Archive for January, 2009

US Government to Buy Junk Assets and Loans with Tax Payers Money

President Obama’s administration with newly appointed US Treasury Security Geithner is looking to announce plans in the near future to purchase “bad—or non-performing and illiquid—assets from banks“.

What might these “assets” be you may ask?

Recently Drew Griffin and David Fitzpatrick, on a special investigative assignment for CNN had revealed this about Silver State Bank in Las Vegas, Nevada.

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So why is the US Government bailing out banks that have these bad loans? How will this save Americans from further foreclosures and job losses?

President Obama’s administration and Congress have yet to explain it to the American people how this is going to help and how it will be paid plus interest since the government doesn’t have a surplus.

Lastly, with this “hurry up offense” what other “stimulus” have been added by the 435 Congressional Districts and 50 states to this economic package?

The Republicans, despite President Obama’s efforts for a bi-partisan accord, are not buying it.  President Obama and Treasury Secretary Geithner want to use taxpayers money to buy toxic assets that no one on Wall St wants to touch.  What does Wall St know that President Obama and the taxpayer don’t know?

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Capitalism versus Welfare State, I Can’t Tell the Difference Anymore

Economic plans by Democrats versus Republicans, Liberals versus Conservatives, all are off target. In my honest opinion, I don’t think either party’s economic plans will work. Neither address the issue that Americans can’t support a standard of living that they desire, an extravagant and self centered culture promoted by media and banks all so willing to lend you the money, and a government and economy controlled by the super wealthy to funnel wealth to them.

As of 2001, the top 20% of the country controlled about 85% of the country’s total net worth.

In 1983, the top 20% of the country controlled about 81% of the country’s total net worth. Up 4%.

As each decade goes by, the weath continues to be funnelled upwards, squeezing the remaining 80% of the people in the United States. Worse for the bottom 15%. (Data source: http://sociology.ucsc.edu/whorulesamerica/power/wealth.html)

This is across both Democratic and Republican controlled White House and Congress.

And we witness this everyday and we accept it. The laws protect businesses more than individuals. Wealth hides behind legal corporate structures and are better protected than individual bankruptcy laws. Individuals bare more tax burden for the country than corporations. Between individual income tax and social security, the Federal government in 2008 collects nearly 85% of its tax revenue while corporations only had to carry the rest.  (Data source: http://www.infoplease.com/ipa/A0104655.html)

How many of us know all those “executive perks” for top management?  John Thain was redecorating his office while Merrill Lynch was in dire trouble and using taxpayer’s money, he was paying out bonuses to the top ranks and laying off the lower ranks.

How many of us know those lobbyists working for top management influence and infiltrate our government? William Lynn who’s job it was to get government defense business for Raytheon Corporation is now Deputy Secretary of Defense.

So why do laws and government actions continue to disfavor those faceless 80% (240 million Americans)?

This week alone, more 71,400 new job cuts were announced.  Hence, an already impatient President Obama has renewed sense of urgency to convince the holdout Republican Congresspersons to vote for his Economic Stimulus Plan.  Behind close doors, they are negotiating revisions.  But will President Obama be successful if there are fundamental economic philosophical differences?  Texas Congressperson Ron Paul and others believes it’s the absolutely the wrong thing to do because it’s interfering with the free market. In addition, where is the borrowed money coming from?

Ron Paul and Dick Armey on Fox Business News

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What do you think?

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Socialization, It’s Already Here. Why Not Go All the Way?

so·cial·ize (sō’shə-līz’) Pronunciation Key
v. so·cial·ized, so·cial·iz·ing, so·cial·iz·es
v. tr.
1. To place under government or group ownership or control.
2. To make fit for companionship with others; make sociable.
3. To convert or adapt to the needs of society.
v. intr.
To take part in social activities.
so’cial·i·za’tion (-shə-lĭ-zā’shən) n., so’cial·iz’er n.
The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2006 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved.

In the United States, some companies in defense, education, agriculture, auto and banking have received either government (a.k.a taxpayer) subsidies or in the case of banking money directly for capitalization.  And in general, these businesses are receiving tax payers’ monetary assistance so that they can adapt to the needs of society.  We have so many regulations of industries and now that we have direct control over some of them like the banks that received TARP money, then why not call it what it is, socialization.  Whatever happened to taking responsibility and ownership?

The reason we don’t is because you must first examine who’s benefiting the most by not calling it socialization?  Well, the owners of those companies because they will lose control.  And the lost of control means less money for them.  We know approximately 50% of Americans invest directly or indirectly in the stock market.  But let’s face it, the top 20% own more of it then the remaining 80% of Americans.  But if it’s taxpayer money then shouldn’t we all be owners?

Now this gets even more interesting with the banks.  If I as a taxpayer is issuing money to the banks via the US Treasury under TARP in order to capitalize the banks, and in addition, I keep my cash on deposit at the same bank with the FDIC insuring my bank deposits, and further the banks borrow from the Federal Reserve in order to lend money to me in the form of a mortgage, then why am I bothered with paying interests on my mortgage to the bank since practically I am part owner of the bank?  I am essentially paying bank management and its employees to lend my money to myself in addition to paying 50% of Americans who are possible shareholders.  But keep in mind, these banks already lost their equity and capital, and were on the verge of collapse prior to taking the TARP money.

Why not just socialize the banks and eliminate the inefficiencies in the banking system.  Lower the interest on all mortgages within these banks that accepted TARP.  This will create immediate discretionary income for all mortgaged homeowners and help them keep their homes which will stop foreclosures which will help stabilize the real estate market.  But since this will make mortgages originating from banks under TARP more attractive than those that did not accept TARP money, there will be a flood of refinancing forcing all non-TARP banks to either come under TARP or face losing customers.  So might as well make every bank part of the same institution and nationalize the whole banking industry.  Some banks or financial institutions are already asking for more second round of TARP money.

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