Me too, Secretary Paulson!
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US Department of the Treasury Dear Secretary Paulson:Â Â I've looked over the fact sheet on the proposal to give the Treasury the authority to purchase "troubled assets," and although I have some doubts about the wisdom of the program, if there's going to be one, I want to get in on it!
With that in mind, I thought I'd sent you a quick list of some of my troubled assets, so that you can make sure the appropriate people know about them, when they start buying. (I have no doubt that others are doing much the same thing, so I wanted to be sure to get my request in early.)
I guess my biggest category of "troubled asset" is clothing that doesn't fit. Not only do I have quite a bit of money sunk into these assets--which are worth much less than I paid for them--but they've got my closet filled to the point where there's scarcely any room for my wife to store her wool! (She's a spinner and weaver, so she has lots of wool to store.) Because of that, I'd be willing to let my old clothes go for a substantial discount from their original cost. I don't know if the Treasury would have much hope of realizing a profit on these assets--but if the dollar goes on losing value, we might no longer be able to afford to import clothes from abroad, in which case, they just might have more value than I realize.
The next category of "troubled asset" that I'd like the Treasury to take off my hands are old books. I've got lots of them. Since the internet has made it easy to buy and sell used books, the value of most used books has plummeted! Check the prices of used books at amazon.com, and you'll see that many books are worth less than the cost of shipping them--even if you ship them book rate! (They call that "media mail" now, but I'm old enough to still think of it as book rate.) Anyhow, these assets are quite troubled. They are not only worth a lot less than what I paid for them, they're also (like the old clothing) taking up a lot of room--my book cases are completely full, and I've got stacks of books all over the place!
I wanted to mention those two categories first, because they're the most important to me. I understand, though, that you're mainly focused on financial assets. My own financial assets have held up pretty well so far, but I do have some stock in a certain former employer that's done quite poorly. I can't really say it's "clogging up" my balance sheet, but if the Treasury could take it off my hands and get the economy going again, it could be a win-win.
Thanks very much for your thoughtful consideration, Secretary Paulson, and I hope you'll let the appropriate people know so that my trouble assets can be included when you start buying. I want to assure you that my old clothes and books can be had for a tiny fraction of the $700 billion that you're talking about spending. I'll need much less than 1% of the money--much, much less! You don't have to worry about me hogging the program. And, thanks again.
Yours sincerely,
Philip Brewer
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too funny.
Although I am not an expert in economists (by any stretch of the imagination), I have to think that this bailout goes against my idea of capitalism.
You did (and always do) a great job of breaking down complicated ideas. I was wondering if you (or any Wisebread blogger) could break down the rationale behind this bail-out. I have read a lot about it, and on Meet the Press this morning, Paulson was either talking over my head or not answering questions. I understand that they believe that if these massive corporations would cause a ripple effect on other companies, but I don't understand how (in a capitalistic economy) we can save these companies? I thought the cream rises to the top? I thought that when one business fails, a better business rises? I really want to understand THEIR logic behind why we could not let them fail. Could you please explain?
@ kav122:
Even most of the people who are pushing for this bailout agree with the general idea that companies who make bad investments ought to lose their money. And, as you say, when some businesses fail, that leaves a spot for some other business to succeed. (And, when a family gets foreclosed on, that leaves a house that the bank will sell cheap to some renter who didn't buy a house he couldn't afford.)
Speaking as a renter who didn't buy a house he couldn't afford, I have to admit to a certain inclination to let things go that direction. If houses peal off another 15% or 20%, prices will be about where I think they're a good value.
However, we have a vivid example of what happens when you chose that strategy. Andrew Mellon, Hoover's secretary of the treasury, is famous for proposing exactly that strategy for dealing with the collapse of the 1929 asset bubble:
As we saw in the 1930s, when that strategy goes badly, it goes very badly indeed.
So, I have no doubt that Congress will authorize the Treasury to buy hundreds of billions of dollars of iffy paper. (They'll probably throw in a bunch of other stuff, too--maybe some protections for homeowners, maybe an equity stake in the businesses that we bail out, almost certainly some new regulation.) There are two things I don't know:
None of this is good. But, as harmful as it is, as risky as it is--and as easy to make fun of as it is--it doesn't seem as risky as the alternative. Because we know where that can lead.
Philip..
I hope you're right... but my fear lies in the second part of what we don't know, and that is the cost.
Credit Default Swaps have been sliced diced, sold and resold so many times that they have lost their identity. Indeed, it has been reported that some banks have bought and sold (meaning insured and reinsured) the same securities three times. The accounting is so obscure, that teams of auditors have been unable to unravel a small portion of one hedge fund's trades, after working for three months.
The commonly accepted explanation of Derivative "Notional" Value, is always accompanied by a disclaimer that this does not represent an actual value. In fact, until the SEC "experts" were unable to develop an accounting value, most people, including most traders.. believed that "notional value" was more of a measure of trading volume.
In order to try to sort out the current debt, several attempts have been made by the banks and brokers themselves, to accept some kind of "fuzzy" value, inorder to develop some liquidity. In fact, the very reason that they were unable to do this, even in extremis.. is an indication that any so-called solution with an injection of arbitrary liquidity will probably be doomed to failure. Open ended debt (via CDS's) may end up with a cost, many times the proferred 700 Billion. Try this for details... http://www.theaustralian.news.com.au/story/0,25197,24380944-643,00.html
(A pretty good and simple explanation)
The US has laws regarding bankruptcy. Somehow, this has been ignored. "Too big to fail" is not part of the laws.
Here's an ercerpt from
http://kwitsach-hadera.livejournal.com/
...............................................................
"The second, much bigger, reason is that the US Treasury Secretary, Hank Paulson, in collusion with the US Congress, is about to commit an act of blatant treason.
Instead of doing the right thing, which would have been to place the system in administratrion (bankruptcy reorganisation), he has decided to make the United States itself bankrupt.
The bankers are laughing up their sleeves.
What Paulson has announced is this: he will establish a Federal agency to buy up what will amount to trillions of dollars of bad debt. The debt will become the liability of the US taxpayer. The bankers will get off scot free. The US will also insure investors in US money-market funds, which have seen significant withdrawals in recent days.
The idea is that, in a reflection of the Resolution Trust Corporation, the debt will be warehoused so that it can get the chance “for much of it to recover a portion of its value.”
But make no mistake, as far as the financial system is concerned, this will achieve nothing, other than delay the inevitable once again.
The real benefit for Paulson’s controllers, is that long held goal of the financial elites - the end of the United States, and that pesky Constitution.
What about us, here in the UK? For us, there’s the small matter of the spectre of hyperinflation which will make Weimar Germany pale into insignificance. "
..............................................................................
I don't know what will happen, but my current sense of this terrible problem is that we are just delaying the inevitable, and in a matter of less than a week, making a mistake that could reduce our great nation to the stature of a banana republic.
Even the most optimistic pronouncement from the most optimistic member of government has a strong hedge of uncertainty. That is not encouraging.
Unfortunately all we can do is stand by and watch. ..and wonder if the people that we elected know what they are doing.
.....................................................................
my opinion only
One reason capitalism works is that entrepreneurs risk their own money, property, time and effort in the hope of reward, and the awareness of risk leads to a certain degree of caution when it comes to taking on enterprises.
But when you throw tax rebates, government subsidies, and a history of governmental bailouts into the mix, you cut that risk to the point where people get both careless and greedy. Take off the safety brake of a reasonable degree of government regulation and watch out!
High reward, artificially low risk and--surprise--we have the kind of irresponsible behavior we're been seeing in the lending and capital markets for years.
And now, another bailout? I would just like to know if the managers and CEO's responsible for marching their companies off the cliff are going to be left with nothing, like so many ordinary Americans who are seeing their homes and savings disappear....or are those who played financially roulette with investors' and depositors' money going to walk away, their pockets full of chips, while the American taxpayer gets shafted once again?
sorry, I meant "not an expert in the economy"
No one can "rationally" explain this situation. It's not rational as Phil clearly stated (I think).
Fat Cats got fatter, with the concurrence of a broken Federal Government. The legislation put in place after the "Great" [sic] Depression", to avoid this kind of a problem, was systematically torn down by 40,000 lobbyists, 300 million dollars in gifts to 535 congressmen and the most incredible incompetence and criminality of the SEC and many, many other regulatory bodies.
Washington has become the new Sodom and Gomorrah. Money floats around like snowflakes in a blizzard. "Honest Politicos" is the ultimate oxymoron. So now it's broke, the answer is to pay off the folks who caused the problem. If you'd like to know the reason for the final nails in the coffin, you'll have to spend about two hours in google, doing your own research on "credit derivative swaps", because you won't find a simple explanation anywhere. Once you have an idea of how these pieces fit the puzzle, then you'll understand why 1.4 quadrillion dollars of notional value is is the piece that will make any solution impossible.
The answer is the same as it was in 2003... Let them FAIL!
If the Government had obeyed it's own laws, the problem would have been solved then. If the government stayed out of it now, we'd all hurt... but we could have come through it with just a few scars.
Now that we've been deceived and lied to again, it's over.
We've been "sold down the river"... which means we're slaves.
...sigh
my opinion only
The sad thing is it is really that bad :-( I was so angry when I read the comments that when some wanted to add stipulations into the program about helping homeowners keep their houses that comments were made by the opposinig that it would be too expensive?!?!??!?! What in the name of g-- is too expensive after you are spending $700 billion dollars of (our) taxpayer money!?!?! Please give me a royal break on this one. This is just Paulson helping his stupid old friends.
One thing we have plenty of in America... ignorance.
This is funny. LOL. But I don't think you and other posters truly understand the magnitude of today's problems and the effect letting all these huge companies fail would have on your job and your money. This is so much worse than what we had post-internet bubble.
Buying your troubled assets isn't going to prevent the complete collapse of our financial system. Also some of these "troubled assets" can actually have some value and may end up bringing some money - depending on the purchase price.
Also, where do you think FDIC money to pay off depositors comes from? And what would happen if FDIC reserves would not be enough? You still end up paying one way or another.
Incidentally, even if you don't work in banking industry your job may be affected by these companies failing. For example, my company is in computer business, not in finances. But some of our customers are among those failing financial institutions. Even if my company has been doing fine so far, it would be overly optimistic for me to think it wouldn't be affected. How many other companies are in this situation?
Also, we don't really know if all of these assets will be junk and all of this ends up to be wasted money. For example, when the government bailed out Chrysler in 1980 in exchange for then-worthless options, the taxpayers ended up making money when Chrysler rebounded and the options the government got from the deal skyrocketed.
Long read... only for anyone interested in knowing what's going on.
http://henryckliu.com/page169.html
my opinion only
I'm worried about a lot of the items you list. The one I'm not worried about is the "bankers laughing up their sleeves." Believe me: Those guys are terrified, not amused.
You're right Phillip. Bankers are terrified, at least the smaller bankers. I can assure you that JP Morgan with it's rollover assets of 90 trillion is not worried in the least bit. Neither is City Group or Bank of America. Ever the opportunists, they are egging this crisis on so that they can gobble up other banks one by one until they are powerful enough to force us into financial slavery. Wachovia? Going down and City Group is waiting in the shadows to snatch it. One more bank lost in the big bank vortex.
And why is anyone listening to Paulson anyways? He was a partner for Goldman Sachs, ie the the titan of the big banks. Show me a man who isn't corrupt and isn't helping out his banker cronies, and I'll show you a dirty sock I'll begrudgingly eat.
The "laughing" comment was from the Aussie, but there's a lot of sentiment out there that agrees.
http://www.alternet.org/workplace/99660/wall_street_is_licking_its_chops_at_the_bush_team's_multi-hundred_billion_dollar_giveaway_plan/?page=entire
The part of this whole sad story that bothers me the most, is that no one except a few serious bloggers with a legal background, have even suggested the mechanics of an alternative to the bailout.
Do you think it's because there "IS" no alternative?
My personal vendetta rests on the rules change... midstream, so to speak. After working my way to and through retirement with extra conservative savings through FDIC guaranteed (low interest) IRA's and IBonds, I look at others who bet on high risk... lost the bet, and now are being saved... What will the NEW RULES be?
Life, Liberty, and the Pursuit of happiness... I don't remember the word "guarantee".
Remember Jean Valjean? Prison for theft of a loaf of bread. And now, conciousless bankers and manipulators who have stolen our future, and the futures of our children... and no one yet, at any level of government has mentioned the word "JUSTICE".
by the way.... total cost so far (including the $700Bn) = $15,000 per American Family.
my opinion only
@Philip Brewer - I agree with what you said. "punish the wrongdoers" was tried in 1929 and it lead to the Great Depression. Moral principles are all great, but failing financial institutions aren't exactly the same as failing local bookstores. There is a huge effect on the economy and on our jobs. Yours and mine and many people who had nothing to do with this mess in either as a lender or as a borrower.... As to the "artificially low risk" - how is having your company taken over by the government is a low risk? There is a new CEO at AIG.
Also, mutual funds are major holders of AIG debt, not just banks. People who own these mutual funds are you and me in our 401K. Letting AIG fail, would've hurt our money as well.
Also is getting a loan at 11%+ and losing 80% of the company such a great bailout? I read the link posted by lghbob, but it is one person's opinion. Wall Street Journal and other papers' views are different - . One listed the break up value of AIG to be 150 billion; also that the sale of the couple of its profitable businesses could raise enough to repay the government's loan. CNBC thinks the government gets a great deal and may actually make money. We do know that the government did end up making a lot of money when they bailed out Chrysler in 1980 giving them money in exchange of stock options. At the time Chrysler stock was worthless; when the company rebounded, the government made money. We really don't know what is going to happen now.
Same with bad debt - the issue will be the price that will be determined on a reverse auction. The price may end up being 40 cents on each dollar or less. Depending on how many loans will default and on the final price, we don't really know how much of our money will be lost or if the deal will end up making money.
Besides, when banks fail, FDIC takes over. Isn't FDIC' money also taxpayers money? If FDIC reserves dry up, the government will need to spend more taxpayers money or print more money. Either we pay for bailout or we pay for deposits at failed banks via FDIC.
Thanks for all of the responses. I can see the whole picture much better now.
The fact that the Great Depression was hard does not change the fact that it was necessary (I'm sure I can only say this because I was born 50 years after it ended)
Nevertheless, when businesses (and consumers) become too leveraged and have engaged in too many risky behaviors, the market needs to correct itself. The sooner it does so, the smaller and less devastating the cleanup is.
In just about any scope of life, there are infinite parallels where consistent maintenance is better than remedial solutions How about: " A stitch in time saves nine?"
When the market is not allowed to correct itself, it merely postpones that pain to some point in the future. At this point, it looks that it may be quite a few years until we have to deal with the predicament since the government keeps shouldering more and more of the debt. As a result, our financial system won't be the only thing to collapse. Now that these are inter-twined, our financial system won't go down until our government systems collapse as well. I think most everyone can agree that this will be a bigger problem to contend with than just the downfall of our banks.
The reason our government is crippling our market system and pushing back reality is because we have elected officials, but the real power of our country lies in our corporations. They exercise so much power on our officials because they've all been bought and paid for to get them to the place of power they are. If companies can rig up a system that allows them to continue to make consistent profits while the government shoulders their risk, that is exactly what they will do.
"The fact that the Great Depression was hard does not change the fact that it was necessary"
Really? Virtually every analysis I read and every historical account criticized the actions of the government then and said that it could've been avoided had the government not tightened the credit. How can you be sure that different policy in 1929 wouldn't have prevented it and maybe indirectly could've saved saved millions of people? The Great Depression spread abroad and hit other countries, specifically Germany, and, well.. you know how this turned out. Your post contains much general discussion, but very little concrete proof that different actions in 1929 wouldn't have prevented it.
It is also totally unclear - as pointed above and in many newspaper article - if all this money will be lost or if government ends up actually making money... Again, historically bailouts (like Chrysler's) worked out to the taxpayers' advantage. We don't know how this will turn out.
It also took over 20 years for stock values to reach the same level they were at in 1929 before the crash. Which means most of us would lose our savings. I am 49, so sorry if I am not that anxious. If you are younger, and maybe if you have all of your money in gold, you may be fine. Oh wait, there was gold confiscation in the 30s....
"It also took over 20 years for stock values to reach the same level they were at in 1929 before the crash. Which means most of us would lose our savings."
That's a rough spot to be in, and I'm sorry that's the case. You might forget that when an economy experiences turmoil, virtually everyone suffers. So even though I may not have the life savings that you've accumulated in your years, My financial welfare will be strained as well. Unfortunately, that sheds no light on whether a depression needs to happen or not. All this shows is that letting the market correct itself will be very, very hard for everyone.
Which means we need to get out of the way, let it run its course, and remember to address these problems sooner rather than later from now on.
I was around for a while in the aftermath of the depression (which really didn't end until 1954 when the market regained its 1929 highs). While we didn't live in tents, there were many days when potato peel soup was featured on the household menu du jour.
Interesting about the FDIC reserves... in fact, they're already gone... as is the Pension Benefit Guaranty Fund, the Social Security Fund, and the Medicare/Medicaid fund. They exist on paper, but in reality the funds will come from the same place the "bailout" funds will come from. DEBT.
About AIG... As far as I can tell, no one knows how many dollars are involved. Since AIG was working with derivatives, and swaps, no one has been able to say just how far reaching their transactions went.
The push is to "Save the Banks", to "Save the Brokers" and maybe to "Save the Foreign Investment Banks. And so far, Mr. Paulson et al, have not said that the $700B would fix the problem.. Estimates go to $3.6 Trillion.
We DO have laws that cover bankruptcy, and procedures to follow to insure the residual assets.
This is very complex, and there are no certain answers. Given that, my personal feeling is that putting off the inevitable will result in compounding the problem. Had we taken the "hit" back in 2003, it might have been much , much less than it is today.
So, I'd prefer to let nature take it's course.... to abide by the existing rules, and to avoid the creative 3 day plan to "Fix it". Instead of leaving the revaluation of the mysterious bank assets to the same people who built the problem, we should do it by using government personnel without a vested interest in the results.
My feeling is that if we are going to spend the money, it should go towards making the innocent victims whole.
As far as "Fixing the System"? I believe that the private sector will find a way to return to the market economy, and that it would be better built from the ground up, than by Government intervention.
but that's
my opinion only
It is appropriate to be furious at the financial situation today.
The U.S. had a financial system that worked pretty well from the mid-1930s through the 1970s. Beginning with the Reagan administration and continuing to today, and unfortunately not excluding the Clinton administration when the Gramm-Leach-Bliley Financial Services Modernization Act (remember Wonderful Phil Gramm?)was enacted. This repeal of Glass-Seagal allowed commercial banks to become stock brokers and insurers, allowing the birth of such monstrosities as the AIG of the past eight years or so.
Gramm-Leach-Bliley was just about the final dismantlement of the well wrought regulations that remedied the financial abuses that were a major cause of the Great Depression.
We now have a government that has managed to reinvent the Great Depression.
The remedy it is proposing is similar to its remedy for 9-11. Just as 9-11 was used as an excuse to throw away inconvenient parts of the Constitution and give power to the executive branch, this crisis is being used to concentrate all power in the executive branch bureaucrats. We are told by Treasury Secretary Paulson and his ilk that there is a chance we can be saved if we let him and a few cronies do anything they want with tax-payer money. But they're the same guys who were cooking up the disastrous schemes in their day jobs at the big financial institutions only a couple of years ago.
They might well buy Philip's old clothes. Is it more ridiculous than some of their other ideas?
If we have $700 billion to throw at problems, let's throw it at education, health care, and road repair. That might actually help the country.
I have one more question:
Is there any thing that we can do to stop this? I mean, not the bailouts that have already happened, because they are done deals. But is there any way that we can put a stop to this abuse of power (in my opinion)?
It seems strange that they cannot even answer simple questions about this situation, yet they expect us to "get behind them."
I know that I can control the decisions that I make, but I just wish that this was put to a vote or something.
I guess wish in one hand...
I was actually moved to send notes to my congressman and both my senators with my thoughts on the bailout. (Something that I often think I ought to do, but hardly ever follow through on.)
All the congressmen and a third of the senators will be running for reelection in just a month and a half. If there's ever a moment at which constituent pressure can make a difference, this is it. Let 'em know what you think.
Some people are calling these bailouts the "splurge".
http://www.avc.com/a_vc/2008/09/rules-for-the-s.html
Heh.
It's a bad situation all around, for sure, but if the alternative is in fact worse than the bailouts... well, what else can we do?
Who said the alternative is worse????
http://www.atimes.com/atimes/Global_Economy/JI23Dj06.html
my opinion only
After following this mess for weeks and listening to all the experts state why we need this, the bottom line seems to be to make sure companies can get credit so they can keep employing people.
Maybe we should take that boat load of money and instead have it at the ready for business credit for vetted business needs ala the federal backed home loans. Yes I know Freddie & Fannie are in trouble, I blame lots of that on them being made private with shareholders. One govt. entity that isn't dying right now is Ginnie Mae. What I heard was because it wasn't taken private it is still ok even though it gives out 0 down govt. backed home loans to veterans. That is the clear contrast of what went wrong and where.
Put that money directly into available credit for industry to assure jobs and needed services still operate and let Wall Street go down in a ball of flames.
I am just so mad that all of the unfettered free market ideology we have had shoved down our throats the last 8 years has now failed. Now look who is running to the govt. to save them.
"Which means we need to get out of the way, let it run its course, and remember to address these problems sooner rather than later from now on."
This is your opinion, and just like mine it is not necessarily the truth. It is the opinions like yours that caused the Great Depression when most analysts agree it could've been averted. What makes you think the recession or the next Great Depression is necessary and cannot be avoided?
I also think you underestimate the seriousness of today's situation. Right now companies find it extremely difficult to get credit. Since businesses don't normally have piles of cash lying around in FDIC-insured savings but have them invested into business, they need credit for everything including paying your salary. They borrow to pay salary, then pay it back from income. The companies cannot quickly raise money to meet their obligations, they have to declare bankruptcy even if they have other assets. It is not like S&L crisis where only a subset of companies were affected. Most banks are affected and without banks the economy cannot function.
"Who said the alternative is worse????"
It is an interesting article, but it does not show that the author really understands the situation. There is nothing in the article that suggest an alternative solution or tells about what will happen without the bailout.
As to these assets - who says that the current market price actually represents the fair value? There is a panic in the markets and when there is panic, the equity (or all assets) prices can fall below actual value. Doesn't make it cannot go up from there. From what I heard, only about 25% of subprime mortgages foreclose. When there is a foreclosure the home is sold, presumable for more than $0, so there is some recovery. Yet, at least according to what I heard on cnbc today (yes, I know it is only an opinion much like the article above) these assets are currently priced as if over 50% of these mortgages foreclose and there is no recovery of any money at all. So depending on the price - that will be determined in reverse auction not just set randomly - there could be some value which is higher than the current market price and yet provide some return. Also, some of the proposals suggest government get some stock in companies from which it buys assets. If this passes, than the government may well make money when these companies rebound - as it did with Chrysler.
@ Kitty,
Some of these homes will have very little recovery. Even earlier this summer there are cases of some old rental homes that went to foreclosure due to the landlords making bad investments. What I was seeing is tons and tons of housing stock in either rundown or emerging neighborhoods for $8000 to $20,000.
Part of me wanted to run with a fistfull of savings to grab a cool looking old house for that cheap. There is a real fear though, of what is going to happen when you have an entire neighborhood full of homes like that. Not a situation I want to sink rennovation money into.
If we can pull off a quick recovery or even stability some more desirable homes could recover 50% of their value. But markets where homes jumped to $800,000 due to the frenzy when they are really worth about $250,000 are going to be very hard to recover.
I think I share a real frustration with many people. We just do not know enough and we don't have a source we trust to tell us where we really are right now. The govt. has a habit of either lying to make things seem rosy to avoid a panic or misrepresenting things as a means to a specific ideological end. The financial sector has no credibility left. Paulson and Bernanke, hmm hard to tell. Bernanke I at least put some stock in what he says since he was a scholar for so long but he is still appointed by Bush and I don't know if that impacts his credibility and what he is saying.
Henry Paulson was a CEO for Goldman Sachs. So it really bothers me to be asked to believe what he says without something substantial to back it up.
BAILOUT
"WE DESERVE IT DIVIDEND"
The only thing that has made any sense this week!!
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 301,000,000 +/- 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 billon 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.
This even takes care of the AIG employees that lose their job.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
If you had insurance from AIG, now you have the money to replace it with a more stable company.
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 folkswho 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.
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.
And theoretically with the boost to the economy most of these people would be more productive and pay enough in additional taxes over a 5 to 10 year period to repay the $59.5 Billion.