Can You Hear Us Now? (We Said NO!)

The Paulson Bailout, proposed at $700 Billion, has now grown in the Senate to $850 Billion with the addition of absolutely ridiculous “sweeteners” like free bicycles and tax breaks to wooden arrow makers!  The Senate has completely lost its way.

But before the House considers, or worse, ACCEPTS any permutation of the Paulson Bailout Plan, they must remember that you can’t make a silk purse from a sow’s ear… and no amount of lipstick will sell this stinker of a porker to the American people!

Even without the additional $150 in pork, think about this:

How much is $700 Billion?

More than the government spent COMBINED in Fiscal 2006 for:

Medicaid                                            $180.6 in Billions

Education                                           $118.6

Health                                                 $ 63.9

Transportation                                   $ 70.2

Veterans Benefits                             $ 70.0

Community Development                 $ 54.5

Food & Nutrition Assistance            $ 53.9

Justice System                                  $ 41.0

Housing Assistance                          $ 38.3

TOTAL:                                             $691.0

Source: Budget of the

United States

Government, Fiscal Year 2006

According to CNN August 14, there were 750,000 homes currently in foreclosure. In addition to hurting the homeowners, these troubled assets set the value of the lenders' capitol plummeting due to the “Mark to Market” Accounting rules.

$700 Billion divided by 750,000 homes = 933,333 PER HOME!

As ridiculous as this might be, and I'm not actually proposing it (just using it to illustrate JUST HOW bad the Paulson plan is!), why don’t we just give each troubled homeowner $100,000 toward their mortgage to keep them in their home and reduce or eliminate their balance? We can then refinance any remaining balances for 15 years at 7% fixed.

This would cost taxpayers only $75 Billion, the homeowners get to keep their homes and reduce or eliminate their house payments. The banks get instant liquidity. Balances under $100,000 are paid off and come off the lenders’ books! The lenders get to convert bad loans over $100,000 balance to smaller, better risk loans at a nice fat 7% and suddenly have VALUE again.

The only loser... the guy who bought a home he can afford, and who continues making his payments, on time.

Of course, this would be an unconscionable giveaway bailout, giving taxpayer money to people who bought houses they couldn't afford... and yet it's more measured, more reasonable and more likely to WORK than the Paulson plan... which does nothing to address the cause of the problem: the CRA, Mark to Market, and corruption at Fannie & Freddie, which MUST be dismantled or at least downsized!  And it doesn’t help the people who took loans they couldn’t afford either!  It bails out the lenders for making bad loans and taking unacceptable risks.

But… we have to do SOMETHING!!  Or do we?

We’re told that inaction will melt the economy.  But it won’t!  And WHAT does the Government do WELL anyway?  Do you trust them to fix the problem?  Most often (and in this case), Government IS the problem; see http://www.youtube.com/watch?v=NU6fuFrdCJY&feature=bz301 and www.youtube.com/watch?v=fa0agm711PQ. 

No bailout has passed yet.   The day the House failed to pass it, the market dropped 777 points.  The doomsday crowd went berserk!  Yet when you realize that the market was down over 300 points BEFORE the vote, the failure of the bill only accounts for a 400 odd point drop.  Interestingly, the very next day, the market bounced back with the 3^rd largest point daily gain in history… and essentially nullified that post-vote loss!  Then the Senate passed their pork-laden version of the bailout, and the market dropped precipitously again!  I guess you could say the market reacted NEGATIVELY to the bailout!!

So how does it affect “Main Street”? You can still go down to the bank and get a home loan or a car loan… IF YOU QUALIFY.  Folks are still driving to work at jobs they still have, in cars they still own, burning gas that they still pay too much for.

Remember EF Hutton?  When they spoke, people listened… till they stopped listening.  Where are they now?  Do you care?

Remember Smith Barney?  They made money the old fashioned way… they earned it!  They’re not earning much now, are they?  Did their evaporation off the face of the earth hurt you?

The fact is that brokerages and even banks have failed before and will again.  YOUR deposits are insured and you retain access to your funds.  YOUR stock assets in your portfolio are YOURS and not your brokers.  If your broker goes under, you still own your stocks.  Find another broker to handle your trades!

I recently proposed a workable plan that would bolster confidence in the markets and ease the capitalization/credit/valuation problems without socializing the markets or giving corporate welfare to Wall Street or handing over inordinate power to Paulson.  Read it at http://starboard.blogtownhall.com/2008/09/30/fixing_the_financial_crisis_without_socializing_the_market.thtml   If our lawmakers would consider implementing such a plan our economy would improve without mortgaging our future generations to throw $700 Billion or more at it.

For too long Fannie/Freddie and Wall Street have played fast and loose, always with the understanding that if things turned sour, the Government would come to the rescue.  They’ve behaved (even if we exclude corruption and cooking books) like spoiled children who act irresponsibly and get in trouble frequently, only to look to their parents to bail them out – and their expectations keep getting met!  The best thing such a parent can do is put a stop to it – and institute some “tough love”.  When they begin to stand firm, saying “NO, you made your bed, now bear your consequences”, that is the beginning of the maturing of the child.  It’s time that the Wall Street institutions begin to grow up.

Will some firms fail?  Yes.  And they’ll be scooped up at bargain prices by firms who HAVE investable capital!  Will people lose jobs?  Yes.  Will they get other jobs?  If they have marketable skills, they will!  Will the “Market” handle their absence… sure.  The services they provided will be offered by other, more innovative, more competitive and more successful enterprises.  THAT is our capitalistic market-driven system… and when ALLOWED to work, it DOES.

Copyright © 2008 by

Doug Edelman

Doug Edelman is a conservative political commentator and has been a contributing editor for The Conservative Voice.  His work is also seen on News By Us, The American Daily, The Post Chronicle, New Media Journal, Capitol Hill Coffee House etc. For the support of his family, however, he is also an IT Consultant/Contractor and owner of a Computer Services Business.  He has taught PC Maintenance & Repair and Networking at his local Community College, and maintains a blog at http://edeldoug.blogs.com/. 

Comments

[Georgia]

Karl Marx stated in his Communist Manifesto that the following 10 planks are a TEST as to whether a country has become communist or not. If they are all in effect and in force the country IS communist.

1. Abolition of private property and the application of all rent to public purpose.

The 14th Amendment of the U.S. Constitution (1868), and various zoning, school & property taxes. Also the Bureau of Land Management. Kelo v New London and the 6500 residents of Riveria Beach, FL currently being evicted by local Government who have sold out to Condo Developers.

2. A heavy progressive or graduated income tax.

Misapplication of the 16th Amendment of the U.S. Constitution, 1913, The Social Security Act of 1936.; Joint House Resolution 192 of 1933; and various State "income" taxes. We call it "paying your fair share".

3. Abolition of all rights of inheritance.

We call it Death Tax, Federal & State estate Tax (1916); or reformed Probate Laws, and limited inheritance via arbitrary inheritance tax statutes.

4. Confiscation of the property of all emigrants and rebels.

We call in government seizures, tax liens, Public "law" 99-570 (1986); Executive order 11490, sections 1205, 2002 which gives private land to the Department of Urban Development; the imprisonment of "terrorists" and those who speak out or write against the "government" (1997 Crime/Terrorist Bill); or the IRS confiscation of property without due process.

5. Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly.

We call it the Federal Reserve. A credit/debt system nationally organized by the Federal Reserve act of 1913. All local banks are members of the Fed system, and are regulated by the Federal Deposit Insurance Corporation (FDIC). This private bank has an exclusive monopoly in money creation and is directly responsible all inflation

6. Centralization of the means of communication and transportation in the hands of the State.

We call it the Federal Communications Commission (FCC) and Department of Transportation (DOT) madated through the ICC act of 1887, the Commissions Act of 1934, The Interstate Commerce Commission established in 1938, The Federal Aviation Administration, Federal Communications Commission, and Executive orders 11490, 10999, as well as State mandated driver's licenses and Department of Transportation regulations. There is also the postal monopoly, AMTRACK and CONRAIL.

7. Extention of factories and instruments of production owned by the State, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.

We call it corporate capacity, The Desert Entry Act and The Department of Agriculture. As well as the Department of Commerce and Labor, Department of Interior, the Evironmental Protection Agency, Bureau of Land Management, Bureau of Reclamation, Bureau of Mines, National Park Service, and the IRS control of business through corporate regulations.

8. Equal liablity of all to labor. Establishment of Industrial armies, especially for agriculture.

We call it the Social Security Administration and The Department of Labor. The National debt and inflation caused by the communal bank has caused the need for a two "income" family. Woman in the workplace since the 1920's, the 19th amendment of the U.S. Constitution, the Civil Rights Act of 1964, assorted Socialist Unions, affirmative action, the Federal Public Works Program and of course Executive order 11000. And I almost forgot...The Equal Rights Amendment means that women should do all work that men do including the military and since passage it would make women subject to the draft.

9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country by a more equable distribution of the population over the country.

We call it the Planning Reorganization act of 1949 , zoning (Title 17 1910-1990) and Super Corporate Farms, as well as Executive orders 11647, 11731 (ten regions) and Public "law" 89-136.

10. Free education for all children in government schools. Abolition of children's factory labor in its present form. Combination of education with industrial production, etc. etc.

People are being taxed to support what we call 'public' schools, which train the young to work for the communal debt system. We also call it the Department of Education, the NEA and Outcome Based "Education".

Kevin Moore
Tampa, Florida

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