Real Crisis, Real Solution

The world is not ending. But the potential for a terrible economic downturn is real.  Ask almost anyone about the current economic crisis in our U.S. of A., and they’ll probably admit they don’t understand a) what’s going on, b) how we got here, or c) how to fix it.  Me neither.  Not completely at least.  Heck, there are plenty of executives and others in charge who are as confused as the rest of us.  That’s not to excuse anyone nor the mistakes that were made, but to illustrate the complexity.  While this latest ‘crisis’ got serious a couple weeks ago, it’s been brewing for years.
Bernanke, Bush, Paulson, & Cox

The Bailout Boys: Bernanke, Bush, Paulson, & Cox

What most of us do understand and agree on is this: There ain’t no way we’re bailing out fat cats on Wall Street with taxpayer money.  Well, that’s not what this bailout is about.  It’s literally the government and us taxpayers coming to the rescue, relieving an emergency financial situation that’s affecting all of us.  It’s my goal everyday to boil stories down to their simplest.  Can’t do it with this one.  But relax!!  Everything’s gonna be fine.  Know how I know?  Warren Buffet said soAnd we should listen to him.  Buffet has had experience in this kind of fiscal trouble before.  The truth is, the $700 billion rescue package could actually make us money.  In that case, we ought to replace the description “bailout” with “investment.”  Buffet said if he had the money, he’d fund the deal himself.  But there’s only one entity (we trust) with those resources and the time to wait for the $700 billion to pay off, and that’s our government.
Buffet Buffs Fiscal Fears

Buffet Buffs Fiscal Fears

So, the deal is almost done.  Democrats and Republicans could make an agreement by the end of the day.  The bill could be signed by the time the markets open Monday.  By most accounts, President Bush set it up well in last night’s speech, doing a great job explaining the risks of doing nothing, and reassuring us that we’ll survive.  Now just because Congress acts fast, doesn’t mean the economy will rebound in a week.  Some financial experts are predicting a real recession late this year into 2009.  The economy will likely remain slow for a time, but a complete meltdown can and should be avoided.  And major reform is needed to protect us in the future.  Meantime, save your money!!
Now, no economic blog post would be complete without perspective from “Mr. Financial Common Sense,” Dave Ramsey.  He’s the no-nonsense talk show host who pushes a debt-free lifestyle.  Obviously it’s easier said than done.  His idea, as opposed to the bailout, would basically have us insure the bad mortgages instead of buying them.  It’s an interesting take on the situation.  There are other opposing ideas from leaders like former Prez-candidate Congressman Ron Paul, but at this point it seems like the bailout train in running with no brakes.
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One Response

  1. I don’t know who wrote this, but I received it in my e-mail the other day I thought, hum… someone should appoint this man head of the treasury. Maybe we don’t need quite as much as he suggest, but 1/3 of that amount would deffinitley help out my family and I. Just maybe this idea could get to those who make decisions for us.

    This man’s a GENIUS!!!!

    I’m against the $85,000,000,000.00 bailout of AIG.

    Instead, I’m in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

    To make the math simple, let’s assume there are 200,000,000 bonafide adults in the U.S.

    Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000
    might be a fair stab at adults 18 and up..

    So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

    My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

    Of course, it would NOT be tax free.

    So let’s assume a tax rate of 30%.

    Every individual 18+ has to pay $127,500.00 in taxes.

    That sends $25,500,000,000 right back to Uncle Sam.

    But it means that every adult 18+ has $297,500.00 in their pocket.

    A husband and wife has $595,000.00.

    What would you do with $297,500.00 to $595,000.00 in your family?

    Pay off your mortgage – housing crisis solved.

    Repay college loans – what a great boost to new grads

    Put away money for college – it’ll be there

    Save in a bank – create money to loan to entrepreneurs.

    Buy a new car – create jobs

    Invest in the market – capital drives growth

    Pay for your parent’s medical insurance – health care improves

    Enable Deadbeat Dads to come clean – or else

    Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman
    Brothers and every other company that is cutting back. And of course, for those serving in our
    Armed Forces.

    If we’re going to re-distribute wealth let’s really do it…instead of trickling out a puny $1000.00
    ( “vote buy” ) economic incentive.

    If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!

    As for AIG – liquidate it..

    Sell off its parts.

    Let American General go back to being American General.

    Sell off the real estate.

    Let the private sector bargain hunters cut it up and clean it up..

    Here’s my rationale. We deserve it and AIG doesn’t.

    Sure it’s a crazy idea that can “never work.”

    But can you imagine the Coast-To-Coast Block Party!

    How do you spell Economic Boom?

    I trust my fellow adult Americans to know how to use the $85 Billion

    We Deserve It Dividend more than I do, the geniuses at AIG or in Washington DC.

    And remember, The Birk plan only really costs $59.5 Billion because $25…5 Billion is returned instantly in taxes to Uncle Sam.

    Ahhh…I feel so much better getting that off my chest.

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