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If you are mad as hell about the now likely passage of The Great Bailout, then yell until you are heard!

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The Great Bailout Save America Plan
Winners Foreign and U.S. investors in, and foreign and U.S. management and employees of, financial companies in and outside the U.S. Americans
Losers Americans Foreign and U.S. investors in, and foreign and U.S. management and employees of, financial companies in and outside the U.S.
Borrows from American taxpayers Yes, over $700 billion with high risk of not being paid back Yes, much less than $700 billion with near zero risk of not being paid back
Deposit and investment account insurance Weakens them by weakening FDIC, NCUA, and SIPC Strengthens them by strengthening FDIC, NCUA, and SIPC
Money market fund insurance Yes, temporary and limited funding Yes, permanent and unlimited funding
Inflation Raises inflation a lot, costing Americans more to live Raises inflation a little
Management of surviving financial companies As weak as they are today Much stronger than they are today
Liquidity Uses a new unproven method to inject cash into the financial system to reestablish the flow of credit Uses existing proven methods to injects cash into the financial system to reestablish the flow of credit
Toxic, high risk loans/debt Bought by the Treasury at over-market prices and held for a long time, gambling that buyers will eventually pay more than the inflated purchase price Briefly held by FDIC, NCUA, and SIPC before being resold to willing buyers at market prices
Housing prices Fall to sustainable levels slowly, delaying the recovery Fall to sustainable levels quickly, speeding the recovery
Concentration of power Treasury, which has strong ties to Wall Street FDIC, NCUA, SIPC, and the Federal Reserve, who have a long history of serving Main Street
American education Weak focus on safety of deposit accounts and money market funds Strong focus on safety of deposit and investment accounts, safety of money market funds, and financial management of houses and investments

Mark 2527 - days ago 
If only America was affected ! This crisis impacts every corner of the planet - not just the American continent.

It was brought about by some very greedy individuals who invented complex financial instruments that concealed what they were doing - buying and selling things they did not own or that did not exist and treating the profits gained thereby as real money, which they took as commissions or profits. Also lending money to people who were notorious for not paying it back at rates that could not be sustained.

Looked at practically, and logically, this is clearly bonkers, and would sooner or later start unravelling. Unfortunately, these people had by then taken their profits, commissions and fat pay checks and vanished before they could be brought to account, leaving the rest of us to pick up the pieces and pay for the consequences.

Originally the finance industry was a world where trust was the order of the day, and a man's word was supposed to mean something. If a man shook your hand and said he would pay you back, that was enough for you to give him the money. Unfortunately that trust is now gone, and a man's promise has been rendered meaningless by a greedy and unscrupulous few.

I am simply amazed that the so-called clever people running our major financial institutions could all be so stupid as to allow this to happen and even more amazed that when it has, how quick they are to hold their hand out begging for help. They should all be strung up and left to rot as an example, so this never happens again.
Guest 2527 - days ago 
There are 2 sides to each coin... (I am not thinking outside the box here)
Why do you want to save the FDIC, the NCUA and the Fed Reserve? Let it all crumble and it will get reinvented...

During WWII they re-invented the monetary system as a means to more easily trade and barter goods. it happened that they used cigarettes as they common currencies. The moral of the story is that if we make a tabula rasa... we will most probably return to a similar situation.

So whether we save the "investors" or some "Americans" s not exactly how I look at the problem. The question is whether we want to re-distribute the wealth -or whatever is left- and how.

Whether you trust that Mr Paulson, Mr. Bernanke and Pres. Bush are a lot smarter than the "system" and that the system left to by its own will be better. Will de-privatizing our financial sector -even for a short term- be better than letting the free market economy forces reach an equilibrium without external interventions? In general many agree that a government intervention may avoid or delay a serious meltdown of the economy on the very short term. But I am not sure this is necessarily good.

The real loser if this happens is China... They are the ones with most at stake here. And they are not leveraging their surplus to do anything.

The bottom line: It depends what Paulson, Bernanke and Bush do when they redistribute the wealth.

Now let me put my "out of the box" thinking hat on. Why did we save Fannie and Freddie? The whole system came down crushing, lenders took too many risk (to keep fueling the growth engine). Now let's say we did not save any of the lending institution, and they went bankrupt in a way where both your deposits are gone as well as your debts. Nothing survives. This means that anyone who borrowed money from WAMU to buy a house would own their house and see their debt written off. The loser are obviously the people who lend money and the winner are those who borrowed money. That's one way to redistribute wealth. Is it fair? I would challenge that this is pretty close to a zero sum game ... value is not created. and therefore redistributing the wealth is never fair to everyone.
Guest 2527 - days ago 
In my opinion, since an overwhelming majority of Americans either directly own equities, or participate in a pension funds that do, etc., it is clear that something must be done other than let the system free-fall and self-resolve its issues through the market place.

I don't think our nation's leaders would be inclined to intervene, if it were not for all the outside.foreign investments being at risk and what wide spread defaults and system failures would do to our reputation in the world, not to mention the impending presidential election.

Over the years, the "experts" and advisors have always recommended investment abroad to balance one's portfolio. I always shyed away from that because I felt that I would be investing in a black hole, where finanicial reports were prepared under unknown or unsupervised standards and the geo-political risks were unfamiliar to me. Now America has become such a black hole. It is embarrasing to us as a nation and because of that, we cannot afford noattempt to intervene. A bad remedy would be better than no remedy.

P.S. Having felt that none of the 4 top executive candidates in this coming election were worthy of their target offices, considering our large population, I had not intended to vote in November. Now that I've seen how a bad president can bring a country to ruin, I will be voting for the lessor of evils. It is obvious that the most capable would not want the job.
Guest 2527 - days ago 
I am shocked that Americans are shocked about this $700,000,000,000.00 bailout that Americans will have to pay if Wall Street does not. However, Americans are mute about the $10,000,000,000,000.00 they definitely have to pay back somehow. Otherwise, future generations will have to figure it out.

Please raise/double my Federal Taxes just to pay down all the Federal Debt because I love my children.

Where the hell is the Sacrifice by Americans today just like our ancestors sacrified for us?
Guest-9/29 2526 - days ago 
If today showed us anything, it is that we are in a real crisis. There are three things we can do to ease the pain:

1) Eliminate (or at least freeze for now) all foreign aid. Since we cannot take care of our own, we need to stop kissing everyone else in the world's butt and worry about US.

2) Start billing, and then retroactively bill Iraq for the cost of the war. They've got oil. We didn't take it from them as a lot of people thought we would, but why are we letting them build wealth while our economy tanks, largely due to efforts in behalf of their freedom, which they do not seem to appreciate.

3) Start looking at programs such as space exploration that have nice to have benefits, but are not critical to our economic survival. Set priorities on these endeavors and temporarily eliminate those that are not crucial.

It is time to plan for our own survival as a super power, or settle for the Third World.
Guest 2525 - days ago 
Locally, a mortgage broker has suggested an alternative in which the federal government would create a trust that would buy all of the single family occupied real estate currently for sale- only in cases that these sellers are buying another home. They would also buy the foreclosures up, and shore up the banks in the process. There would be a trickle up effect as the housing market is stabilized, and the houses can be sold to return the monies to the government- Does it have merit?
Tim 2525 - days ago 
It seems to me from reading the ideas here, that there are alot of options available, instead of a bailout. This bailout concept doesn't seem right as it is a march towards socialism. While the Democrats cry that Wall Street is the culprit, I contend that it is the Democrats and their creation of the GSE's and lax lending standards. There is plenty of evidence that the Republicans (including President Bush and John McCain) that tried to create more oversight of these GSE's but the Democrats blocked it. I really don't think that we should be bailing out these institutions, let the market self correct, no matter the pain. We're better off living with our principles of a free market then throwing it all in the trash to a supposed crisis. (I agree with many that think that this 'crisis' has been created in order to make it an election issue, also most banks are not making credit available because they are waiting for a bailout.) Congress should let this revision of their bailout bill fail too - and let it be final! Then the banks will finally realize that taxpayers are not going to save them from their screwups. Then they will find other alternatives. The next thing that should happen is investigation of all Congress Members who have ties with Fannie Mae and Freddie Mac (especially those that have received large amounts of donations). Determine which Senators and Representatives have been influenced monetarily with covering up and shielding Fannie Mae and Freddie Mac, then prosecute them for their unscrupulous activities. Wouldn't you think that a situation of this magnitude warrant a serious action against those that caused this, against those that knowingly protected this scheme? I think so!
Mark Marriott 2524 - days ago 
Your chart above fails to recognize that everything and everybody are interconnected now. Loss of confidence in the banking system impacts everybody, and hurts everybody. Something dramatic is necessary to restore confidence. We are in a confidence crisis.
Guest 2524 - days ago 
I don't think the bailout will cause inflation, as that is usually the result of an economy growing too fast or a supply side price shock to a key input, like oil. However, as the government sells bonds to finance the bail out (they wouldn't just print money) it will be interesting to see if they need to raise interest rates to get the bonds sold. Higher rates would not help the economy, obviously.

Because bankers around the world can't trust eachother right now, for fear that they all have undisclosed bad assets, they are not lending to each other on the wholesale market, or are lending at much higher rates (Libor has really jumped in the last few days). That increases rates for credit cards and adjustable mortgages, half of which are based on Libor. The banks are also hoarding cash to shore up their reserves against any bad mortgages they hold. The mortgages may not be bad, but because they can't sell them and there is no secondary market for them, they are forced to mark them to market and hold extra reserves for them. The end result of this is that consumers mortgage payments increase, and home buyers have a harder time getting new mortgages (because the banks are hoarding cash). So that means more foreclosures and fewer buyers, which further reduces the value of the mortgage backed securities, and on and on, accelerating the housing market meltdown. My fear is that if enough banks start to fail in this spiral, that the federal government won't have enough money to cover FDIC, and if people loose confidence in FDIC, then we have an old fashioned run on banks and bam, the Great Depression all over again.

I am particularly worried about banks starting to shut off business credit lines. We have one which we really rely on to carry receivables. They are tempted to do this as a way of hoarding cash.

The government, by stepping in and buying the mortgage backed securities that no one will buy right now, can create a secondary market in them, allowing banks to mark to market at more reasonable valuations and hold less reserves, which means more lending. Also, to the extent this allows a lot of banks to sell those assets and puts them in a stronger balance sheet position, confidence will return among banks and they can stop gouging each other in the wholesale market, which means Libor goes back down to sane levels.

Its all about breaking the vicious cycle. Once that is broken and the markets stabilize, the federal government may eventually end up making a profit on the mortgage backed securities it bought, because it is not forced to sell them in a distressed market but can wait for better times. It may also be the Americans actually do a better job of paying those mortgages (again with lower Libor) than the market prices currently forecast, they turn out to be decent assets, and the government again recoups its investment.
Guest 2522 - days ago 
I have called and emailed my representatives urging them not vote for the bailout as it is. I love this new plan! I'll get it to my representatives and as many people as I can! Thanks.
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