virtualrn

An Outstanding Plan: Economic Stimulus

Recommended Posts

Received this e-mail and I thought it was very funny:

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.

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 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.

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

  • Like 1

Share this post


Link to post
Share on other sites

Makes too much sense. Instead they're bailing out the business that created this mess. It's like me going to Vegas and losing all my money, then expecting .gov to bail my sorry butt out! It's all gambling but the taxpayer is supposed to cover the losses.:evil:

Goldbug

Share this post


Link to post
Share on other sites

Well, I hate to be the bearer of bad news, but $85 billion divided by 200 million people is $425 for each person- not $425,000. I guess that's a good thing since we pick up the tab. ;)

Assuming the cost of the mother of all bailouts is $700 billion, that means that there is a $3500 bill coming due for each adult alive today. OUCH.

Let me be clear that I too oppose intervention. Private sector goofed and allowing private sector to feel pain is what leads to creative destruction. The basics of evolution apply in the business world. If you can't cut it, you must not be rescued or collectively we all lose.

With that said, consider what Bill Gross had to say yesterday. He says this deal is a no-brainer even using higher than anticipated default levels on these toxic mortgages:

Treasury issues bills and notes at an average cost of 3% to taxpayer. Treasury then buys $700 billion of mortgage backed securities above fire sale price but well below intrinsic value. This price gives a return of 10-13%. The spread between return on ther assets (10-13%) and the cost (3%) gives a net return to the taxpayer of 7-10%. Even with default rate assumptions high, this will generate an expected return for taxpayer of $25 billion per year. One thing to consider is this is not a spending plan. It is an exchange of collateral. If the Us gov't holds long enough and the real estate market recovers and the liens on these properties become wholly secured again, the return on these assets could be whopping.

Not my words but Bill Gross' words. And although that I reject this plan for the reasons listed above, it makes me think that it isn't akin to flushing $700 billion down the toilet. These assets have value. There is just no market for them right now.

  • Like 1

Share this post


Link to post
Share on other sites

Yeah, I think it was $3500 when I finally did the math last night-stupid idea anyway, gads-can you imagine the mark ups on supplies if everyone had the original amount to spend --but nevertheless funny....

Share this post


Link to post
Share on other sites

Does the government even know how to accomplish anything within the budget. It appears that they always go over, costing tax payers more than originally projected.

It seems like this plan is like using a water hose to put out a forest fire.

Share this post


Link to post
Share on other sites

$700,000,000,000.00 (eleven zeros) what are we thinking!

There are 75.7 million homeowners in the US.

Just send EACH homeowner a check for $750 a MONTH , for a YEAR.

Or just send EVERY homeowner in the US $9,247.03 each. I’m pretty sure that would boost the economy.

..let’s just “bail out” WallStreet and hand them a “blank check”.

The government is buying “Bad Debt” with YOUR money. Smart…..very smart.

I’ll take my $9,247.03 in CASH please.

With $700 Billion dollars you could buy some AWESOME Christmas presents:

269 – Virginia Class Nuclear Attack Submarines @ 2.6 billion a piece

1,237 – B2 Bombers @ $566 million a piece

2,800 – Hope Diamonds (45.52 ct) @ $250 million

7,000 – Mona Lisa paintings @ $100 million a piece

102,941 - Learjets (nine passenger) @ $6.8 million a piece

205,882 – Letters signed by Abraham Lincoln (As sold at auction in April 2008 for $3.4 million)

4,487,179 – Bottles of wine that came directly from Thomas Jefferson’s wine cellar (As sold at auction in 1985 for $156,000, wouldn’t he be proud)

12,438,695 - 2008 Ford F250 CrewCab 4x4 Powerstroke Diesels w/ Leather @ $56,275.00 ea.

25,641,026 – Rolex Gold President watches @ $27,300.00 ea.

80,766,124 – St. Louis Ram’s 2000 Super Bowl XXXIV Lombardi Trophies ($8,667)

There are 200+- Billion stars in the Milky Way Galaxy

A stack of 700 Billion One Dollar Bills would be 3,225,670 miles high.

The International Space Station orbits the earth at an altitude of 242 miles

An area covered by 700 billion one dollar bills measures 2,800 square miles and would cover Delaware (google map it)

A length of 700 billion one dollar bills laid end-to-end would measure 67,834,592 miles and circle the globe 2,709 times

A length of 700 billion one dollar bills laid end-to-end would stretch to the moon and back 142.5 times

If you spent:

TWENTY SIX MILLION, SIX HUNDRED AND THIRTY SIX THOUSAND, TWO HUNDRED TWENTY FIVE DOLLARS AND TWENTY SEVEN CENTS a DAY I repeat………TWENTY SIX MILLION DOLLARS A DAY

for SEVENTY TWO YEARS (72)

($26,636,225.27 a day for 72 years)

You would spend:

$700,000,000,000.00

That’s $1,109,842.72 an hour….24 hours a day

or $18,497.38 a second for SEVENTY TWO YEARS.

Finally, to help those who love malls to understand large numbers by imagining the shopping spree of a lifetime starting with varying amounts of money. Let’s say a shopper must spend $20 per second and must do so 24 hours per day until penniless.

$700 Billion Dollars = 1108.5 years of non-stop shopping.

Does anyone realize that the Senate just voted and PASSED a $25,000,000,000.00 taxpayer funded loan to the AUTO MAKERS (domestic AND foreign)? They’ll pay it back over 25 years @ 5% interest instead of the 20% they’re paying now….because their credit stinks……boohoohoo.

YOUR TAXES ARE GOING UP because of all this.

What are you thinking!

Share this post


Link to post
Share on other sites

How to contact your Senator

(Click here to email your Senator)

http://www.senate.gov/general/contact_information/senators_cfm.cfm

700 Billion = $2,333.33 for EVERY US Citizen.

That just seems a little excessive since only 2% of the homeowners are facing foreclosure.

There are 75.7 million homeowners x .02 = 1,514,000 homes x Ave home price $185,000 = $280 Billion in troubled loans

Where the heck is the other FOUR HUNDRED AND TWENTY BILLION dollars going?

Share this post


Link to post
Share on other sites
8] That wasn't "Political" was it?

As long as you offer no opinion on senators, congressmen, president and the like, you're ok.

If you can talk about government without waxing politics, you're ok too (a difficult feat in itself, but thanks to this bailout, we are seeing that a lot lately).

Share this post


Link to post
Share on other sites

How about this for a bailout solution?

http://georgewashington2.blogspot.com/2008/09/support-house-gop-rescue-plan.html

FRIDAY, SEPTEMBER 26, 2008

Support the Wall Street-Funded Rescue Plan

Forget Republican versus Democratic. That's a false dichotomy. Its the Democrats in Congress who are now trying to pass the fat cat welfare, taxpayer-funded bailout. Forget labels. Forget politics. Forget who should get credit for good ideas. Let's look at substance and do what's best for the country.

House Republicans are pushing a meaningful alternative to the Paulson bailout plan.

CNBC has the story:

In a letter to House Speaker Nancy Pelosi, House Minority Leader John Boehner urged that the proposals be "given the consideration they deserve."

The proposals include:

Wall Street – Not Taxpayers – Should Fund the Recovery

Private Capital – Not Tax Dollars – Should Be Injected Into Financial Markets

Immediate Transparency, Oversight, and Market Reform

Click Here to Read Boehner's Letter and Republican Proposal

This is a chance to stop the taxpayer bailout and to make the scam artists who created the economic mess clean it up.

So call Congress and demand that they support:

(1) Wall Street - not taxpayer - funding of the recovery

(2) Private - not public - capital injected into the markets

(3) Immediate transparency, oversight and market reform, and

(4) Insist that they clean up the derivatives mess, also.

(Find contact info at Congress.org

Goldbug

Share this post


Link to post
Share on other sites

We don't talk politics here.

While I find some of this thread amusing and some enlightening, let's be very careful as this subject - the bailout - is spoken of. Leave the "Dems want this" and the "Pubs want that" out of this.

I am tempted to lock this thread....but if we can all behave, we will leave it.xdancex

Share this post


Link to post
Share on other sites

but if you lock out the "bailout", we'll miss out on sooooooo much fun.

greed doesn't have a political party. everyone who enters the holy ring of the capitol beltway loses any semblance of integrity. i know . i've lived there.

they're ALL free game for ridicule. 8-)

Share this post


Link to post
Share on other sites

This was taken by the Credit Karma blog, but when I read, I felt it my duty as a participant of this fine board to share it with you. I think we can all take heart in what I highlighted in red. :)

I don't necessarily agree with all of this. This is pretty much just the line that people are feeding us to buy into Wall Street's mess. But I do feel it might help those want to read up on the bailout themselves and form their own opinion, like I have.

http://blog.creditkarma.com/

How the Bail Out Affects Everyone

Written by Kenneth Lin

The popular sentiment right now is that the $700B government bail out is about Wall Street, CEOs, and in general, rich people. While the bail out will most certainly help the aforementioned, it has much larger ramifications on the general economy. To start, a failure in the financial system of this proportion will create a credit crunch. This means it will be harder to borrow money and when you do, you will pay much more in the form of interest and fees. We already see it in the mortgage rate tables with fewer loan options and rates that are higher than their historical ranges given other interest rates.

Recently, we are started to see the credit crunch begin to cascade to the credit card industry. We monitor rates and fees of approximately 200 credit cards. In the last few weeks, we have seen APRs increase. At the same time, we have seen fewer approvals for credit cards from people with similar credit as those who were approved months ago.

This trend will probably continue to cascade into other sectors: auto loans, bank fees, etc. if the government does not act. The collapses will also increase unemployment and further drag down the economy. The upside is that taxpayers don’t pick up the tab and that the large corporations get what they deserve.

It’s not our goal to take political positions on this bail out. There certainly were bad decisions, poor management at these financial institutions, and there needs to be accountability. However, as columnist Steven Pearlstein wrote “You can try to prevent a financial meltdown or you can teach Wall Street a lesson, but you can’t do both at the same time.” With that said, it is upon each of us to understand the issues, the ramifications, and then make an informed decision.

Share this post


Link to post
Share on other sites

Exactly.

The truth is that the average American does not truly understand the financial markets and what drives our economy. We also don't realize that it is the behavior of the American consumer that appears to drive the world economy. (This was even true back in the Great Depression!)

All though none of us wants to have $700 billion of our tax dollars used to rescue these perpetrators on Wall Street, the catastrophe awaiting the average American is so much worse.

Honestly, and IMHO, neither candidate for the WH should promise tax cuts at this point. I would be surprised if we got through the next 4 yrs w/o a tax increase.

I guess what is the most frustrating for all of us is that we are innocent victims. (Oh and I hate victim mentality!) We didn't make the decisions that put our financial instututions at risk. We here on this board, and other credit related boards were getting our financial houses in order and learning responsible use of credit and budgeting. While we were doing the right thing, the rug was pulled out from underneath us. We were powerless to stop this train wreck. It reminds me of the time when I was married to an alkie/addict. I was doing the right thing. I was earning enough money to pay the bills. HE spent more than we could afford. HE caused the financial issues. *I* was the one left holding the bag and cleaning up the mess! :evil: I hated the feeling then. I hate it now.

I don't blame any one entity for this. There is so much blame to go around. The reality is that blame will get us nowhere. We need to accept what is and then figure out the best way to move forward from here. Kinda like I had to do at the end of my marriage. America is a population of survivors.....we will survive and hopefully have learned a huge lesson from this.

Share this post


Link to post
Share on other sites
All though none of us wants to have $700 billion of our tax dollars used to rescue these perpetrators on Wall Street, the catastrophe awaiting the average American is so much worse.

Amen, sister! How many more banks have to fail before Congress gets the message?!!!! Now is not the time for us vs. them on Capital Hill. DO SOMETHING!!

Share this post


Link to post
Share on other sites

Can't really get too politic.,I am a bit ticked so I would just rant....just watching all the finger pointing, grownups acting like little girls called ugly lol. Imagining the CEOs who walked away with trillions sitting on their yachts, smiling, and giving us all the finger......

Share this post


Link to post
Share on other sites
Can't really get too politic.,I am a bit ticked so I would just rant....just watching all the finger pointing, grownups acting like little girls called ugly lol. Imagining the CEOs who walked away with trillions sitting on their yachts, smiling, and giving us all the finger......

Ya know, the dam is breaking. I don't like "bailing" people out, either, but we need to do something or almost every bank in America will fall. We need to get over the perception that this is all just fun and games for the rich folks on Wall Street. If we don't do something, our economic system will collapse.

Failure of a bail out plan means:

  1. That means high unemployment
  2. The FDIC insurance does not have enough in its account to back up everyone's savings. If all the banks fail, we are all out our money
  3. Hyper inflation
  4. High interest rates
  5. Basically DISASTER
  6. Loss of Global confidence in the US Economic health, and then who will loan us money to pay back our debts? No one. Which means higher taxes.

Remember 1980? I do. Mortgages were 17%. Unemployment was 12%. Let's get Congress off its ass. All they care about is being reelected. It's unbelievable.

  • Like 1

Share this post


Link to post
Share on other sites

Admin, isn't that the truth? However, the fiat system is at the end of it's road.... A severe recession is coming no matter what this bill looks like or smells like. Throwing money down rat holes is what got us into this mess and this bill is no different. This bill is the tree branches breaking our fall as we hurtle down to bloody rock bottom.... Good luck to everyone on this board, we will need it.....OK-I tend to think in worst case scenario-rosier comments please!

Share this post


Link to post
Share on other sites

This is just an observation based on my recollection of these events over the past few months, so I'm probably missing something but,

Didn't we hear a few months ago, when the big European bank bailout was in the news (I listen to BBC radio a lot), that they needed the money over there because of all the worthless mortgage backed securities that were bought by overseas interests? Supposedly, a bunch of European banks were going to fail, and some did, if they didn't get the money. Seems like there was about $250B pumped into that deal.

If it's true that a majority of the bad loans were sold off to overseas interests like they said a few months ago, why are we talking about "bailing out" U.S. investors now? The loan orginators, and probably most secondary purchasers, sold off their interests a long time ago and are now laughing all the way to the bank. And, if the securities have already been sold, what exactly is the U.S. government supposedly "buying" with its "investment?"

I just don't believe any of this. There's something else going on.

Share this post


Link to post
Share on other sites

VirtualRN,

I appreciate your concerns. To alleviate some, you need to go back to 1929 and see why the world (not just the US) collapsed. We had no FDIC. We had no bail out. Without $ to move, businesses and farms collapsed and we had 25% unemployment. The dust bowl in the midwest only exacerbated an already bad situation. (The dust bowl was caused by poor farming techniques.) The economy ground to a halt. It took illegal programs instituted by FDR to get the populace employed and ultimately WWII to get us out.

When Jimmy Carter was president (ahhhh, remember the last gas crisis?), there was double digit inflation, double digit unemployment, and as Admin mentioned 17% mortgage interest rates. These increases in rates set the stage for the horrific interest rates we see on cc's today (for default rates and subprime cards). Bad as it was, we did survive. There were bank failures, but FDIC protected the vast majority. One thing that was better during this time was that most folks still had corporate sponsored retirement packages so no one lost money in 401Ks.

There is no ONE single point of failure here - or single point of blame. It was the composite of everyone and everything hitting simultaneously that caused this. Nevertheless, we are here. We still have the FDIC to insure our accounts so there has been no runs on the banks. This will prevent the complete collapse of the banking system, but won't prevent what we are seeing at this point.

If the government does not bail out the banking system, we will survive, but it will be very painful! Small businesses will fail and all those jobs will be lost. Without jobs, there will be no car or home sales. The auto industry will stagnate (more job losses) and builders will close their doors and foreclosures will rise. Homes will lose more value. HELOCs will be history. More and more banks will reduce our credit limits or close our credit accts all together. We won't be purchasing foriegn made products, so the markets overseas will feel the hit as well.

The good side? The US is the largest consumer in the world. Without US purchasing worldwide goods, the rest of the world will see their sales suffer....especially OIL. Without us using gasoline, the cost of a barrel of oil will correct back down to $75 a barrel or lower. We, as a society, will be more cautious with our money. But, if you don't have a 401K, it would be a very good time to start one. When the economy does recover - and it will - what you invest now will multiply like rabbits! As the value of the dollar declines, our American made goods will be the most cost-effective purchase for other countries! Our exports will increase and imports (whose price will jump) will decrease. This will reduce the trade imbalance we currently suffer.

It took 10 yrs and a world war to get past the depression. It took far less time to recover from the Carter years. This will mean an adjustment to our lives but should not be catastrophic, just painful....only because we have been so used to having the latest gadget or toy. Real Estate will eventually recover, but you will have to stay in the same house for 10 yrs or more.

Regardless of who wins the election, they will have quite a mess to clean up.

  • Like 1

Share this post


Link to post
Share on other sites

Mom of 5, Admin-amidst all the finger pointing these last couple of days, your responses are intelligent, obviously researched, and are very well written. No name calling, party bashing, or accusations.....Very good!

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.