[Vision2020] Why are we bailing out all these large corporations?

Tue Sep 23 00:12:09 PDT 2008

Andreas,

What I am saying is that giving $700 billion dollars to men and woman at the top of the economic scale who have already demonstrated monstrous greed and financial incompetence is not the answer to strengthening the economy or helping the American middle class.. This is socialist Marxism at its worst. We are dumping good money after bad. This will hurt the lower and middle class, and only favor the well-to-do. 

Being without money for a short period of time is NOT the worst thing that can happen to a nation.  It can, in fact, make us more resourceful, careful, creative, and grateful. Nor do I think the way Congress and the President are spending the money is going to shorten the coming recession/depression. 

Rewarding bad behavior is will only reinforce bad behavior. If we are going to give away the taxpayer's hard earned money, we ought to be giving it to those that know how to run a successful business model, not ones that go billions into the whole. 

Best Regards,

Donovan

--- On Mon, 9/22/08, Andreas Schou <ophite at gmail.com> wrote:

From: Andreas Schou <ophite at gmail.com>
Subject: Re: [Vision2020] Why are we bailing out all these large corporations?
To: donovanjarnold2005 at yahoo.com
Cc: "Tom Hansen" <idahotom at hotmail.com>, "Vision2020" <vision2020 at moscow.com>
Date: Monday, September 22, 2008, 9:34 AM

Donovan --

Three paragraphs worth of platitudes is difficult to argue with. I
take it that your position is that failing to deal with this financial
calamity will actually be *worse* for America, but that we should do
it anyway to build ourselves into a race of moral supermen?

-- ACS

On Mon, Sep 22, 2008 at 12:15 AM, Donovan Arnold
<donovanjarnold2005 at yahoo.com> wrote:
> Andreas,
>
> What you are talking about doing is socialism. A State run economy. We
know
> this doesn't work. Printing up an addition $700 billion is only going
hurt
> those that rely on a strong dollar. The dollar bill will be worth little
> than the cost of printing a dollar. The retired, and those living on a
fixed
> income or disability cannot earn more dollars, so inflation hurts them. I
> see no reason to drastically cut their lifestyle to help the millionaires
> and those with huge stock investments whom took huge risks knowing the
> consequences.
>
> Let the greedy bastards that swam way out there against all common
> sense with no life vest SINK on their own. Is see no reason to drown with
> them. If you give them first class tickets on a five star cruise-liner
back,
> the next batch of idiots will just swim out further in deeper waters
> expecting the same treatment.
>
> I feel no sympathy for big risk takers that lose. Even less for those at
the
> top of the food chain.
> The BEST thing for the future of our free economy is to allow bad
businesses
> to sink so the good ones can rise and thrive. There are lots of good
> business men and women out there, they should not be playing second fiddle
> anymore to these big losers.
>
> So what if we go into a recession. I don't think it is such a bad
thing that
> people learn to do without a latte every morning for a few years. God
knows,
> the last Depression created the greatest generation of people this world
has
> ever seen. Maybe we should be building character instead of debt for
change.
>
> Best Regards,
>
> Donovan
>
> --- On Sun, 9/21/08, Andreas Schou <ophite at gmail.com> wrote:
>
> From: Andreas Schou <ophite at gmail.com>
> Subject: Re: [Vision2020] Why are we bailing out all these large
> corporations?
> To: "Tom Hansen" <idahotom at hotmail.com>
> Cc: "Vision2020" <vision2020 at moscow.com>
> Date: Sunday, September 21, 2008, 6:24 PM
>
> Tom --
>
> I'm going to have to (probably) agree with Jeff on this one. FDIC only
> insures consumer banks, and SIPC provides a very limited amount of
> protection -- it only insures investors against assets endangered by
> the failure of a brokerage, rather than against the assets themselves
> dropping in value. Neither has a lot to do with the utter market
> collapse that's going on around us right now. Some of it could've
been
> prevented by re-regulating the financial markets; other elements have
> always been poorly regulated.
>
> The first problem was the explosion in subprime and exotic mortgages.
> Here, part of the problem was the incentive structure for mortgage
> brokers: individually, they received a commission on the mortgage;
> however, since the mortgage frequently no longer belonged to the
> original broker when the borrower defaulted, they didn't care. So long
> as the housing boom was moving fast enough to get the mortgage off the
> balance sheet by the time it came due, no one cared*.
>
> The second problem was the explosion in the sale of mortgage-backed
> securities. This, essentially, was a trillion-dollar attempt to spin
> straw into gold. Large banks packaged high-risk mortgages together in
> such a way as to -- supposedly -- balance the various risks against
> each other in such a way as to make the investments safe. They then
> leaned on the ratings agencies to rate these securities either AA or
> AAA (essentially, as safe debt to purchase), which they did.  One
> would think that the financial geniuses that run Wall Street would
> know that there's no honest way to make 2 + 2 = 5. But there you have
> it.
>
> Third, leverage. The debt to asset ratio being carried by Wall Street
> was ludicrous. The SEC had granted exemptions for the big five
> investment banks, allowing them to take out loans at anywhere from
> 30:1 to 40:1. Of the five companies granted that exemption, only one
> -- Goldman Sachs -- is still in anything resembling a decent state.
> The higher your leverage, the more you depend on outsmarting the
> market to outrun your debts. Worse, *your* debts are in someone else's
> accounts receivable column. If you drop into bankruptcy,
> congratulations: your creditors can all take the number in their
> accounts receivable and divide it by the amount to which you're
> leveraged. This causes ripple effects across the entire financial
> sector.
>
> I've got no problem with the government spending taxpayer money to
> bail out Wall Street. The CDOs (mortgage-backed securities) that the
> government is thinking of purchasing probably do have some underlying
> value. But if we're going to be buying a ton of bad debt, we should be
> canny consumers: we don't take on $700 billion worth of debt without
> getting something in return. An equity stake in every company from
> whom we buy CDOs should be fine. The US taxpayer having a seat on the
> board of directors of every major Wall Street firm would also provide
> an elegant solution to the regulation problem: each firm is regulated
> (by a federal trustee) to the extent it couldn't keep its own house in
> order*.
>
> -- ACS
>
> * Incidentally, despite what John McCain's commercials might be
> telling you, Fannie Mae and Freddie Mac had very little to do with
> this business. The definition of a 'subprime mortgage' is a
mortgage
> which neither Fannie nor Freddie would take. Fannie and Freddie's
> problems were largely caused by (a) investor panic, (b) their
> attempts, while wearing their 'private corporation' hats, to
compete
> at a level of risk higher than they ought to've, and (c) a massive
> liquidity crisis caused by everyone wanting to sell mortgages and no
> one willing to buy.
>
> ** Also incidentally, as a US taxpayer, you might be happy to know
> that since the AIG bailout, you now own a one-three-hundred-millionth
> stake in Manchester United, which I am told is a soccer team. They
> used to be a property of AIG: now they're yours. They're quite
> good.\
>
> On Sun, Sep 21, 2008 at 5:35 PM, Tom Hansen <idahotom at hotmail.com>
wrote:
>> Paul -
>>
>> It is my impression that this economic crapshoot was instigated by
>> deregulation of the industry under both Reagan and Bush Sr..
>>
>> It used to be that it was difficult (stringent requirements and
constant
>> federal monitoring) for banks, S&Ls, and other financial
institutions
> to
>> qualify for FDIC/FSLIC "protection".  Once Reagan removed
these
> requirements
>> and Bush Sr. drastically limited (if not eliminated) federal
>> monitoring, banks approved loans to people/businesses that possessed
no
>> viable capability of ever repaying the loans and investment firms made
>> investments that would make third-world countries cringe.  These
financial
>> institutions were not concerned about going "out of
business",
> not as long
>> as they had that FDIC/FSLIC sticker on their doors.
>>
>> So, as Bush Jr. tries to pass himself and potentially McCain (who
>> coincidentally has been in the Senate since Nixon left the White
House) as
>> heroes to the American people, remember who made this all possible. 
Hint:
>> It wasn't Obama.
>>
>> Tom Hansen
>> Moscow, Idaho
>>
>>
>>
>>
>> ________________________________
>>> Date: Sun, 21 Sep 2008 16:59:05 -0700
>>> From: godshatter at yahoo.com
>>> To: vision2020 at moscow.com
>>> Subject: [Vision2020] Why are we bailing out all these large
> corporations?
>>>
>>> If a large corporation is about to go bankrupt because they loaned
> money
>>> without proper collateral behind it and without a determination
that
> the
>>> person taking out the loan could reasonably pay it back,
shouldn't
> we
>>> let it crash and burn? Isn't that what is so casually referred
to
> as a
>>> "market correction"?
>>>
>>> I've heard it stated that there is something different about
this
>>> situation - it's more dire and it could have a snowball effect
on
> the
>>> rest of the economy or even the globe. Does anyone here know
enough
>>> about this to explain that?
>>>
>>> What is so important about this situation that would result in the
>>> necessity for an Iraq War-sized expenditure?
>>>
>>> Or is it a case of the rich looking out for the rich, which
I'm
>>> half-tempted to believe is the case.
>>>
>>> Paul
>>>
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