45 responses to “Bail Out Plan”

1. 

   lisatower

   September 26, 2008

   Thank for clearing that up. Hopefully some humour will lower the anxiety. What I hear when people are opposed to the bail out is “Why are we going to blow 700 Billion tax payer dollars”. What they never seem to graps is that the gov will be purchasing ASSETS with this money. They are not going to give Johnny Armani a big check and tell him to go try it again. The bulk of the 700B is to purchase mortgages. Each and every time one of those gets refinanced or the home gets sold the entire balance gets paid back to the gov. Best of all they have an exit strategy to sell it all off and recover the entire investment.
   As a side bar, I have a theory as to why these things are so infuriating to regular guys like me. Lets take Merrill Lynch for example. You can insert any recent company failure you like. The CEO left with a 66 Million dollar severance package. after running the company into the ground. Cashflow Quandrant tells us that CEO’s are….wait for it…EMPLOYEES. Thats right they are overpaid highly priviledged EMPLOYEES. If they had been an S,B or I they would have left with nothing. An S, B or I knows that he is the last one to get paid not the first. I’m irritated that these multi-million dollar parachutes are coming out of the “5% of the money” side of the quadrant.
   In life you are rewarded in proportion to the service we give others. But these guys FAILED to serve their companies and still snuck out the back door with the checkbook.
   Tim Tower

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2. 

   KBH

   September 26, 2008

   Chris – don’t know if you’d seen anything like this, but I got this email and it sums it up well:
   Hi Folks,
   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 U.S. Citizens 18+.
   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 billion 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 Dad s 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 that is being proposed by one of our candidates for President.
   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 Family 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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3. 

   dean clouse

   September 26, 2008

   I agree with that for the most part Bradyman. However, the reasons these companies are going under has less to do with ARM’s than you may think. Most of the mortgages that go into default are either not ARM’s or they are ARM’s with interesting additives. For instance, many of these bad mortgages are actually what is commonly referred to as negative amortization loans. Yes, as these people pay their mortgages, their note gets bigger. Now add in the falling value of homes and you get people who owe more than the house is worth, and then the 3 years of negative amortization ends and the mortgage turns into a 27 year ARM with a 20% higher balance and double the payment, so they leave and go somewhere else. Also, many of these loans are SISA (Stated Income Stated Assets, yes, they would give you a mortgage based on your word that you had that much in cash in the bank and that you make that much at your job, then let you have the home with almost zero down), or NINA (no income no assets, even worse, they know you don’t have money or income, but you can have the house anyways). Also, there are some loans that you could get up to 60% of your income before taxes, and yes, sometimes that would be your stated income, and you wouldn’t have to prove it. Crazy, isn’t it?
   Now, how did the mortgage guys get so crazy to loan money to people who could claim they made so much and not have to prove it (gives new meaning to bragging rights about one’s income), then give them a loan that was up to 60% of that income before taxes, then figure out a payment that wouldn’t even cover the monthly payment therefore add the difference to the end of the mortgage until the note went up by 20% then reamortize it as a 25-27 year standard mortgage with varied interest rates and the whole payment had to be made with no exceptions which would double the monthly payment thereby making the new mortgage payment roughly 120% of the persons before tax stated income? Simple answer here.
   You see, several years ago, congress passed several laws telling financial institutions to come up with ways to give out loans to people without income, jobs, savings, or credit history. So, yes, it is our governments fault. So now our government, who caused this financial problem, thinks that the solution is to throw money at the companies that were ruined by their laws. Hmmm, maybe the government should just stay out of business, including finanacials, oil, automobile, healthcare, education, insurance, etc. What do you think?

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4. 

   Josh

   September 26, 2008

   sounds like you pretty much nailed it on the head, Chris. 🙂
   To add to what the last comment says, even if the money is going into mortgages in hopes of a decent return, that’s still 700 Billion dollars created out of thin air by the not-so-Federal Reserve and loaned out to our government WITH INTEREST. It’s also another 700 Billion new dollars flooding the market, shooting up the cost of commodities like gas and food, while the money everyone gets from their jobs would have less purchasing power to get the expensive gas and food with. I’m gonna stop before I get too excited here, but that’s the gist of it.

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5. 

   Alpesh Shah

   September 26, 2008

   Chris,
   I lost my job today due to this whole mess. I work at a bank and since the bank can not sell the loans to Fannie and Freddie due to this whole government takeover the company had to unfortunately cut back. Thank you for speaking the truth on the subject that many people are afraid to say. I have attached a great video from Ron Paul talking to Ben Bernanke. It’s a great video talking about price fixing in our society and why socialism fails every single time.
   
   – Alpesh

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6. 

   Jonathon Jones

   September 26, 2008

   I wish more people would hear Ron Paul out on these issues. Here is a letter from him that sums up the current situation. Incidentally, he has also called on Americans to boycott the 2 party system and vote for 3rd party candidates. I recommend approaching that suggestion with a teachable mindset and investigate the affect it could have if more Americans voted their conscience instead of voting for the lesser of two evils.
   Here’s the letter…
   Wednesday, September 24, 2008
   Dear Friends,
   Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.
   The events of the past week are no exception.
   The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! “This is welfare for the rich,” he said. “This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters.”
   That describes the current bailout package to a T. And we’re being told it’s unavoidable.
   The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences – predictable, that is, to those who understand sound, Austrian economics – are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
   • The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
   • Financial institutions are “designated as financial agents of the Government.” This is the New Deal to end all New Deals.
   • Then there’s this: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
   There goes your country.
   Even some so-called free-market economists are calling all this “sadly necessary.” Sad, yes. Necessary? Don’t make me laugh.
   Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind – another example of the big choice we’re supposedly presented with this November: yes or yes. Now, with a backlash brewing, they’re not quite sure what their views are. A sad display, really.
   Although the present bailout package is almost certainly not the end of the political atrocities we’ll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
   The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
   When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
   Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
   In liberty,
   Ron Paul

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7. 

   Scott Woodcox

   September 26, 2008

   Chris, Awesome post. My wife and I were just discussing the very questions you posed. Its a vicious circle of us not having money, them losing our money, us paying our own money back to them, so they can “give us our money”. Which also brings up the question that if the money is being held up in their jets, suits and cars, why are those company’s also going belly up. Kinda makes me want to get a shoe box instead of a savings account.

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8. 

   Rick

   September 27, 2008

   Chris,
   If these financial institutions lost our money in the first place, and then the government gives them more of our money what is to say that they won’t lose our money again?
   Just a question I had when I read your post.
   Rick

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9. 

   Stacy

   September 27, 2008

   here it is in a nutshell….
   Dear Friends:
   The financial meltdown the economists of the Austrian School predicted has arrived.
   We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market’s attempt to re-establish rational pricing of houses and other assets.
   Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I’d only be repeating what I’ve been saying over and over – not just for the past several days, but for years and even decades.
   Still, at least a few observations are necessary.
   The president assures us that his administration “is working with Congress to address the root cause behind much of the instability in our markets.” Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
   We are told that “low interest rates” led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
   Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or “wildcat capitalism” (as if we actually have a pure free market!).
   Speaking about Fannie Mae and Freddie Mac, the president said: “Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.”
   Doesn’t that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn’t that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn’t the federal government shown that the “many” who “believed they were guaranteed by the federal government” were in fact correct?
   Then come the scare tactics. If we don’t give dictatorial powers to the Treasury Secretary “the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.” Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
   It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
   The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
   F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own:
   Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
   To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end… It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
   The only thing we learn from history, I am afraid, is that we do not learn from history.
   The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
   Oh, and did you notice that the bailout is now being called a “rescue plan”? I guess “bailout” wasn’t sitting too well with the American people.
   The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you’re supposed to have a voice in all this actually seems to annoy them.
   I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects – the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
   H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
   In liberty,
   Ron Paul

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10. 

    Bobbi Biggs

    September 27, 2008

    AWWW!!! Chris!!! You lost me when you mentioned Tom Brady!!! I take it you’re a Patriots Fan!!! True Blue Colts fan here!!! I don’t know if you realize this, but we are big rivals!!! I really held you in high regard and respect until I read this! LOL! Just joking! All kidding aside, I was just laughing when I read this, because it is sooo true. Funny how the twisted cycle just continues!
    Love in Christ, Bobbi Biggs

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11. 

    brian

    September 27, 2008

    Chris,
    You are amazing. I really think the post by KBH is interesting. I am so glad that we no longer look up to our government to take care of our future, with one exception, our incredible Armed Forces. This is the PRIME example of a society that has been taught WIN-LOOSE principles. We are in the battle (media war) with ya buddy. I’m certain that our Keynote Speaker at our Major will explain this so we all understand just exactly what to do in November. I have no doubt that Bob McEwen understands this issue unlike any other. The truth Chris, we need to get the truth to people and the sooner the better. Thanks for getting Bob as a Keynote Speaker, can’t wait.
    Brian Powers

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12. 

    Laurence Goldkamp

    September 27, 2008

    All I can do is smirk when I read this. I’m so glad I am apart of TEAM! There’s hope!! There’s change!!

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13. 

    James Beery

    September 28, 2008

    I tottally agree that a government bailout being charged to the taxpayers is not a good idea. That is the problem with the country today. Noone wants to take responsibility for what they have done.
    One of the reasons that we are in the housing crisis we are in is because five years ago the media started pummeling all the big banks becuse they were not lending money to everyone. Implying that home ownership was a the American dream and that keeping someone from the American dream was wrong. Be careful what you wish for.

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14. 

    Mark G

    September 28, 2008

    Some good points in the comments. But like you said it takes a politician or expert economist to ‘splain them. A little fuzzy math in the first comment unless mine is off (it was off by a factor of 10 to the 3rd get a mathemetician to ‘splain that). Golden parachutes and lifestyles need to be eliminated for those not hauling their weight as “E”s and get back to a sense of reality in all of this wealth we created, it never really existed except on paper. When companies quit producing dividends and we started making money strictly from the speculative nature of the stock (i.e. Amazon, Yahoo, Google) we lost our sense of real value.
    mgg

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15. 

    dean clouse

    September 28, 2008

    Guess what is happening now. The congress is actually bailing out on the bail out program and coming up with a brand new idea on how to help out. This new program is now called the rescue plan. It differs from the bailout plan in two ways: first, the spelling is very different, and second, well, ok, just one difference. Same law, new name.

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16. 

    brent hansen

    September 29, 2008

    Loved the train of thought from KBH above. However the math is a little incorrect. When you divide 85 billion dollars by 200 million people each person would recieve only $425.00 not the $425,000 he stated above. Sorry, that would bail out noone.

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17. 

    KBH

    September 29, 2008

    Chris and readers –
    I thought this short video (I’ve attached link) was REALLY well done to go through the government programs which some of the commenters above have mentioned (specifically the CRA and Freddie and Fannie’s roles in spurring the “boom”)- though after being exposed to “Freedom to Fascism” I agree with Ron Paul’s position in the complicity of BOTH parties and the Fed (the Shadow Government is in full effect, with the Hollow Men continuing to dine on us). Also, some time back in a dialogue with Orrin on his blog (about how America looks versus Marx’s 10 planks of communism) he suggested reading Murray Rothbard’s book on the Great Depression – it’s a tome and an antidote to caffeine, but it got me to look for more readable sources on the same subject, to learn from our past so as to protect our future.
    
    I genuinely fear for America and my kids’ future. The more information I get (and yes, you DO have to sift through the wackos when you look at non-mainstream-media, but you CAN verify a lot of stuff through concentric sources, and discount urban-rumor/myth theory), the more it becomes clear that unless we do something about it, we become complicit in it. Information is the weapon for this war. Start the trickle, then slowly turn up the tap; you and I didn’t START thinking this (TEAM) way, we had to be convinced from skepticism and lethargy, and should only reasonably expect that we’ll have to work hard to get others in motion. The prize is worth the discomfort – we should all rewatch The Patriot.

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18. 

    Amanda Bealmear

    September 29, 2008

    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 Stimulus Dividend.
    To make the math simple, let’s assume there are 200,000,000
    bonafide U.S. Citizens 18+.
    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
    Stimulus Dividend.
    Of course, it would NOT be tax free.
    So let’s assume a tax rate of 3 0%.
    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. Make mortgage payoff mandatory.
    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
    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 that is being proposed by one of our candidates for President.
    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?
    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.
    Kindest personal regards,
    Birk
    T. J. Birkenmeier, A Creative Guy & Citizen of the Republic
    PS: Feel free to pass this along to your pals as it’s either good for a laugh
    or a tear or a very sobering thought on how to best use $85 Billion!!

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19. 

    Bert Fall

    September 29, 2008

    Great post! It really puts it all into perspective. There were also a couple of earlier comments that were dead-on accurate. There are a few things that worry me about this deal. 1) The inflation caused when so much new money that isn’t backed by anything is pumped into the system. 2) The government intervening and not letting someone to fail which, as we all know is necessary to succeed. 3) The government intervening at all. I must have missed the part in the Constitution that gives them the authority do even do that. 4.) Finally, the scariest of all is that the whole thing reeks of Socialism. I can’t help but to think how some people are eating this up just so the government can get a stronger foothold on Wall Street. Now people are even blaming free markets for the whole debacle. I believe it is “lack” of free markets that caused it. I’m glad a few people posted the articles written by Rep. Ron Paul. I know people dismissed his ideas during the primaries, particularly about Iraq, but I read his book “The Revolution: A Manifesto” and there are some great parts that go into economics and free markets. It was easy to understand and didn’t put me to sleep. Unlike some of my economics teachers. He’s also had some really good points on the floor of the House that have been played a lot on Fox News.

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20. 

    dean clouse

    September 29, 2008

    Step one, reduce all income taxes to 25%.
    Step two, promote the leaders of the army who actually want to destroy the enemy right now. No more smacking them around then rebuilding their country. Complete destruction until complete surrender.
    Step three, if it is not explicitly stated in the U.S. Constitution that the government can do something, then the government has to get out of it. How much money will the government have to stop spending if they actually obeyed the U.S. Constitution?
    Step four, drill for our own oil right now and offer a large sum of money for any company that can bring up American oil in the next two years.
    Step five, let the market correct the market. Letting the government correct the market is like letting the students grade the teacher. They are too whiny, immature and uneducated to do a proper job.
    Do you know what really bothers me about this bailout program that failed today? The Republicans overwhelmingly voted against it but 60% of the Democrats voted for it. Let’s look at this problem. The Democrats claim they are against big business and for the little guy. So they always say “tax the rich and give to the poor”. Now they come up with a bailout program that essentially taxes the poor to give to the rich!

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21. 

    Bert Fall

    September 29, 2008

    I don’t have a single independent thought when is comes solving the current financial crisis. However, I’m a strong proponent of the Austrian School of Economics and I read a lot of publications from the Ludwig von Mises Institute as well as the Foundation for Economic Education. Here’s a few things that have been suggested thus far. I sent this to the Senators from my state as well as my House Representative. I encourage all of you to contact your representative and let them know what you think. Anyway, here’s a few steps to get started. 1) End the bailouts- Congress must revoke the Fed’s authority to bail out failed businesses at the taxpayers expense. (I’d just rather see them end the Fed period but I think we’ll just have to take baby steps.) 2) Cut Taxes and Curb Regulation- Specifically corporate and capital gains taxes. This will bring investors back to the market and make it easier to attract new workers and clients. Also, there is too much legislation, i.e. Sarbanes-Oxley, that is crippling our markets. 3) Reduce Spending- Our federal spending is at an all time high and we must start paying down some of our debt. (I heard an interview with Sen. James Demint this morning where he proposed this but said it would take about 50 years to see some significant effects. That’s some serious debt.) The Federal government must start living within its means or else we will have another financial crisis on our hands. 4.) Reform the Monetary System- Currently whenever the Fed needs money to bailout companies or lower interests rates it pumps money into the system that is not backed by anything. Essentially, the Treasury is printing money out of thin air. Obviously this creates a problem as it weakens the buying power of money already in circulation. I like to use the analogy “If you want stronger Coffee, you don’t add more water.” 5.) RETURN TO THE GOLD STANDARD!! No more of this fake money stuff.
    I’m sure that there is a lot more that should be done. I’m anxious to hear what some of the other readers will come up with.

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22. 

    Alpesh

    September 30, 2008

    Chris,
    I am posting another comment to this because the bigger financial crisis is the entitlements that we have promised to our citizens. I have attached a video with the exact financial projections and how bad things are going to get unless we act as Americans and fill the void where we can.
    All these videos are from the Comptroller General of US Government, these numbers haven’t been disputed by either Democrat or Republican.
    This first video explains how Medicare and Social Security are going to be big problems in the future.
    
    The second video explains the four deficits of America (The Team is going to be able to help two of the Deficits directly in this video)
    
    This final video is a panel discussion on what to do, there isn’t just one answer on what to do in this situation.
    
    I love this country and unfortunately we are on the wrong track. What needs to happen is grassroots change both politically and in people leading their families with the right values and understanding of finances. What we really need is a revolution ….hmmm sounds familiar

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23. 

    Bobbi Biggs

    September 30, 2008

    Birk,
    I really like your plan…Have you ever thought of running for President???
    Your future constituant,
    Bobbi Biggs

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24. 

    Mike Jones

    September 30, 2008

    Chris,
    The current financial “crisis” is yet another example of the ethics crisis our country is experiencing. Despite what the democrats say, the evidence is overwhelming that the Office of Federal Housing Enterprise Oversight had identified problems within Fannie and Freddie. Republicans certainly brought these things to light bug failed in their persistence. I have included a video from 2004 oversight hearing in which the dems rigorously protect Franklin Raines, the head of Fannie. Raines was paid 90 million dollars during his 5 years. He is now Obama’s primary economic adviser. Yet another reason Obama must be defeated.
    Many of our elected officials have been hurrying to put together a bill (no matter how poorly constructed) in order to get out of town in observance of the Jewish holiday Rosh Hashanah. Apparently they couldn’t think of working on a holiday like the rest of the common folk.
    Enjoy…
    

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25. 

    George W

    September 30, 2008

    Two quick points:
    – The markets did not create the problems, government interference with the operation of the markets did. Mark-to-market and coercing mortgage lenders to lend to non-credit worthy borrowers are the prime examples.
    – Reading Thomas Sowell’s recent articles explains may things in an easy to understand way

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26. 

    Kerry Konecny

    September 30, 2008

    Hi
    Chris, I think saying NO to the bailout is the right thing eventhough it hurts in the short term. What can be done is setting the capital gains tax to 0%, Opening up off-shore and Alaska to drilling, and no taxes on new businesses for 2 years minimum. These would all help the economy grow. The current “bailout” plan doesn’t encourage growth…it just promotes more bad behavior in that it rewards bad government and bad business decisions.
    Kerry Konecny

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27. 

    Anon

    September 30, 2008

    http://www.time.com/time/business/article/0,8599,1845209,00.html?cnn=yes

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28. 

    Rick

    September 30, 2008

    Chris-
    I found this excerpt from Greg Brown of Newsmax….
    “…So here’s the deal. Don’t bail out the banks. Don’t give money to home speculators who got in over their heads. Give it to me.
    No, not cash. Give me a tax credit, say, $10,000 a year for five years, but only if I buy a house worth at least five times that amount within the next 18 months.
    (The Congress did give first-time buyers a $7,500 tax credit recently, but it phases out based on income. Most people in a position to buy a house today make too much and are on their second or third home anyway.)
    Do that, and I’m shopping for a $250,000 home knowing that I can make back my hefty down payment over the first five years.
    See, people like me are exactly the problem. Too many of us who actually behaved ourselves during the mad rush to make easy money in housing are now gun-shy, sitting on cash and waiting for the moment to buy. Of course, with so many homes coming on the market, there’s no incentive to rush. Renting is too easy and too cheap.
    I don’t relish the pain of others, and I don’t expect to see my new house gain value. I’m smart enough to know that homes appreciate normally at, oh, about 1 percent a year.
    But I certainly won’t be buying a house soon if I know that it will automatically lose value. Who would?
    I’ve got my eye on several nice places, and they all fall pretty much on the median price, around $250,000. The current national inventory is 4.62 million homes, and the median price is a bit less than $250,000. Take the inventory number and multiply it by $50,000.
    So, the final bill for my version of the bailout, which we all seem to agree is absolutely necessary, is this: $231 billion over five years. Not a penny to crooked bankers. Not a penny to greedy home flippers.
    And if the thousands of potential home buyers like me take this offer, thousands of homes come off the market, putting a floor under the crumbling assets held by all those hurting banks.
    Builders back to work, mortgage lenders back to work. We just roll back the clock like it never happened.
    Win, win, win. So, to the Congressional reps battling this out on the Hill, just let me know when you can cut the check. I’ll call my realtor within the hour.”
    As for me, I see this as only a solution for those that have the money to invest. Most of the people I know are not sitting on a pile of cash just waiting for an opportunity. But on a more serious note, there is a lot of finger pointing going around and it isn’t just the politicians either. There is a plaque affecting so many Americans that is eating away our very existence. You see, the American public seems to believe that Washington and the failing banks are the ones to blame when the fact of the matter is the general population has just as much responsibility to problem. Had more of the citizens shown more restraint and not tried to keep up with the Jones’, much of this mess could have been avoided in my opinion.
    However, since that is not the case, we now have a moral responsibility to share with those that are hurting, the news of what we know…. Leadership! The fact of the matter is that we all have an asset that can never be taken from us…. our minds! Drilling for oil will help the energy crisis and adding to the reserves of the mind will be no different. Invest wisely and the returns will be unlimited!
    -Rick

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29. 

    Dom.E.

    September 30, 2008

    My view on the whole deal is this: When the Democrats and the Republicans start to work together to come up with a bipartisan deal that helps the American people – their constituents – while keeping the economy from falling apart: please call me, but leave a message because I won’t be waiting by the phone.
    This is where the American governmental system has failed the American people. Obviously, the bill got shot down because it was too much in favor of the Democrats’ stance than the Republicans’ stance. I personally didn’t read the bill, so I can’t say. Nevertheless, something needs to be done before the United States falls into a recession, or, worse yet, a depression.
    The bailout plan that gives the American people a large lump sum of money could work; however, how many politicians in DC think that way to give the people money rather than their rich supporters? The governmental system has broken down so that the politicians aren’t listening to their constituents, but are listening to the people who’ll put money in their pocket. There are Americans in every state who are suffering some type of financial strain which leads to crime, divorce, and other things which break down our society.
    I think that the American people should stand up and make some noise. I’d like to see Average Joe stand up and say it’s time we had an everyday person run for office, not some rich political type. I’d like to see somebody stand up and say he or she would fight for what their constituents want rather than what some lobbiest says. Rather than reaching across the aisle and saying I’ll support your bill if you support mine, I’d like a politician who’d say to their opposite party congressman “no thanks, that’ll hurt my constituency.” It’s time we had a bunch of people who served with a servant’s heart and serve their people rather than serve their interests.
    I thought it was supposed to be “A government for the people, by the people” instead of a governement for the politician, for the politician.
    It’s time to shake up Washington!
    It’s time for somebody to step forward and ACTUALLY serve the people of whom elected them!
    (This statement is approved by Dominick Eldridge.)

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30. 

    Hunter Elam

    September 30, 2008

    Chris,
    You make some fantastic points. However I feel that we need to remember we have a long history of “Bailouts” in this country. We are famous (infamous?) for rewarding failure while punishing success! Everyone knows about the FDR “New Deal” as the ‘big bailout’ in the last century but lets not forget the larger and more recent history of “uncle sugars” handouts:
    Penn Central Railroad YEAR: 1970 COST: $3.2 billion – In May 1970, Penn Central Railroad, then on the verge of bankruptcy, appealed to the Federal Reserve for aid on the grounds that it provided crucial national defense transportation services. The Nixon administration and the Federal Reserve supported providing financial assistance to Penn Central, but Congress refused to adopt the measure. Penn Central declared bankruptcy on June 21, 1970, which freed the corporation from its commercial paper obligations. To counteract the devastating ripple effects to the money market, the Federal Reserve Board told commercial banks it would provide the reserves needed to allow them to meet the credit needs of their customers.
    Lockheed YEAR: 1971 COST: $1.4 billion – In August 1971, Congress passed the Emergency Loan Guarantee Act, which could provide funds to any major business enterprise in crisis. Lockheed was the first recipient. Its failure would have meant significant job loss in California, a loss to the GNP and an impact on national defense.
    Franklin National Bank YEAR 1974 COST: $7.7 billion – In the first five months of 1974 the bank lost $63.6 million. The Federal Reserve stepped in with a loan of $1.75 billion.
    New York City YEAR: 1975 COST: $9.4 billion – During the 1970s, New York City became over-extended and entered a period of financial crisis. In 1975 President Ford signed the New York City Seasonal Financing Act, which released $2.3 billion in loans to the city.
    Chrysler YEAR: 1980 COST: $3.9 billion – In 1979 Chrysler suffered a loss of $1.1 billion. That year the corporation requested aid from the government. In 1980 the Chrysler Loan Guarantee Act was passed, which provided $1.5 billion in loans to rescue Chrysler from insolvency. In addition, the government’s aid was to be matched by U.S. and foreign banks.
    Continental Illinois National Bank and Trust Company YEAR: 1984 COST: $9.5 billion – Then the nation’s eighth largest bank, Continental Illinois had suffered significant losses after purchasing $1 billion in energy loans from the failed Penn Square Bank of Oklahoma. The FDIC and Federal Reserve devised a plan to rescue the bank that included replacing the bank’s top executives.
    Savings & Loan YEAR: 1989 COST: $293.8 billion – After the widespread failure of savings and loan institutions, President George H. W. Bush signed and Congress enacted the Financial Institutions Reform Recovery and Enforcement Act in 1989.
    Airline Industry YEAR: 2001 COST: $18.6 billion – The terrorist attacks of September 11 crippled an already financially troubled industry. To bail out the airlines, President Bush signed into law the Air Transportation Safety and Stabilization Act, which compensated airlines for the mandatory grounding of aircraft after the attacks. The act released $5 billion in compensation and an additional $10 billion in loan guarantees or other federal credit instruments.
    Bear Stearns YEAR: 2008 COST: $30 billion – JP Morgan Chase and the federal government bailed out Bear Stearns when the financial giant neared collapse. JP Morgan purchased Bear Stearns for $236 million; the Federal Reserve provided a $30 billion credit line to ensure the sale could move forward.
    Fannie Mae / Freddie Mac YEAR: 2008 COST: $200 billion – The near collapse of two of the nation’s largest housing finance entities was yet another symptom of the subprime mortgage and housing market crisis. In an effort to prevent further turmoil within the financial market, the U.S. government seized control of Fannie Mae and Freddie Mac and guaranteed up to $100 billion for each company to ensure they would not fall into bankruptcy.
    American International Group (A.I.G.) YEAR: 2008 COST: $85 billion – When AIG was unable to secure a private-sector loan, the federal government intervened by seizing control of the insurance giant.
    Auto Industry YEAR: 2008 COST: $25 billion – In late September 2008, Congress approved a more than $630 billion spending bill, which included a measure for $25 billion in loans to the auto industry. These low-interest loans are intended to aid the industry in its push to build more fuel-efficient, ‘environmentally friendly’ vehicles. The Detroit 3 — General Motors, Ford and Chrysler will be the primary beneficiaries.
    TOTAL COST (of above): $685.5 BILLION
    Now we need another infusion: Proposed – Troubled Asset Relief Program YEAR: 2008 EST COST: $700 Billion – The Bush administration/Congress has proposed a “rescue plan” to ease the current crisis on Wall Street. If approved by Congress, the Treasury Department will be authorized to purchase up to $700 billion of distressed mortgage-backed securities and other assets and then resell the mortgages to investors with ZERO judicial oversight.
    The Outstanding Public Debt as of 30 Sep 2008 is:
    $ 9,8 9 8,4 6 0,5 6 4,9 3 2. 0 5 (yes that is almost 10 Trillion Dollars)
    The estimated population of the United States is 304,823,269 so each citizen’s share of this debt is (for the next day) $32,472.79.
    But keep in mind the National Debt has continued to increase an average of $2.42 billion per day since September 28, 2007!
    Ah hah we have found the issue, the $$$ bucket has BIG hole in it! So, we just keep adding more $$$ and it will stay full right? If you believe this you could be a member of our elected government.
    So WHY do our elected officials, TV commentators, lobbyists, bankers, etc. want us to do just that? The reason is relatively simple, they need you to pay so they can borrow more $$$. That’s right! If you fail to pay your bills then you are affecting “uncle sugars” credit rating with the countries who loan him $$$ so he can keep on spending the big $$$ that keep Uncle Sammy in power. Remember $ build special programs and special programs get votes. Simple as that!
    The $180 Billion spent for economic stimulus checks? Borrowed from China’s monetary reserve of US Currency. We then took it to XYZ-Mart and spent it on stuff (that was made in China) so “our economy” would grow. This is not a “Liberal vs. Conservative thing” nor is it a “rich vs. poor thing”; it is a simple case of wanting more stuff (from new Laws and Social Programs to Studies and Aid packages) and life style than our economy can provide us. As an entire nation we are making up the income vs. outlay gap with credit.
    The World LOVES US because they collect the interest! The “poor” nations of China and India are making a killing on our credit and the UAE are trillionaires may times over because of our loans, financial markets, and oil demand.
    So are “we the people” bad or evil? No! However “we the people” are still living like we are the richest nation on Earth yet we are no longer tending the economic fields that made us this way. We as a nation are addicted to “stuff” and “lifestyle”!
    The moral is when anyone or any organization signs up for “debt” they are in effect becoming an ‘indentured servant’ to the loan originator for the period of the obligation. When the US borrows $$$ they are signing you and your kids up to work at the mill to pay it off. Never ever forget that. They decide how long and when you will work for them. We call the debt a deficit and the payments are called taxes. You and I are ultimately responsible for both.
    All that said, am I as addicted to “stuff” as the next guy (if not more)! I learned the (very) hard way what happens when you sign on for more obligations then humanly possible. I struggle every day to learn delayed gratification and move toward a “cash first” lifestyle. That is why TEAM is so important for our family! I am a guy who had five (yes 5) high-end sports cars (Ferrari, Maserati, Porsche, Jaguar, etc.) in the garage. They were all paid off BUT I was still in debt elsewhere. All in order to maintain my “lifestyle” and “status”. You have no idea how hard it was for me to sell those and be honest with myself that I didn’t need them until I was debt free. Am I debt free now? No. Do I need to be? Yes! Am I working on it? Every day! When it happens will I buy other sports cars, guns, aircraft, etc? YES, YES, & YES! However I will not sign my family up for more debt! The buck stops here!
    Think about it this way the next time you want a new ‘doodad’ and decide to put it on credit. Add up the amount $$ it will take to pay it off (with interest), divide that by the amount of hours you will need to generate that income, and then realize that for X years you are going to be working for VISA/the bank/etc. for Y hours a day. This will really help you to grasp just how much the impact of that purchase will have in your daily life.
    So, should we “bailout” the markets and make it ‘all better’? Simply put, no. We would prolong the issues that we have just begun facing. They have been in the pipeline for a long time now. So, the folks you see on TV crying about the sky falling and we need more $$$ are like a petulant child in the toy isle; they want a new “woobie” and they want it NOW! You can give in but the next time they get in a pinch it will be more of the same. It is time for stewardship!
    Is the world going to stop spinning if we don’t bail them out? Probably not. Is it going to be tough? Yep it sure is! Any person or business that relies on Credit to make up its shortfalls is going to have problems or fail. That is a fact you can bank on! People are going to loose money and stuff; it is as simple as that. However, we can and will get through it!
    At this point are you thinking all doom, gloom, and discontent?
    Well stop it! Get off the chair and untie the rope from around your neck.
    It is not only going to be OK it is going to be FANTASTIC!
    WARNING: GOOD NEWS AHEAD!
    We are going to experience one of the greatest transfers of wealth in the history of mankind. Our economy is shifting toward a “polar business market” where large corporations (deemed credit worthy and thus “bankable”) will interface with small or home based businesses (like us) to distribute products and services globally. Now I know what your thinking; What is this clown smoking? What about all the other stuff you said?!? ARG, walk the plank ya scurvy dog!!! (There is always one pirate in every group)
    Why HBB’s?
    Home-based businesses are the “hidden economy”. Since 1992 (per US Census + GOA) the number of Home-based businesses of all types has been growing at an average rate of 11%. However in the last 2 years this rate has jumped to an average of 33%. The SBA is predicting that this number will continue to increase logarithmically as the ‘belts tighten’ in the job market. Bright people have to go somewhere and do something to survive; it is as simple as that.
    With flexible work hours, no commute and a high level of autonomy, operating a home-based business certainly has its advantages over traditional employment. With many of the obstacles to starting such a venture now being outweighed by the worries of an unstable economy, recent research indicates that more and more individuals are looking for opportunity.
    “With phones, PDAs and the Internet, people can run businesses anywhere,” said researcher Joanne Pratt, whose study was published by the Small Business Administration. Further Pratt’s report indicates that home-based firms take home 36 percent of the gross receipts versus 21 percent of their traditional counterparts. More profit = good! With fewer expenses, many individuals can also afford to earn less total income by staying at home.
    That said in today’s financial market it is almost impossible to get a loan to start a home-based business. Most HBB’s have under capitalization issues without credit or cash infusion.
    However, the great news is with Monavie/TEAM, you don’t need or want a loan hanging over your head.
    As we all know; it is about investing time (and yes, a small amount of money) in a system to generate repeatable and long lasting results.
    So why is this good news? (WIIFM)
    We (Monavie & TEAM) have the answers the country needs. Remember Health, Wealth, and Wisdom? Well think about the “ills” facing out country now. Notice a pattern forming? People need to find success on their own two feet (independent of a company that might fail), improve their general well being and health, and learn a new way of approaching life as well as leading their families. That, my friends, is what “we” do best. We are here to help. “Not to sign em up, get em in, or sell em juice!” (a GREAT quote from Chris) We need to help them find answers by showing them another way out of the situation they find themselves in.
    We have a Billion + annual revenue company in the key growth market on our side, proven leadership in both TEAM & Monavie, a time tested system of “B type” business success, and one heck of a pay plan.
    In closing (yes it is finally over), I offer this opinion; rather then another handout lets be good stewards and just say “no”. We can give the folks who are hurting from this mess a “hand up” not another hand out to prolong the agony. There is a light at the end of the tunnel and this time we can make sure it is not a train.
    Just my $.02 (adjusted for inflation) HE PhD. c

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31. 

    Mike in St. Louis

    September 30, 2008

    Hey Chris, I would first like to point out that, while the twice-mentioned plan to give loads of money to the American people sound great, it is not quite right in the math. We would actually get $425 dollars each. Secondly, someone mentioned a 25% income tax, which also sounds great, but ultimately still penalizes productivity. What we really need is to go to the FairTax system which is highly supported by Mike Huckabee (who should have been the Republican nominee. How much would you love a Huckabee/Palin or even a Palin/Huckabee ticket!) Then, even if the government wanted to do something stupid like undermine the fundamentals of capitalism, they would have to come up with money that was given out of choice and freedom, not forcibly extracted from the pockets of hard-working Americans. By the way, did anyone notice that our country seems to be all for capitalism on the way up, but is leaning towards socialism on the way down? Could it be that our “leaders” are not “leaders” because they have stopped learning, performing, and leading? Maybe it’s time for a revolution. GRRRRRRRRR!!!! (I’m Mike Mooney and I approve this message.)

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32. 

    Josh

    September 30, 2008

    4.) Reform the Monetary System- Currently whenever the Fed needs money to bailout companies or lower interests rates it pumps money into the system that is not backed by anything. Essentially, the Treasury is printing money out of thin air. Obviously this creates a problem as it weakens the buying power of money already in circulation. I like to use the analogy “If you want stronger Coffee, you don’t add more water.” 5.) RETURN TO THE GOLD STANDARD!! No more of this fake money stuff.
    This sounds awesome! It’s just a little more difficult than making the treasury change it’s ways. The Federal Reserve (company that prints the money) isn’t even a government business. It is a private corporation (with shareholders that are unknown even to the president). I think we need to abolish the income tax entirely, abolish the federal reserve entirely, and abolish the IRS entirely. Then, we might have something we can start to work with.
    I’m also surprised, with all this talk about the devaluation of the dollar and the gold standard, no one has mentioned the Amero …
    

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33. 

    Brad in St. Louis

    October 1, 2008

    I have to agree with Mike in St. Louis. Everyone should take some time to visit http://www.fairtax.org . I just wanted to add a quick comment. I would be astounded if nobody else has thought of this. Right now is a very troubling time in our country and we need real leaders who care more about our country than they do about party politics. My proposal, and I’m sure that I am not alone, is a Brady/Woodward ticket! Brady/Woodward 08!! Who’s with me?!

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34. 

    David Bessenbacher

    October 1, 2008

    Hey Chris you hit the nail on the head again. I’ve been listening to some of Mike Huckabee’s ideas and views on all the situations and I think that he is another person who stands on conviction and has some great ideas on how things could be fixed in this country. Do you ever think that he could be a guest to speak at one of our National Leadership Conventions?

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35. 

    Bert Fall

    October 1, 2008

    Here’s a great video. So simple that a child could understand it.
    

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36. 

    kckarate

    October 1, 2008

    Outlaw insurance companies because they add no value to the overall equation. They only exist if they get more total premiums than claim payouts to us. Plus they remove financial decisions from consumers and decrease the overall importance of social capital.
    Let me explain: as experts in risk as they have become it would be less risky for us to not buy insurance. Otherwise they wouldn’t sell it to us. By the time you add up all the premiums you pay in a lifetime; you will have enough to pay for a couple major disasters that may never happen.
    Besides being a better business decision for the consumer; another direct result of getting rid of the insurance industry would be a much more realistic customer driven auto repair industry and doctor/hospital industries. The only reason that these industries can charge freak-ishly high prices is because of our socialistic insurance system.
    Insurance is little more than legislated intellectual charity. It is the community’s job to help out their fellow man in a disaster – IF THEY WANT TO! Axing all insurance companies would be a great adjustment in the balance of things to raise the importance of social capital and get prices back to a reasonable level.

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37. 

    ECM

    October 1, 2008

    I find it very interesting to read all of these comments. It seems that probably 90% of those I talk with are against the bailout. So why does it seem the politicians are going to pass it??? The politicians seem to think we really need it, but they keep saying the sky is falling, but don’t give specifics & explain it in average language. If they know something we don’t know, they should go ahead and tell us. I think the American people could handle the truth. It’s just so hard to trust the politicians because they are always beating around the bush when they are asked a question. And what’s with adding all these additional provisions to the bill???? I was talking with a University professor who teaches political science & he said he is really surprised to see how much “junk” is being added into bills to get them passed. This bill is over 450 pages long. How does anyone get a grasp of what it contains in just a few days???? It is very exciting to me to be associated with TEAM and to think that we are working towards changing the world to make it a better place. When more people are “job optional” maybe some of them will run for political office and show the other politicians how to stand up for their values and not to compromise their core values.

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38. 

    Owen Derry

    October 2, 2008

    Chris:
    I believe that ultimately, this whole problem rests with the American voters, or non-voters, as the case may be. We have become too comfortable and perhaps too arrogant. As a nation, we have lost the concept of delayed gratification. I think Hunter Elam hit the nail on the head.
    If we continue to elect representatives who practice socialist policies, regardless of what party banner they wave, we can look to socialist countries of the past to predict the results that we and our children and our children’s children will have. Although it appears to be very compassionate to save jobs and homes and savings in the short term with various bail-outs, many industries and companies are protected from the competitive process. They then become weaker and less competitive. The loss of jobs or homes or savings may be delayed, but selfishly, we push off even more pain and suffering to future generations.
    Each day, I see more and more evidence that we are on a path that you and Orrin talk about on SOL 1 (The Dash / Let’s Talk About Destiny). Although many may believe that we are invincible, one need only look to Rome, the Spanish empire of the 15th and 16th centuries, the British Empire of the 17th and 18th centuries, and the like to see that each of these empires had their day in the sun, but ultimately became weak and declined.
    However, I also believe that great nations are not fated to fall apart, but rather, the citizens become too comfortable and give up their right to be free. For example, Wikipedia says, “In 2004, there were about 216 million people in the US who were able to vote. Out of these people, only about 126 million actually voted. (58%) The 2004 elections had the largest percentage of people who voted since 1968.” Obviously, a lot of people have given up. It IS something that can be changed. We CAN make a difference, and there is HOPE. In short, get on System and get into the living rooms of America.
    In addition, if our politicians feel that buying or guaranteeing these mortgage-backed securities (which the private market apparently will not buy) is such a great deal, how about having every member of Congress and the Senate put 100% of their pension funds into these securities and leave the pensions there for the next 10 years?

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39. 

    John Dickinson

    October 2, 2008

    Let free enterprise take its course, no bail outs. My wife’s self-employed business did not get a bail out because it failed.
    This is what should be required for everyone in this country:
    Financial education needs to be required in all schooling systems, public, private, college, home school, etc. I went to a public school and I had to learn English for 13 years from age 6 to 19, when I pretty much knew how to talk and write when I was 10. Yet, I did not have even one required financial education class.
    I am now in the middle of correcting 33 years of financial mistakes and by 10/02/2009, my financial ship will have turned around and be on the right course thanks to the TEAM training system.
    Just imagine, everyone in the world saving 10% of their income. When emergencies happen, natural disasters surprise us, the financial markets meltdown, or if gas prices go up, we will all have the necessary funds to sustain ourselves!
    Thanks and happy saving!
    John

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40. 

    Steve Visser

    October 2, 2008

    This is in response to the first para of a post by Tim Tower.
    Tim, you stated that what most people don’t understand is that the government is buying assets. I disagree totally with this analysis. If these were truly assets worth holding, these banks would hold onto them. The truth of the matter is the government is absorbing bad debt.
    You referenced ESBI and I would suggest another look into both the cash flow quadrant as well as “Rich Dad, Poor Dad”. Kyasoki clearly describes the difference between “good debt” (which makes money) and “Bad Debt” (debt that costs money).
    This bailout is a terrible plan. I must go back to Einstien who said “A problem cannot be resolved at the same level of thinking in which it was created”. Our congress’ lack of forsight and unwillingness to address this garbage from the beginning, in no way qualifies them to know how to fix it now. To rush in now and decide that the government should be in the foreclosure business is silly at best.
    My biggest frustration comes from this one point. Why in the world would we (the govt) buy all this bad debt and then set up the infrastructure to manage the bad debt. Not only are we bailing out these companies that were horribly mismanaged, but now we are not even going to force them to clean up the mess they created.
    If you’re going to bail them out, make it in the form of a loan, and then force them to manage their own disaster. The govt has proven itself totally incapable of running any program of this magnatude. They are not realtors, mortgage officers, bankers nor businessmen. What in the world makes them qualified to do this?!
    I say throw all of them out of office and lets bring some fiscal responsibility back to Washington.

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41. 

    Jonathon Jones

    October 3, 2008

    Here are some comments from Dave Ramsey who is famous for losing all of his money and learning from it and then becoming a self made millionaire. The lessons he learned have propelled him into a career helping others master their finances.
    Here are his thoughts regarding the situation and some questions that have been asked of him by his students as a result:
    Over the past month, we’ve witnessed the largest bankruptcy in history, the stock market dropping like a rock, and the talking heads on TV freaking out that the world is coming to an end. I’m here to tell you the truth—we’re going to make it. We’re going to be fine. Take a chill pill.
    This month I’ve compiled some of the most-asked questions I’ve gotten recently from you:
    Are we okay, Dave?
    Definitely. Remember Enron and WorldCom in the recent years? We survived that. But much worse than all this was the financial crisis of the ‘80s – S&L collapse and 1,000 bank failures in 2 years. We’re nowhere near this type of thing; that was probably 50 to 100 times worse than all of this.
    What does all of this come back to?
    Greedy banks financing homes to broke people. It all seemed to work okay in their minds when the economy was booming, but when the economy slowed a little bit broke people quit paying on their subprime mortgages. DUH. No wonder they went out of business. Stupid decisions.
    Is there anything we can do to fix this bailout mess?
    YES! Here’s a quick summary: Companies that had billions in subprime loans were feeling the effects of their stupid decision to make those loans in the first place, and practically gave them away for pennies on the dollar. But since no one wants these loans, and they’ve had to mark them down to market value, it has frozen the market. If we temporarily change the rule that forces companies to do that, that will free the market up.
    This is an absolutely huge deal, and it involves everyone getting in touch with their congressperson before we spend hundreds of billions of dollars that we don’t need to! Learn more
    Will the collapse of businesses and banks affect me?
    No, not unless you work there. Thousands of stock brokers on Wall Street have lost their jobs in the past few weeks, but that happens in other industries across the country in good and bad times. This time it just happened in NYC where all the national news media is so they made a big deal of it.
    If I have 401(k) money in a Merrill Lynch or AIG trading account, should I move the money elsewhere?
    No. Your money isn’t with them; your 401(k) money is in the stocks. These big companies are just managers (unless you directly own stock in their company). The only thing that may be an issue is if they crash later, you may have some customer service issues, but your money is still safe. This is a good reminder to not have all of your money in one stock—that’s stupid. Always spread out your money in various growth stock mutual funds.
    With these acquisitions, will my 401(k) account and entire portfolio with Merrill Lynch be lost?
    No. They just own the company Merrill Lynch. Look at it this way—if I owned 6 rental properties and hired a management company that eventually failed, I would still own the properties; I just wouldn’t have a manager. Your broker doesn’t have title to your stuff. Your 401(k) is not a company asset; that’s the beauty of it.
    Should I sell my US stocks to buy gold and foreign stocks?
    Absolutely not! Why would you think foreign stocks are any better than US stocks? Again, diversify your money in good growth stock mutual funds instead.
    What practical lessons should small business owners learn from these bank difficulties?
    When you have no cash, you freakin’ go broke. You must keep some cash on hand, no matter what kind of business you have. Give yourself some wiggle room where you can take a hit and still be standing.
    Remain calm, America. We’re in a slow time, but just pay your bills and you’re going to be fine.

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42. 

    Justin Arndt

    October 8, 2008

    “And to top it all off, Tom Brady is injured and will have to sit out the whole NFL season.”
    Truely the most dishearting part of it all.
    wipes a tear
    We’ll make it 🙂

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43. 

    Joshua Hendrickson

    October 11, 2008

    here’s a phone interview with Robert Kiyosaki about his thoughts about all this. He predicted these bank failures a few years ago, and he has some good things to say about direct sales and network marketing in bad economies.
    It says there’s 5 parts to the interview, but I could only find 3 of them.
    http://video.google.com/videosearch?hl=en&q=robert%20kiyosaki%20interview%20wanted&um=1&ie=UTF-8&sa=N&tab=wv#q=robert%20kiyosaki%20interview%20wanted%20-leads&hl=en&emb=0

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44. 

    Rick R. in Kentucky

    October 16, 2008

    Great post Chris. This is something more and more people need to understand. However, (not to condemn, complain, or criticize) but to do a math check for one of the posters, 85 Billion divided by 200 million people is a mere $425. I licked my pencil and did it twice.
    But to more important info. Everyone ought to read The Creature From Jekyll Island: A Second Look at the Federal Reserve. This will give great insight to what the Federal Reserve is doing and why. It is worth all 600 pages it takes to go through it. the author, G. Edward Griffin will inform you like no other, except maybe than Ron Paul can. And I would almost guarantee that Ron Paul has read that book.

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45. 

    Rick R. in Kentucky

    October 16, 2008

    Sorry Chris, I misspelled my email.

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