Sunday, September 28, 2008

A bailout for banks on Wall Street and mansions on Main Street

As I mentioned on Thursday, I emailed the following to the Senate Banking Committee:

We all have bills to pay. And in my efforts to pay off my credit card debt, I cancelled my cable TV about four months ago. And I’ve done a number of other things to try to reduce my expenses, such as reducing my cell phone plan from virtually unlimited calling ($50/mo) to 50 peak minutes ($20/mo).

My questions about the bailout:

Of the people facing foreclosure, how many still have cable TV? How many have cell phones with unlimited calling? How many could afford a 1,000 sq ft house on a quarter acre with a fixed rate prime, but bought 1,800 sq ft on a half acre with a variable rate subprime?

I’m comfortable helping those in need. But of the millions facing foreclosure, how many are living within their means?

My guess is some are truly in need, living on the margins and just scraping by… so happy to have moved from renting to owning a small home that they can call their own. But I’m also guessing that some people have been living (and continue to live) beyond their means.

As for how to define "living within one's means," well... that's the trick of drafting good legislation. My only suggestion would be using an income-based test, such as the so-called "poverty level" or something similar, perhaps a multiple of it.

I really do not want my tax dollars bailing out either Wall Street or someone who lives in a mansion and drives a Porsche.

I give credit to whomever came up with the talking points about "bailing out Wall Street, but not Main Street." It's a great sound bite.

Too bad The Washington Establishment doesn't mention that while there are needy people on Main Street, there are also mansions on Main Street. But I'm guessing that doesn't fit well with the Bush / Paulson / Pelosi / Reid / Dodd / Frank love of ever bigger Government for the rich and powerful. Besides, it's probably more politically palatable to blame "deregulation," than it is to demand personal responsibility.

Furthermore, if this crowd blamed a lack of personal responsibility on John Q. Public... then John Q. Public may turn the tables and ask these Washington Insiders why they're so fiscally irresponsible.

I still say no to this bailout. It's tantamount to price fixing. And even Bernanke acknowledged last week that price fixing was a major cause / aggravator of The Great Depression.

Tim White


bailthisout said...

700 billion......give each taxpayer a piece of that and forget wall street and their irresponsible ways.....give me a break!!

Anonymous said...

This is now how productive investing works:

U.S. Senator $13 Million
Fed Bailout: $700 Billion

Pretty good ROI, I'd say,0,3321771.story?page=1

Breachway said...

market down 700 points Tim....that is part of the reason you spend the 700 billion....people are panicking

Anonymous said...

You can come up with a lot of reasons of how this happened and how so many people profited from it, and say," screw them", if it makes you feel good, but it won't help country and it won't help you.

If a govt financial package is not passed and passed very soon, this country, the world and even you will suffer greatly. Right now the financial institutions are operating in a state of extreme fear that can bring our economy to a halt. What is needed is a solution to reduce the fear and help save the financial institutuions, Wall Strees and the businesses that provide jobs.
Right now, things can wind out of control and there will be no place to hide.

I think everyone should really set aside their emotions and support a plan to stop a melt down.

tim white said...

market down 700 points Tim....that is part of the reason you spend the 700 billion....people are panicking

IMO, the issue is "confidence." But printing more money (increasing credit) doesn't address the root cause - a lack of confidence in the US Dollar. That's why I emailed our three reps nine days ago and suggested a compromise that would restore "confidence." The compromise is sound money.

Even Greenspan questions the long term viability of fiat money.

tim white said...

I strongly believe that a return to sound money would reduce the fear and restore confidence... and in the long run, it's the only thing that'll restore confidence.

Anonymous said...

People should not spend what they don't have. It works. This includes our government. As far as this mess goes it bad and it will need cool smart heads to get us out.

tim white said...

even you will suffer greatly.

My 401k was about $70k at June 30. And it gets revalued tomorrow... I'm not expecting good things in the market tomorrow or in my 401k statement in a few weeks.

tim white said...

on the flipside, they inflate the currency and the dollar devalues.

When the market settles a bit... who knows where the cost of oil / gasoline will be?

The potential collapse of the dollar is a higher priority for me than the likely continued fall of the DJIA.

Anonymous said...

This isnt just about Wall Street, that is a short sightedview of the problem. this is directly abotu the credit markets. Failure to pass the bill is goign to have potentially devastating affect on the credit markets which affects everyone from homeowners, to small business owners. Was it a perfect bill, no. But it was a bill good enought to address the urgent issue at hand. Voting against it was pure politics and not in the interest of the american people. The GOP congress voting against it, blew it. I have been a life long republican until today. I have had it. The Bush adminsitration first plunged us into a trillion dollar disaster in Iraq, now under its watch we have this mess. And today they cant put their own blind self interests aside and vote for the darn bill.

John McCain and the GOP lost my vote....I am done. I have had enough of this crap. I am voting democrat straight down the line this november. They damn wel better pass a bill this week before they collapse the economy.

This adminsitration will go down as the worst in American history.


Anonymous said...

One more thing....when a building is starting to burn, you dont sit there and discuss who was at fault or wether is more cost efficient to use water or chemical retardent. You grad whichever one is closest and will do the job and put the damn fire out. Is that concept so hard for these selfish corrupt politicians to understand?

When they dont pass a bil quickly and the economy start to completely unravel and jobs are lost.....what will they say then....oh its the dems fault, the GOP fault.....lots of god that will do. Pass a bill you corrupt slime bags.

Chipmaker said...

A bill will be passed. Just not the first one thrown over the wall.

The Patriot Act was passed quickly and with little review. There's all sorts of obnoxious things stuffed in there.

Bush was given a blank check for Iraq as well, and look how that's turned out.

No. Administrations should never be given blank checks, not without sincere and strong safeguards, but this administration in particular has proven it cannot be trusted and has no credibility when it cries "wolf!"

I'm for taking the pain now and passing a bill that will work for the greater good of the nation, not just some high-rollers whose bets busted.

Anonymous said...

.....what will they say then

They will say that the bill just didn't fit with everything that they believed. They were trying to protect the taxpayer, bla bla bla.
They always have an excuse for doing nothing and they get paid 168,000 a year. It's just a matter of keeping their jobs and they just don't care about anything else.