Something is very out of whack

Everyone intuitively including the people pushing this bailout realize something is very, very out of whack here. It just doesn't compute that we as taxpayers have to pay for this massive cleanup. Whats more they, the 'designers' of it, are deeply embarrassed to have to do it. It totally contradicts and makes mockery out of the entire Reaganian ideology of deregulation and free-for-all market driven economics to which they ascribed to and from which Poulson personally benefited. And as Birk T. J. Birkenmeier shows (see below) even the a "piddly" $85B for the AIG bailout directed back at US citizens would have an incredible direct effect. But $700B? It boggles the mind. What the fuck is going on?

In a time when we've gotten used to pissing money away at astronomical rates (see the ‘burn-rate’ for the Iraq Occupation at http://www.nationalpriorities.org/costofwar_home) this figure, $700B, still blows everyone away. There is never money for anything: health care, bridges, schools, college tuition assistance, states budgets. When some modest spending bill passes Congress for 2 or 3 "measly" billion, Bush fucking vetoes it. "Can't afford it" he says. Then low and behold we now have to fork over nearly 3/4 of a trillion dollars or else everything goes down the tube. And what is galling beyond words is that the very people that got us in this mess (and got way richer in the process) are saying unless the US taxpayer (meaning the US middle class) bails us out, we will let everything collapse in a 1929 style gotterdammerung.

As far as I can tell these guys, Poulson and Beranake are winging it. One day they bailout a big investment bank, the next day they let one collapse, then they rescue a big insurance company. But nothing works. Now they are coming up with the "700 billion dollar gamble." They just try different shit to see how the stock market and credit markets worldwide react. The markets liked the big bailout idea. So now the big boys are now holding out for this massive mother of all one time expenditures. Today it looks likes going through so the Dow is up, surprise, surprise.




A modest proposal from:

Birk T. J. Birkenmeier, A Creative Guy & Citizen of the Republic


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

Kindest personal regards,

Birk T. J. Birkenmeier, 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!!

Bad Day at Black Rock

Monday September 15th was a ‘bad day at black rock’ for Wall Street - and probably all of us. When two major investment houses fall in one day, one to the ignominy of bankruptcy, Lehman Brothers, and the other being forced to allow itself to be eaten by a bigger fish as BankAmerica gobbles up Merrill Lynch, it is indeed worth noting. But other than damaged careers and besmirched reputations, most of the guys responsible for this mess will land on their feet financially. They might have to fall a couple levels down from super rich to merely being ‘very well off.’ But they all no doubt saw this coming years ago and protected much of their own personal wealth. At the operational level the 13,000 jobs Lehman Brothers are in question, whereas BofA will probably keep most of Merrill Lynch’s 18,000 financial advisors and become the preeminent source of “experts” on financial matters (even as these ‘experts‘ participated in one of the biggest financial disasters in American history.)

The problem is not that there was shakeup on Wall Street and some biggies bit the dirt. The problem is that all of these operations were incestuously interconnected in a giant financial clusterfuck. The housing bubble has been long since acknowledged but was conveniently ignored by the both the players and government regulators, the neoliberal free marketeer controlled government agencies and the (as usual) corrupt Congress. There was simply too much easy money being made by all. Granting mortgages once meant using the aggregate of depositors’ money, saving accounts and such, as a reserve against loaning larger amounts on a real estate, that is real property that had some kind of underlying quantifiable value. With people’s homes as collateral they only defaulted if they absolutely could not avoid it. And property values slowly appreciated hence equity increased both by paying down the principal and enjoying the normal appreciation in value. That had worked well for years and was well understood and regulated.

What started it all was a sustained and delightful steep appreciation in home values, probably kicked off by normal supply and demand factors, but inevitably amplified by old fashion speculation. The whole thing might have been contained had not mortgages become not simple financial instruments in and of themselves but elements in larger more complex financial instruments. They become embedded in packages that were not handled by regular banks but big time investments banks like Bear Stearns et. al. and sold widely. And this eventually included the newer, higher yield but also higher risk animal – the now notorious “subprime loan”. This is a mortgage that by all rights should never have been granted in the first place. The debtor can’t afford it and/or the terms are misunderstood or misrepresented. Also often little or no down payment was required – a perfect recipe for many to bail at the first opportunity. Furthermore, they were marketed in an unregulated and McDonalds hamburger type way along with massive numbers of home equity loans, once quaintly known as “second mortgages.’

By the early 2000s the economy essentially ran on credit much of it derived from people pulling equity out of their homes for consumer spending (along with ubiquitous and usurious “plastic” - credit cards) as well as, of course, buying homes they couldn’t afford. The risk of subprime mortgages was supposed to be engineered out by all kinds of complex arrangements and the risk spread evenly like insurance risk. However, when the crash came and they were defaulted on, the reverse happened they infected everything they had contact with. The result is a near worldwide financial meltdown. And here we stand. The investment banks are falling like dominoes going hat in hand to each other and the government for handouts. If the government acquiesces, it falls absolutely into a contradiction to its ideological principals of lassie faire capitalism. Plus it sends the wrong signal to a future generation of players. But in the worse problem is it is liable to further erode the dollar causing a possible run and trigger hyperinflation.

The stock market is well aware of all of this and responded by going into full in panic mode, falling a disastrous 504 points. The amount of wealth that vanished in the clicking of mice is probably more than GDP of good number of whole countries. When everybody sells at the same time nobody gains except the first few rats off the ship – or of course all the guys ‘selling short” which I’m sure was a large chuck of the action. But what about the 401 K plans based stock ownership? Retirement for the baby boomers (a term I detest but use anyway due to laziness) looks bad. There are going to be a lot of old geezers in the workforce holding on to their jobs until they retire feet first.