Misanthropic Meanderings

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Location: California, United States

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Tuesday, September 30, 2008

I'd bail you out, but you stole my bucket

So, let me see if I get this straight. The ruling class has blown most of our money (as they've offshored and protected their investments ages ago) and now, after running several hundred collective years of solid banking and investment firms into the ground, they want even more of our money to save themselves from not being as rich. Pardon me, but why should we, the American people, pay for your supreme, epic, FAIL?

It struck me 2 years ago as I trailed behind my beloved domestic partner (DP) during house hunting that the American economy was a bloated elephant on toothpick construction stilts. Who could seriously afford a $300k "starter" house? Was this real estate and his/her mortgage broker partner on some sort of industrial crack, that a $60k salary was able to spring for that kind of starter? What start was it, the dynamic jump down? Most people told me I just didn't understand finance. All I knew was that jobs were few, the pay rates were lower for COL (cost of living) than in 1999 and the math of actual payments to actual income meant that I'd be a fool if I ever said to my mate that this was worth doing. We waited until the wheel came around and now we have a place we can afford, unfortunately...the wheel also swung around on his job. But we can hold out for while, thankfully.

These CEOs and lobbyists have no such sword hanging over their heads. They had cushy payments for decades, bonuses that are bigger than their salaries and the ethics of fly larvae. While there is a need for financial bailouts to protect the public, the current plans on the table are not them. We need a real populist plan. Here's what I have to say and if you agree, copy it into an email and send it to your Senate and House reps.

1. Absolutely no golden parachutes for the top level executives for these companies. When a worker is fired for incompetence, they do not get massive financial bonuses. They've failed to run an ethical company and failed to run a successful company. There are no bonuses to be had for failure.

2. All CEO compensation has a limit of $400k for this year. No extras, no perks, no sweetheart loans with no real payback dates. No christmas bonuses. I doubt any Lehman Brothers mailroom staff are getting a years salary and christmas bonuses. If any CEO, CFO, etc asks why, please read rule 1, no bonuses for failure.

3. Absolutely no bailout for CDS (Credit Ddefault Swaps). Why? The creative finance techniques that created CDS' are to blame for what's happening now. There is no reward for this type of "creativity". In fact, if it was a guy in an alley with a gun, we'd call it what it was, robbery. Robbers should not be bailed out for their thefts.

4. Debts are not investment opportunities. See rule 3. We demand oversight, clear regulation & oversight to prevent this kind of high stakes and high cost shell game.

5. Preserve our neighborhoods by preserving our neighbors. We are losing our homes. Foreclosures are up and bankrupt vacant homes are driving down the home value for hardworking Americans who can pay their mortgage and creating pools of danger as their vacant homes become targets for looters or squatters. Allow bankruptcy judges to renegotiate mortgage payments for those in forclosure.
a. Allow rates to be reduced by as much as 50%, based on evidence of income, as long as the homeowner is willing to pay his mortgage.
b. Ensure that as long as they can pay on their home, they can live in it. Set a time limit for financial review, to keep the payments fair.
c. As they can afford more, they pay more. Let there be no interest rate penalty for this mortgage exception.
d. Banks should not turn down payments made on a home because it is not exactly the mortgage payment. Why? Because .01 is better than .00.
Keep families stable and neighborhoods stable by heloing the American worker keep his home. This is the primary bailout that needs to happen.

4. Henry Paulson is not a credible choice to oversee this bailout. The more I know about him and his connections to people who are making out like bandits during this "crisis", the less I like. It is time to cut this extremely well connected insider lose. I make no claims of criminal behaviour, I just point out that there is a good case for conflict of interest and as this and a number of recent failures have happened under his "service" to the current administration, he is not a proven, capable administrator for any bailout plan.

5. $700 billion is far too much money to be handed over in any lump sum. I'd also say $250 billion is too large. Have any of the people in charge demonstrated a good sense of fiscal responsibility? No. $150 billion to released at $50 billion dollar increments monthly for the rest of 2008 for immediate relief. A fund of $250 billion for 2009 for phased relief over the next 6 months. Am I pulling figures out of nowhere? You bet I am. If that was good enough for the Secretary of the Treasury, that's good enough for me. In reality, my numbers are based on foreclosure dollar amounts. Perhaps Secretary Paulson could try that for a change.

6. No tax breaks for the rich, no tax breaks on estates or investments. Now is not the time for more tax breaks for the poor ruling class. Now is when they have to pay their debts.

We better hang on to our dollars, strive to be as economical as possible and hold on to our buckets. None of the financial news I'm reading says a bailout is tremendously necessary or really going to save anything. We have to stand firm and insist that law makers listen to us. Not lobbyists or proven failures. We the people, the guys who they really work for. Now get emailing.

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