Wednesday, September 24, 2008

I still oppose the bailout without "sound money"

Reported by the APs Jennifer Loven:

President Bush on Wednesday warned Americans and lawmakers reluctant to pass a $700 billion financial rescue plan that failing to act fast risks wiping out retirement savings, rising foreclosures, lost jobs, closed businesses and even "a long and painful recession."

A couple of things:

1) $700 billion? It was $30 billion for Bear Stearns. Then it was $200 billion for "the penultimate" - Fannie / Freddie. And tack on AIG's $85 billion for good measure... among other recent bailouts.

And the war in Iraq was supposed to be $50 billion, right? And, ignoring the future rebuilding of the military, how many hundreds of billions have already been spent? And wasn't the war supposed to be financed with Iraqi oil?

And with this rescue plan for Main Street bailout for Wall Street, we're told that it'll pay for itself?

With all due respect to the President, he has no credibility on this. Nor does Treasury Secretary Hank Paulson... former CEO of Goldman Sachs and reported by Forbes to have been worth $700 million in 2006.

Sorry. I bought what you sold in the past. Not anymore.

2) failing to act fast risks... "a long and painful recession." Ok. Is he suggesting we're not in a recession? And while I can accept the theory that this bailout is supposed to make this recession less like the 1930s and more like the 1970s... I didn't hear the POTUS say the recession will be milder with this bailout. Reminds me of Tom Ruocco's saying "there's a recession everywhere... except in government spending."

3) The root cause of the problem is fiat money. That is, our money has no intrinsic value. The US Dollar has lost the confidence of many people. So those people are "selling" their dollars and "buying" commodities. That's what happens when you turn on the printing presses (or simply issue trillions of new debt). To turn our economy around, we need sound money. Alan Greenspan explains the problem of fiat money here.

4) I keep hearing about the "assets" that will be purchased by the federal government. Here's the rub... of those so-called assets... how many are liabilities? Is the BP gas station buried in one of those "mortgage-backed securities?" What's the value of that "asset?" Or should it be considered a liability? And how many such liabilities or environmental hazards are about to be purchased?

5) 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 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). Of the people who are 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, but bought 1,800 sq ft on a half acre?

Frankly, I don't know if it's even possible to answer all those questions. But if people answer yes to those types of questions... I don't have much sympathy for them. I go back to the simplest answer to address Wall Street's problem:

Oppose the bailout.

Tim White

1 comment:

John Sparsky said...

Thomas Jefferson wrote ever so long ago of the need to oppose such government interference. I found a unique petition written using his mighty words. You can sign it at Jefferson's Plea. Sign it. And get others to sign it. We need to go back to Jefferson's america.