just imagine for a minute

Sep 29, 2008

just imagine for a minute

Hi! If you're new here, welcome - I'm Steve, the author of brip blap! Take a look at my about page and check out a few posts. If you like what you read (and I hope you do!), please sign up for my RSS feed or sign up to get posts by email by clicking here. Send me an email directly - I would love to hear from you. Thanks for visiting!

I’m writing this Sunday evening when the bailout package has been finalized but not yet voted on. I’ve been stunned by the speed that this bailout has rushed through Congress, much like the Iraq war rushed through. I stopped and imagined for a minute what would happen if we had an all-hands massive push combining the executive branch and both parties in both houses of the legislative branch to enact:

Meaningful healthcare reform
Decisive actions to achieve energy independence in ten years
A comprehensive and complete revision of the tax code, eliminating loopholes for lobbyist-inspired deductions and adding good ones, like tax credits for hiring Americans (for example)
A massive effort to audit and slash wasteful spending across the board for the federal government.

You get the idea. The frustration is enough to make you grind your teeth to the bone, isn’t it?

All of this furious rush to save Wall Street should demonstrate to everyone at least one small bit of absolute truth about life in America today: the rich and powerful watch out for their own. The rest of us should learn that lesson and watch out for ourselves. If your Congressman votes for the bailout and you don’t like what you see in the final package, make sure you remember it come Election Day. Take your business away from companies if you feel they unfairly benefit. Don’t be passive if you don’t want to be. Imagine for a minute what would happen if we all stood up to punish this kind of excess just once. It might not be the disaster they want you to think it will be.

photo credit: Porcelaingirl° {enthusiastic foolish}

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Viewing 14 Comments

escapee 09/29/2008 10:42 AM 1 point
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Also, you may be able to vote to RECALL your congressman right now if you live in one of these states. This is taxation without representation. What happened the last time the American people were subjected to that?

http://www.ncsl.org/programs/legismgt/elect/rec...

Alaska
Arizona
California
Colorado
Georgia
Idaho
Kansas
Louisiana
Michigan
Minnesota
Montana
Nevada
New Jersey
North Dakota
Oregon
Rhode Island
Washington
Wisconsin

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bripblap 09/30/2008 06:52 AM 1 point
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And escapee, there's also the even simpler action to vote against your congressman in about 6 weeks on election day, when all 435 are up for re-election.

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escapee 09/30/2008 09:40 AM 1 point
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really? I don't *think* my congressman is up for reelection...

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deepali 09/30/2008 02:23 PM 1 point
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has there been a government takeover of your state? :)

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http://paradigmshifted.wordpress.com

CraigK 09/29/2008 01:43 PM 1 point
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It only better decisions were made over the past few years, we probably would have been able to avoid the situation our economy is in now.

Craig
www.budgetpulse.com

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neimanmarxist 09/29/2008 02:06 PM 1 point
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i heard you on NPR! nice! :)

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Bill 09/29/2008 03:10 PM 1 point
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I agree with you about priorities: Healthcare, education, and energy reform would all be worthwhile endeavors, along with tax reform and government spending reform.

But the point that a LOT of people miss is this: Without this "bailout," none of this matters.

People certainly can disagree, but I think they're wrong. Just look at how the market reacted to this. EVERY money manager I've seen interviewed or quoted is for this, in some form or another.

The reason: The government has done a poor job instilling confidence and TRUST in the financial industry. I just wonder when there will be a full-fledged run on the Bank of the US (i.e., the Treasury), when every foreign entity cashed out of their US-backed bonds. Interest rates will skyrocket and the Fed will have to PAY people to buy bonds (negative interest rate). It's not unlike what's going on now; it'll just be far more severe.

This is NOT a BAIL OUT of financial institutions. This is saving a patient whose arm has been severed from bleeding to death. We can worry about the arm later. Let's keep the patient alive to live another day.

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http://www.money-hacks.com

bripblap 09/30/2008 07:01 AM 1 point
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Bill, I hear what you're saying, but I think THIS bailout took the wrong form. Even with the addendums there were so few protections against massive new powers for the Treasury Dept. that it was doomed to fail. To expect a former chairman of Goldman Sachs to go to Goldman Sachs and negotiate a fair price for supposedly worthless securities without any other approval or authorization needed is not realistic. I think a lot of the money would have gone to the biggest, most well-connected (politically) firms and since there is no market for these securities, the US would have been stuck with them for years. All of the downside would have been shifted to the US, and none of the upside would have been shifted (I don't believe these particular types of securities will ever recover their full value).

Everything you say will happen, may, but this is what happens when you have decades of mismanagement culminating in eight years of insane recklessness. The bill was going to come due eventually. It's going to be hard (trust me, I work on Wall Street and my prospects have become very, very grim) but I would rather see it happen now than see the US take on more crippling debt it simply cannot afford.

To use your analogy, the patient will live - our biggest concern has got to be avoiding introducing an infection into the system.

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Bill 09/30/2008 07:38 AM 1 point
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Steve, this is a reply to your reply and also a comment on a later post you made about this -- the securities we're talking about aren't fairly-valued. They're priced far lower than a rational market would value them. Therefore, IF the market returns to sanity (and I think it will and I think it will much more quickly with a government instilling confidence in the economy and financial system), the government limited its downside risk by buying the securities at a depressed price. Therefore, it's sort of boosted the risk-reward equation over to the reward side.

It's apparent that you're skeptical of the administration. So am I. I've been VERY vocal about that (read my Rants blog). They're careless, at best, reckless at worst.

However, I'd begin to listen to people like Bernanke (even though I think he missed the party on this), who's academic career encompassed studying the cause, effect, and solutions of and to the Great Depression. He's finally seen the light. And I think he's terribly afraid of how clearly bright that light is!

I HOPE I'm wrong. I REALLY don't want to say "I told you so." Because I have a lot of money in this market, too. I'm just like everyone else here: I work, pay my bills, and count on my investments to fund my retirement. Those 3 things are in jeopardy right now.

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http://www.money-hacks.com

Bill 09/30/2008 07:43 AM 1 point
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One more thing: Do you read andrewtobias.com? I think you'd like what he has to say about personal finance, the economy, politics, and social issues.

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http://www.money-hacks.com

Ruth 09/29/2008 04:03 PM 1 point
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I agree with Bill! Of course I'm angry about having to bail out Wall Street, but I'm 59 years old and planning to retire in the not-too-distant future. I'm watching my stocks lose more and more value every day and I'm scared-really scared. Today has been unbelievably brutal.

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deepali 09/30/2008 02:19 PM 1 point
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ruth, i am hoping that if you are retiring soon, that you've been rebalancing your portfolio!

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http://paradigmshifted.wordpress.com

vamsi 09/29/2008 08:43 PM 1 point
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Health care must be recognised a basic human right in the USA and it would be great if they can so swiftly to resolve that issue.

But your idea of giving tax credits for just hiring Americans is contrary to the principle that efficiency and knowledge are far more important than where they are born.This kind of protectionism will spiral the country down even more.

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bripblap 09/30/2008 07:04 AM 1 point
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Vamsi, maybe I wasn't clear enough. I don't care about citizenship so much as location. Any company who hires anyone legally in America (citizen, guest worker, green card, etc.) should get preferential treatment over someone who sends work overseas. If I send a job overseas, I don't have to pay social security taxes, unemployment taxes, etc. for that employee, which in my mind amounts to a tax cut. I think someone who struggles to keep a job here is penalized for doing so, and THAT ought to change - at least until developing countries offer the same sorts of social welfare benefits we do in the US.

But I certainly don't care where anyone was born, I didn't mean to imply I'm some sort of nativist!

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