Do you oppose or support the $700 billion bailout of the bankers? Try $1.8 TRILLION.

9/27/2008 01:30:00 PM

(0) Comments

Got an extra $17,000 laying around to give to the banks and Wall Street.  Congress thinks you do.  If you aren't in debt yet, you will soon be thanks to them.

Proposed Treasury Department Legislation $700 billion +
Bear Stearns Financing $29  billion
Fannie Mae and Freddie Mac Nationalization $200 billion
AIG Loan and Nationalization $85 billion
Federal Housing Administration Housing Rescue Bill $300 billion
Mortgage community Grants $4 billion
JP Morgan Chase Repayments $87 billion
Loans to Banks via Fed's Term Auction Facility $200 billion+
Loans from Depression-era Exchange Stabilization Fund $50 billion
Purchases of Mortgage Securities by Fannie Mae and Freddie Mac $144 billion
Discount Window Loans to Financial Institutions UNSPECIFIED

Numbers via Reuters

Here are further details of actions, proposals and amounts:

  - Up to $700 billion to buy assets from struggling institutions.  The plan is aimed at sopping up residential and commercial mortgages from financial institutions but gives Treasury broad latitutde.

  -  Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.

  -  The Fed committed to make unspecified discount window loans to financial institutions to finance the purchase of assets from money market funds to aid redemptions.

  -  At least $10 billion in Treasury direct purchases of mortgage-backed securities in September.  In doubling the program on Friday, the Treasury said it may purchase even more in the months ahead.

  -  Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac.  The Treasury announced they would increase purchases up to the newly expanded investment portfolio limits of $850 billion each.  On July 30, 2008, the Fannie portfolio stood at $758.1 BILLION with Freddie's at $798.2 BILLION.

  -  $85 billion loan for AIG, which would give the Federal government at 79.9 percent stake and avoid a bankruptcy filing for the insurer.  AIG management will be dismissed.

  -  At least $87 billion in repayments to JPMorgan Chase for providing financing to underpin trades with the units of bankrupt investment bank Lehman Brothers.  Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.

  -  $200 billion for Fannie Mae and Freddie Mac.  The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed.  The deal puts the two housing finance firms under government control.

  -  $300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.

  -  $4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.

  -  $29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March.  The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.

  - At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.


Now I happened across the following idea, which seems interesting and leaves a few thoughts to ponder............

The Birk Economic Recovery Plan

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 301,000,00 +/- 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 and 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 all American adults 18+ have $297,500.00 in their pockets, and married couples get $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 - Boosts the new college 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 19+ 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.  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 image 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 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.

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.

Misery Index


0 Responses to "Do you oppose or support the $700 billion bailout of the bankers? Try $1.8 TRILLION."

Post a Comment