the Jones' next door did the same.

Well in the past most people in the US used the sale of their house to fund a large part of their retirement. So when you see this happen time and again it is reasonable to assume it will keep happening. Even now I think if you hold a house for 15 years or so it will appreciate enough to make it worth while. When you consider the money saved on rent it is still a reasonable investment. That is assuming you pay a fair price for it.

401K is probably better than putting it in a savings account. A large percentage of the people do not have a clue on how to handle there finances and take most any advice offered. Anymore I'm to lazy to invest in the stock market or anything that takes much time keeping up with. But I have been retired for almost 25 years and have considerably more $ now than I did when I retired. One of the keys to that which I'm sure you are well aware is pay minimal taxes, 0 is a nice number. Never buy anything that you have to pay interest on and save at least 10% of your earnings each year. Living in a place like Thailand helps also. Sorry waundered off track there a bit.

Who you feel sorry for is a personal choice and like picking a favorite color who's to say you are wrong.

Sorry about the name but i went through numerious tries before it finally accepted one. My name is Norm but that was already used but you can use it if you prefer that to BTDT or BT .

.

[brahmburgers]

Lot of good posts on this topic, though I haven't read but the most recent dozen or so.

greed is a basic part of human nature. Ma and pa Kettle made decisions (conscious or otherwise) to get an instant heap of money by going along with the slick sales pitches of silver tongued loaners. That's at the base level. Similar things appear to have happened at all the money manipulating levels going up and up to the $44 million/year hot shots like Treasury Secretary Paulson - who is now campaigning to put himself in the drivers seat - as sole tsar who decides who sinks and who swims. BTW, even if Paulson gets to control the purse strings to 700 billion $$'s - there'll be another US Sec. of the Treasury in a few months who will take over the position.

It's like the end of 'The Wizard of Oz' where the great gift-giver Oz is revealed to be a little old man behind a curtain, shouting in the microphone; , "pay not attention to the man behind the curtain!" Thank's Toto for pulling back the curtain and revealing the hype of the situation. What we need are more Totos who can show us what's really going on.

Personally, I have had zero debt for 20 years, and plan to keep it that way - even if it means living funky. It just feels better to not owe money, especially with accrued % added on. Good thing I'm not married - and don't have a wifey who would continually berate me for driving a rough and tumble vehicle and not spending lavishly like the hi-so crowd on TV - I could never match up to her expectations.

[Naam]

Well in the past most people in the US used the sale of their house to fund a large part of their retirement. So when you see this happen time and again it is reasonable to assume it will keep happening. Even now I think if you hold a house for 15 years or so it will appreciate enough to make it worth while. When you consider the money saved on rent it is still a reasonable investment. That is assuming you pay a fair price for it.

here we go BT. "reasonable to assume" might have applied once and the 15 years time period can be arbitrarily selected depending on how one wants to argue the case. only one thing is clear and that is "nothing is clear or can be assumed in finance and economy based on past times because times have changed".

i give you an example (my personal one). about four years ago i decided to slowly reduce my exposure to markets, not to reinvest proceeds but accumulating cash and reduce risk. a year later (due to personal reasons) i accelerated that motion, meaning not only to use proceeds but slowly selling assets and adding to cash. last year the "subtle slime" crisis came up. my acceleration to cash mutated to a race for cash because at that time i "reasonably assumed" that cash is cash and nothing is safer than cash besides the paid for roof over your head.

now guess what happened end of 2007? especially beginning of january 2008 (when a rogue trader in Société Générale caused in a few days losses of 5 billion which could also have been 50 or more billion). Nick Leeson and Barings Bank jumped into my mind and the fact that your cash is gone when a bank goes belly-up. if somebody had told me 2 years ago that i would worry because i had too much cash i would have called him crazy². but that's exactly what happened and i had to struggle in order to divert and secure my cash.

[PeaceBlondie]

I am sorry I do not have advanced degrees in finance and economics (I leave that to my son). I have always left those guys alone to do what financial wizards do. If they did really complicated trades, it was none of my business. But now that their house of cards has fallen, I am not going to vote for them to be the saviors of a world they have ruined. They deserve jail or execution, or they can tend my garden. Now I will paste this into the email I am sending to my 70-year old sister who cannot sell her home in Orlando.

The world's richest man often says that if it is too difficult to explain and understand, he will invest his money elsewhere.

[BEENTHEREDONETHAT]

Well in the past most people in the US used the sale of their house to fund a large part of their retirement. So when you see this happen time and again it is reasonable to assume it will keep happening. Even now I think if you hold a house for 15 years or so it will appreciate enough to make it worth while. When you consider the money saved on rent it is still a reasonable investment. That is assuming you pay a fair price for it.

here we go BT. "reasonable to assume" might have applied once and the 15 years time period can be arbitrarily selected depending on how one wants to argue the case. only one thing is clear and that is "nothing is clear or can be assumed in finance and economy based on past times because times have changed".

i give you an example (my personal one). about four years ago i decided to slowly reduce my exposure to markets, not to reinvest proceeds but accumulating cash and reduce risk. a year later (due to personal reasons) i accelerated that motion, meaning not only to use proceeds but slowly selling assets and adding to cash. last year the "subtle slime" crisis came up. my acceleration to cash mutated to a race for cash because at that time i "reasonably assumed" that cash is cash and nothing is safer than cash besides the paid for roof over your head.

now guess what happened end of 2007? especially beginning of january 2008 (when a rogue trader in Société Générale caused in a few days losses of 5 billion which could also have been 50 or more billion). Nick Leeson and Barings Bank jumped into my mind and the fact that your cash is gone when a bank goes belly-up. if somebody had told me 2 years ago that i would worry because i had too much cash i would have called him crazy². but that's exactly what happened and i had to struggle in order to divert and secure my cash.

No one will argue that things have changed and what was once prudent and a reasonable approach to handling your money no longer works. I'm also very heavy in cash and do worry some about it. But I have it in several banks in several countries so I am hopefull that they woun't all go belly up. Interest rates are dropping so it is not as good as it was for a while. Currency exchange makes it a bit more exciting as it is hard to predict over any length of time. But then it dosen't matter to much until you want to move it. Did lock a fair bit into 8.7% for 5 years so as long as New Zealand dosen't sink it should be OK. Although they are in a recession now. Do you suppose the "don't invest more than you can afford to lose" applies there also?

To tell you the truth I don't have a clue where to put it other than term deposits, bonds and real estate. That is anywhere that dosen't take constant monitoring. Not to keen on gold (bought it back in the early 80's). Real estates not to good right now so I'll just hope my banks don't go under. It's to lumpy to put under the mattress. I confess my banks don't have the $ insured like the US banks although LOS does claim to insure it. The 3.25% interest is not to exciting though. Thats before the 15% tax on the earnings. That is just marginly better than under the mattress.

Naam if you come up with a good no brainer place to put your money let me know.

[pkrv]

Well in the past most people in the US used the sale of their house to fund a large part of their retirement. So when you see this happen time and again it is reasonable to assume it will keep happening. Even now I think if you hold a house for 15 years or so it will appreciate enough to make it worth while. When you consider the money saved on rent it is still a reasonable investment. That is assuming you pay a fair price for it.

here we go BT. "reasonable to assume" might have applied once and the 15 years time period can be arbitrarily selected depending on how one wants to argue the case. only one thing is clear and that is "nothing is clear or can be assumed in finance and economy based on past times because times have changed".

i give you an example (my personal one). about four years ago i decided to slowly reduce my exposure to markets, not to reinvest proceeds but accumulating cash and reduce risk. a year later (due to personal reasons) i accelerated that motion, meaning not only to use proceeds but slowly selling assets and adding to cash. last year the "subtle slime" crisis came up. my acceleration to cash mutated to a race for cash because at that time i "reasonably assumed" that cash is cash and nothing is safer than cash besides the paid for roof over your head.

now guess what happened end of 2007? especially beginning of january 2008 (when a rogue trader in Société Générale caused in a few days losses of 5 billion which could also have been 50 or more billion). Nick Leeson and Barings Bank jumped into my mind and the fact that your cash is gone when a bank goes belly-up. if somebody had told me 2 years ago that i would worry because i had too much cash i would have called him crazy². but that's exactly what happened and i had to struggle in order to divert and secure my cash.

No one will argue that things have changed and what was once prudent and a reasonable approach to handling your money no longer works. I'm also very heavy in cash and do worry some about it. But I have it in several banks in several countries so I am hopefull that they woun't all go belly up. Interest rates are dropping so it is not as good as it was for a while. Currency exchange makes it a bit more exciting as it is hard to predict over any length of time. But then it dosen't matter to much until you want to move it. Did lock a fair bit into 8.7% for 5 years so as long as New Zealand dosen't sink it should be OK. Although they are in a recession now. Do you suppose the "don't invest more than you can afford to lose" applies there also?

To tell you the truth I don't have a clue where to put it other than term deposits, bonds and real estate. That is anywhere that dosen't take constant monitoring. Not to keen on gold (bought it back in the early 80's). Real estates not to good right now so I'll just hope my banks don't go under. It's to lumpy to put under the mattress. I confess my banks don't have the $ insured like the US banks although LOS does claim to insure it. The 3.25% interest is not to exciting though. Thats before the 15% tax on the earnings. That is just marginly better than under the mattress.

Naam if you come up with a good no brainer place to put your money let me know.

He is in the same place - PKRV

[IAmMarchHare]

in the case of U.S. mortgages that underlying value is a fraction what it should have been. in this context it is worthwhile to mention that the ability of a mortgage-taker to pay back the loan is in fact a part of the underlying value. in many cases that ability does not exist or has never existed. but it's not only the greedy bankers or mortgage brokers who are responsible for the desaster. a part of the guilt falls on the ignorant or even greedy homeowner thinking "why shouldn't i move to a bigger and much more expensive house as it's only 1,299 dollars and 68 cents a month" and who did not ask "what will the monthly payment be when the fixed period of the ARM has passed?" sure, some little old ladies were tricked. but don't tell me all were tricked!

Very reasoned post, and I agree. It was "house flipping" that started this mess from the consumer side, and it was encouraged by everyone, esp. the banks you see going under. Let's face it, this crisis is like a tree w/ root rot, or to quote myself ( ) a sky scraper built on quicksand. It was greed that took over from the government, the banks, the real estate industry, the house flippers, the speculators ...

What I want to know is: Does this crisis really mandate that one person (Paulson) be given vast power to manage it all with tax payer money? Are the CEOs of these greed driven financial institutions going to have to pay up for their part?

I got a humorous email the other day, and I've debated about sharing it. Remember, this is tongue-in-cheek (not to be taken seriously), but it did make me think:

PLEASE VOTE FOR ME AS PRESIDENT……

Good afternoon my fellow Americans,

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 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 thei r 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. And 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 Hoover plan only really costs $59.5 Billion because $255 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

Kindest personal regards,

Thomas J. Hoover -- 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!!

[lannarebirth]

in the case of U.S. mortgages that underlying value is a fraction what it should have been. in this context it is worthwhile to mention that the ability of a mortgage-taker to pay back the loan is in fact a part of the underlying value. in many cases that ability does not exist or has never existed. but it's not only the greedy bankers or mortgage brokers who are responsible for the desaster. a part of the guilt falls on the ignorant or even greedy homeowner thinking "why shouldn't i move to a bigger and much more expensive house as it's only 1,299 dollars and 68 cents a month" and who did not ask "what will the monthly payment be when the fixed period of the ARM has passed?" sure, some little old ladies were tricked. but don't tell me all were tricked!

Very reasoned post, and I agree. It was "house flipping" that started this mess from the consumer side, and it was encouraged by everyone, esp. the banks you see going under. Let's face it, this crisis is like a tree w/ root rot, or to quote myself ( ) a sky scraper built on quicksand. It was greed that took over from the government, the banks, the real estate industry, the house flippers, the speculators ...

What I want to know is: Does this crisis really mandate that one person (Paulson) be given vast power to manage it all with tax payer money? Are the CEOs of these greed driven financial institutions going to have to pay up for their part?

I got a humorous email the other day, and I've debated about sharing it. Remember, this is tongue-in-cheek (not to be taken seriously), but it did make me think:

PLEASE VOTE FOR ME AS PRESIDENT……

Good afternoon my fellow Americans,

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 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 thei r 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

Not a math major, I see.

Edited September 26, 2008 by lannarebirth

[PCA]

in the case of U.S. mortgages that underlying value is a fraction what it should have been. in this context it is worthwhile to mention that the ability of a mortgage-taker to pay back the loan is in fact a part of the underlying value. in many cases that ability does not exist or has never existed. but it's not only the greedy bankers or mortgage brokers who are responsible for the desaster. a part of the guilt falls on the ignorant or even greedy homeowner thinking "why shouldn't i move to a bigger and much more expensive house as it's only 1,299 dollars and 68 cents a month" and who did not ask "what will the monthly payment be when the fixed period of the ARM has passed?" sure, some little old ladies were tricked. but don't tell me all were tricked!

Very reasoned post, and I agree. It was "house flipping" that started this mess from the consumer side, and it was encouraged by everyone, esp. the banks you see going under. Let's face it, this crisis is like a tree w/ root rot, or to quote myself ( ) a sky scraper built on quicksand. It was greed that took over from the government, the banks, the real estate industry, the house flippers, the speculators ...

What I want to know is: Does this crisis really mandate that one person (Paulson) be given vast power to manage it all with tax payer money? Are the CEOs of these greed driven financial institutions going to have to pay up for their part?

I got a humorous email the other day, and I've debated about sharing it. Remember, this is tongue-in-cheek (not to be taken seriously), but it did make me think:

PLEASE VOTE FOR ME AS PRESIDENT……

Good afternoon my fellow Americans,

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 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 thei r 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. And 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 Hoover plan only really costs $59.5 Billion because $255 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

Kindest personal regards,

Thomas J. Hoover -- 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!!

the way you play maths lets one assume that you look for a career switch from investment banking to politics, hehehe.

[IAmMarchHare]

Not a math major, I see.

True, the math doesn't work out, but I thought it was amusing nonetheless. In all honesty, though, the banks haven't proven themselves trustworthy, so I still don't see how giving them more money is going to change that situation.

[pkrv]

Not a math major, I see.

True, the math doesn't work out, but I thought it was amusing nonetheless. In all honesty, though, the banks haven't proven themselves trustworthy, so I still don't see how giving them more money is going to change that situation.

candid - BTW do you want to live a great lifestyle before you die? Nudge Nudge Wink Wink, know what I mean - I doubt even naaam can do better than that

[lifeisrandom]

I'm an American and politically Independent. I say let all the banks fail. Bring the PAIN. It's a good thing in the long run. I got off credit 10 years ago. It was painful for the first 2 years, but has been LOVELY ever since. I will not be affected at all (heheheh - saw it coming); and if it takes something like this to get everyone to kick the credit habit, then that's a GOOD thing.

can you explain why you wont be affected.

[IAmMarchHare]

Just got an email stating that messages to Congress are 300 to 1 against the proposed bailout plan. Doesn't look good for the plan as it stands today.

It looks like some are proposing to remove the mark-to-market accounting rule and replace it with a discounted cash flow accounting rule.

Any finance experts want to explain that one, as I have no idea what that means?

[Naam]

Naam if you come up with a good no brainer place to put your money let me know.

BT, i came up with a no brainer that solved my problem but might not be applicable in your case. the lion share of my cash is presently parked in bonds, daily maturity, huge liquidity (trades can be carried out in seconds), interest daily credited, tiniest bid/ask spreads when buying or selling, bonds held by the "Bundesschuldenverwaltung" which is a subdivision of the German Central Bank. on top of that i have pressured my bankers to accept that i am only willing to pay a flat fee of CHF 50 for each transaction instead of the usual 0.20% as i am doing nearly all the work.

[Naam]

I'm an American and politically Independent. I say let all the banks fail. Bring the PAIN. It's a good thing in the long run. I got off credit 10 years ago. It was painful for the first 2 years, but has been LOVELY ever since. I will not be affected at all (heheheh - saw it coming); and if it takes something like this to get everyone to kick the credit habit, then that's a GOOD thing.

can you explain why you wont be affected.

i got a hunch why he won't be affected, but i won't tell

[maccaroni man]

I'm an American and politically Independent. I say let all the banks fail. Bring the PAIN. It's a good thing in the long run. I got off credit 10 years ago. It was painful for the first 2 years, but has been LOVELY ever since. I will not be affected at all (heheheh - saw it coming); and if it takes something like this to get everyone to kick the credit habit, then that's a GOOD thing.

can you explain why you wont be affected.

I'm jumping into this frey late so if what I have to say has already been said (sorry). IMHO much of this started in the Clinton years when he wanted America to model itself after our more social european neighbors which in turn gave a green light to an attitude of entitlement. America was not built to be a socilist country and trying to change this is like changing horses in the middle of the streem The Financial melt down that is ahead will be a hardship for many but it will serve as a rapid market correction; over inflated prices will fall, credit will go to those who have the ability to repay, with a track record demonstarting a willingness to repay and the cycle begins again. I only hope the liberals learn from this and that they remember a golden rule of business, "you got to pay if you want to play"

[flying]

I'm an American and politically Independent. I say let all the banks fail. Bring the PAIN. It's a good thing in the long run. I got off credit 10 years ago. It was painful for the first 2 years, but has been LOVELY ever since. I will not be affected at all (heheheh - saw it coming); and if it takes something like this to get everyone to kick the credit habit, then that's a GOOD thing.

can you explain why you wont be affected.

i got a hunch why he won't be affected, but i won't tell

I think there is only one way not to be affected by a system & that is to not take part in it.

[VegasVic]

So Wall Street, with its multi-millionaire brokers and investors, will get rescued from bankruptcy because they are too rich to fail, while Ma and Pa Sixpack's home is foreclosed. Ma and Pa can live under the bridge and be ThaiVisa trolls.

PB, let me act as advocatus diaboli and present the other side of the coin with fiction and facts.

fiction (but highly likely):

Ma and Pa Sixpack had most probably already a home which they could afford. then they decided to buy a bigger one or refinance the old one to withdraw the surplus because Pa wanted to replace his big ol' truck with a shiny new Cadillac, Ma the latest model of plasma big screen TV (amongst other things they bought) and then they spent two weeks holidaying in Cancun. now they don't have a home because they could not afford what they bought.

facts:

the lion part of the money did not flow into the pockets of greedy bankers but into the pockets of those who sold their home to suckers because it appreciated 100% in a couple of years!

real money (besides the usual fancy commissions connected to mortgages) flowed into the bankers' pockets only after they repackaged shitty mortgages, sold them to each other and of course to investors who were tricked by AAA ratings of the meanwhile infamous triplets Poor Standards, Moody Blues and Bitch&Co!

But what about the ones that have lived in the same house for 15 or 20 years and have been putting $ into there 401K so they could retire with a reasonable lifestyle. Now the house value has dropped and the 401K is in the mud. They did nothing wrong and they get shafted right along with everyone else. Now they have to put off retirement for a few years or skrimp and save rather than living a comfortable lifestyle. Those are the people I really feel for and there are a hel_l of a lot of them out there.

BTDT, I have to say that you have really outdone yourself showing your ignorance on this post! Lets take a look at that couple that have been paying on the same house for 20 years and have been contributing (with employer matching funds) to their 401K for the past 20 years. They bought their house for $100,000 (lets say they put nothing down just to try and help your argument) back in 1988 , by 1998 their home was worth $172,000 and in late 2003 (just before the realestate run up) their home was worth $210,000. In early 2006 at the height of the relestate runup their house had a market value of $385,000. Today that house has dropped nearly 35% off its high and is currently valued at $255,000. These hard working folks have dutifully made their payments for 20 years and have a balance of approximately $45,000 remaining, lets see now that gives them $210,000 in equity currently. In the spirit of brevity and further embarrasment to you, I will not get into the couples 20 year consevative retirement investments in their 401K, because after 20years of both their contributions and employer matching contributions and the reinvesting of dividends and the compounding of interest not to mention capital gains the ammount they have after the 20% drop from recent U.S. market highs is well in excess of the equity they have in their home. This poor American couple consevatively has a net worth of over $500,000! I can verify the house price in 1988, 1998, 2006 and currently ,the 2003 number is a very close estimate of value at that time. The reason that I can verify the house price is because it was my home in Las Vegas Nevada and the 1998 price was the price that I sold it for then. The $385,000 price is the price that a former neighbor of mine sold his identical house ( except we had a much larger lot and nicer yard) for in January 2006, and the $255,000 current value is actually a bank repo of the same model of home about a block over that sold at auction last month. The $255,000 number was a bank repo and if I were still in my home I am certain I could hacve gotten $275,000-$280,000 in the current market. All of this also assumes that the only investments this couple had was their 401K and their home! QED

[BEENTHEREDONETHAT]

So Wall Street, with its multi-millionaire brokers and investors, will get rescued from bankruptcy because they are too rich to fail, while Ma and Pa Sixpack's home is foreclosed. Ma and Pa can live under the bridge and be ThaiVisa trolls.

PB, let me act as advocatus diaboli and present the other side of the coin with fiction and facts.

fiction (but highly likely):

Ma and Pa Sixpack had most probably already a home which they could afford. then they decided to buy a bigger one or refinance the old one to withdraw the surplus because Pa wanted to replace his big ol' truck with a shiny new Cadillac, Ma the latest model of plasma big screen TV (amongst other things they bought) and then they spent two weeks holidaying in Cancun. now they don't have a home because they could not afford what they bought.

facts:

the lion part of the money did not flow into the pockets of greedy bankers but into the pockets of those who sold their home to suckers because it appreciated 100% in a couple of years!

real money (besides the usual fancy commissions connected to mortgages) flowed into the bankers' pockets only after they repackaged shitty mortgages, sold them to each other and of course to investors who were tricked by AAA ratings of the meanwhile infamous triplets Poor Standards, Moody Blues and Bitch&Co!

But what about the ones that have lived in the same house for 15 or 20 years and have been putting $ into there 401K so they could retire with a reasonable lifestyle. Now the house value has dropped and the 401K is in the mud. They did nothing wrong and they get shafted right along with everyone else. Now they have to put off retirement for a few years or skrimp and save rather than living a comfortable lifestyle. Those are the people I really feel for and there are a hel_l of a lot of them out there.

BTDT, I have to say that you have really outdone yourself showing your ignorance on this post! Lets take a look at that couple that have been paying on the same house for 20 years and have been contributing (with employer matching funds) to their 401K for the past 20 years. They bought their house for $100,000 (lets say they put nothing down just to try and help your argument) back in 1988 , by 1998 their home was worth $172,000 and in late 2003 (just before the realestate run up) their home was worth $210,000. In early 2006 at the height of the relestate runup their house had a market value of $385,000. Today that house has dropped nearly 35% off its high and is currently valued at $255,000. These hard working folks have dutifully made their payments for 20 years and have a balance of approximately $45,000 remaining, lets see now that gives them $210,000 in equity currently. In the spirit of brevity and further embarrasment to you, I will not get into the couples 20 year consevative retirement investments in their 401K, because after 20years of both their contributions and employer matching contributions and the reinvesting of dividends and the compounding of interest not to mention capital gains the ammount they have after the 20% drop from recent U.S. market highs is well in excess of the equity they have in their home. This poor American couple consevatively has a net worth of over $500,000! I can verify the house price in 1988, 1998, 2006 and currently ,the 2003 number is a very close estimate of value at that time. The reason that I can verify the house price is because it was my home in Las Vegas Nevada and the 1998 price was the price that I sold it for then. The $385,000 price is the price that a former neighbor of mine sold his identical house ( except we had a much larger lot and nicer yard) for in January 2006, and the $255,000 current value is actually a bank repo of the same model of home about a block over that sold at auction last month. The $255,000 number was a bank repo and if I were still in my home I am certain I could hacve gotten $275,000-$280,000 in the current market. All of this also assumes that the only investments this couple had was their 401K and their home! QED

Not sure I understand your point here vic. Are you saying $500,000 is adequate to retire on? After you replace that house you sold for something smaller you still don't have much $ left over. But even assuming you don't have to buy a house, $500,000 is IMHO not near enough to retire on. But then your living requirements might be considerable different than mine. I prefer to spend my retirement years in reasonable comfort and not have to worry about my electric bill etc. But then some people might be perfectly happy on that amount. To each his own. I have to admit I'm not familiar with the cost of living in Arizona.

[Naam]

BTDT, I have to say that you have really outdone yourself showing your ignorance on this post!

i resent that you attack a good friend of mine Vic not all of us have the required background knowledge required to make correct judgments. BT is an honest soul, speaks (as i do) from his heart and needs perhaps some guidance and explanation.

[Naam]

I'm an American and politically Independent. I say let all the banks fail. Bring the PAIN. It's a good thing in the long run. I got off credit 10 years ago. It was painful for the first 2 years, but has been LOVELY ever since. I will not be affected at all (heheheh - saw it coming); and if it takes something like this to get everyone to kick the credit habit, then that's a GOOD thing.

can you explain why you wont be affected.

i got a hunch why he won't be affected, but i won't tell

I think there is only one way not to be affected by a system & that is to not take part in it.

by not owning anything which enables to take part in it?

Edited September 27, 2008 by Naam

[ray23]

Sorry Gentlemen lengthy but a good read.

"Sweden's Model Approach to Financial Disaster

By Andrew Purvis / Berlin

Wednesday, Sep. 24, 2008

The Swedish National Debt Office in Stockholm.

Under the current plan being hawked by Paulson and the Bush administration, that astronomical sum would be used to buy up bad debt from ailing institutions in order to clean up their balance sheets. The criticisms of the plan are legion, but one irksome feature is that the banks that made the worst mistakes are in line to get the most help, providing little incentive for future managers to mend their ways. And all taxpayers would get for their rescue money is a mountain of toxic loans of highly dubious value.

The Swedish example offers one way to minimize such "moral hazard" and potentially recoup some of the funds taxpayers are being asked to spend to help get the credit markets rolling again. The idea, says Lundgren, is not to just give money, but "to get some ownership (in return), and eventually be able to get some revenue back." By taking a stake in its enfeebled banks, Sweden was able to minimize the taxpayers' burden in the long run.

Sweden's financial crisis in the early 1990s stemmed from a 1985 deregulation of credit markets, which set the stage for overexpansion and bubbles in the real estate and finance markets. When those bubbles burst in the early 1990s, Sweden's currency crumbled and interest rates spiked to 500% overnight. Of the country's seven biggest banks, five needed either government bailouts or big injections of money from shareholders. The value of the country's real estate market plunged 50-60% in 18 months. "The whole Swedish banking system was off-balance," Lundgren recalls.

The government tried several stop-gap measures to no effect and in late 1992 opted for a complete re-booting of Sweden's financial system. Conservative Prime Minister Carl Bildt's administration sat down with the center-left opposition and came up with a bipartisan, multi-tiered approach. The government issued blanket insurance for a period of four years to creditors in all the country's 114 banks. It established an agency to oversee all banks that needed recapitalization and told them to immediately write down their losses.

Most importantly, the government stipulated that in order to become eligible for government funding, banks would have to give up something — namely equity — in return. In the case of one leading bank, the mere prospect of the government taking a stake was enough to persuade shareholders to dig deeper and raise money on their own. For the rest, the government was able, once the markets rebounded, to sell off the stakes it had acquired, making a profit that was effectively returned to taxpayers' coffers. At one point the government controlled more than 20% of the entire banking system.

The cash that Sweden poured into its banks at the time amounted to about 4% of the country's Gross Domestic Product. The comparable share of the U.S. GDP would be about $850 billion, or not much more than what Paulson has recently proposed . But in Sweden's case at least one half of that money, and possibly more, depending on the source, was recouped by subsequent equity sales.

One of the attractions of this Swedish model is that it reduces so-called "moral hazard" — effectively rewarding poor or reckless risk assessment — by forcing financial institutions that took the highest risks to pay towards their own rescue. And it allows the state to recoup the money that it expends to buy up the bad debt at the core of the problem.

Paulson's current plan exacts no such a price from the financial institutions it proposes to bail out; the idea has not been publicly discussed by either the Congress of the Bush Administration. But it ought not be considered ideologically beyond the pale, since the U.S. government did get equity stakes when it bailed out mortgage giants Fannie Mae and Freddie Mac, as it did last week for AIG, the world's largest insurance company.

Swedish experts caution that the Swedish financial system is relatively small compared to the U.S. In 1992 most leading government officials knew the bank chiefs on a first name basis. Still, the Swedish experience could hold other lessons, says Robert Bergquist, chief analyst at SEB, one of Sweden's largest banks. "The Swedish success depended on four factors," he explains. Stockholm acted quickly, in open acknowledgement of the problems, and under a broad political agreement across the party spectrum. "Running parallel with these three factors," he says, "a new economic policy — new goals for inflation and the budget — was developed after the crisis."

In Sweden's case, he adds, the crisis eventually had silver lining. "It acted as an alarm about Swedish economic policy, which was expanding too much. There was too much focus on defending the currency. The tax system encouraged indebtedness and real estate speculation through cheap loans. The crisis exposed shortcomings, and we had to change tack."

Within several years, Sweden succeeded in getting its economy back on course. Growth has been as robust as in any country in western Europe in recent years and its banks have helped finance the economic boom in the Baltics and points east. Whether its approach could work in the far larger and more complicated U.S. market isn't clear. Certainly the captains of Wall Street would bray over the mere hint of nationalization. But with hundreds of billions of dollars at stake, it might be worth, at the very least, a hard look.

With reporting by Lotta Narvehed / Stockholm

(See TIME covers about Wall Street throughout the years.)"

[LaoPo]

Sorry Gentlemen lengthy but a good read.

"Sweden's Model Approach to Financial Disaster

Swedish experts caution that the Swedish financial system is relatively small compared to the U.S.

Within several years, Sweden succeeded in getting its economy back on course. Growth has been as robust as in any country in western Europe in recent years and its banks have helped finance the economic boom in the Baltics and points east. Whether its approach could work in the far larger and more complicated U.S. market isn't clear. Certainly the captains of Wall Street would bray over the mere hint of nationalization. But with hundreds of billions of dollars at stake, it might be worth, at the very least, a hard look.

With due respect, Ray23, but Sweden can in NO WAY be compared with any other country in the world or, in this case, the USA.

Sweden is a very large country and in size even larger than California but has very few people, just 9 Million versus 36,5 Million for California (est. 2007)

Apart from that, Sweden is in not in a very good shape since they have lots and lots of problems. A major one is that they are suffering, financial wise, with the amount of non-EU 'refugees'/asylum seekers...

Although Sweden is one of the most human societies in the world the burden of the asylum seekers will break their neck if Sweden doesn't do something about it; and they're doing that now, forced to do so.....

In 2007, Sweden took more than 18,000 Iraqi asylum seekers (40,000 Iraqi's in Sweden)...(USA took just 1,600 Iraqi's in 2007....on a total of 8,000) and a total of 22,000 Iraqi's live in the UK.

One wonders who's fighting a war in Iraq....

The unemployment rate for native versus foreign born men/women in Sweden is DOUBLE for the foreign born (6% versus 13% - 2006 nrs). The financial burden for the native population is very heavy.

LaoPo

[ray23]

Don't disagree with you at all. The two parts I was looking at was he deregulation of the system. I'm not real clear on the regulation in the states. If there was a system of check and balances it failed miserably.

The salvage plan how it worked and how long it took. One of my biggest fears was I thought what America is about to do had never been done before and there was no track record to look at all.

But it has been done in a similar form didn't stop a recession. Nor do I think the current plan in America will either. There are dues to pay and we are going pay them. The question that remains is how deep and how long it will go. Most in the past seem to have lasted about 2&1/2 years, on a average. Sweden five years, I think that is more what we are looking like today. At least that is what I plan to deal with. If it's less thats gravey

The upbeat side is they did recover. They also sold the holdings and recoverd at least some of the funds.

The plan may soften the blow, but I don't believe it is goign to stop it.

Interestingly enough I saw an article today attacking the bill based on the exceutives limit on bail out pay.

Saying there are los of strongs banks out there and they will not put themsleves in that position. Well if it's a strong bank and doesn't need it fine more the power to them, those executives might even have a good bonus coming. But you want the tax payers that goes with the deal. You got other options as a bank then you don't need this, go about your business. Let the money go where it is really needed.

My biggest fear is abuse to the bill, opening a brand new candy store on the block, with free samples.

Just the manner in which this was produced brought chills up my spine. Pass it this week or the world will end. Well the week past and things are still about the same. I think the Fed and the Treasury are acting like fire departments putting out fire, instead of preventing them in the first place.

I hope calmer minds prevail and the proper thought is put into this. To me this is going to change how the world economies will work in the future, It could be bad or it could be good. One thing for sure it won't be the same.

Watching Thailand react to this on the surface it looks like a non event to them. I don't believe that for a second. I don't know when the last time you were in Udon, but these days there are 100's of repos on ring road. Five years ago there wasn't even a used car lot here.

Thailand adpoted the same thing as American's play now pay later. They will bite their bullet as well.

I don't know about other countries but my guess is that approach will go much further then just these two countries. So when I look at these thing I wonder what he world wide effect will be. The scarey part what is the plan but to borrow are way out of debt That would not work in my houehold budget an in the end it won't in this either.

The answer really is to pay off debts. But that would mean the economy would not grow. Well where did they teach that economies always grow. that got us itn trouble in the first place. Sometimes the growth stops and anyone who has operated a business knows to prepare for that. They must be teaching something very different in Yale and Harvard these days. Left out reality 101 in the course requirements.

I think the plan may help within limits if it is not abused but that is a big IF.

The one thing it will not due is solve all the problems this is just one of the fires