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On the Financial Crisis, II – the Bailout


http://jtaplin.wordpress.com/2008/09/22/democratic-spine/

I think this says a lot. Thomas Jefferson’s hypocrisy aside (the man was a serial debtor, and the opposite of a “common man”), there is value in looking at government’s complicity in this. Connect that to this:

http://joejolly.wordpress.com/2008/09/22/dems-no-blank-check/

And now we have a funny money party. Simply put, yay.

Here’s the thing, if there is a thing at all: the POINT of government is not to protect the economic system first. It is to protect the people first. Economic well-being of the people happens to be a part of that, but not the only part. The Federal Reserve system is good for the people as long as the robber barons are held in check. The moment we start financing the wealthy is the moment that the system falls apart.

And Paulson wants more cash? To the tune of $700 billion? What have you done for me lately, Henry?

I’ve said this several times, and I’ll say it again: trickle-down economics is a spectacular failure. Giving money to the rich, whether they be rich corporations or wealthy individuals, is equivalent to mortgaging the future for temporary instant benefit.

The point of representative government is to protect the powerless from the powerful, no matter what. Government is the intermediary that says, “I don’t care who you are or think you are, you are equal in my eyes.”

Why is it, then, that someone who represents one of the most polarizing aspects of the wealth-creation industry, can simply demand from Congress $700 billion dollars, no strings attached? Meanwhile, my poor homeless neighbors have to fill out cumbersome government paperwork to get food stamps?

This is absurdity at its best. The Depression is coming, and it will come at the hands of the wealthy attempting to maintain centers of wealth rather than making sure the wealth pays for something better. Like schools, universal healthcare, solving the homeless problem, more police, protecting the environment… For starters.

UPDATE (15:10 EDT)

Says Paulson: “I hate the fact that we have to do it, but it’s better than the alternative.”

I disagree. The alternative – financial firms collapsing under their own egotist weight, is not a bad thing. If you want a free market, with unfettered access to profits, you deserve the consequences of the greed. We do not have to do it.

Plus, Mr. Paulson, here’s the alternative: Since THE PEOPLE are buying out these companies, we should own them. Each American – men, women, and children – is footing approximately $2300 of the bill, we should each be given 23 shares valued at $100 apiece of the government holding company which owns the companies affected by the crisis. Let’s call the government holding company “Baily Hank” (named for Paulson, and with an eye to government naming conventions). Now for a few rules:

  1. Instituting “Baily Hank” means restoring reasonable bankruptcy rules for individuals, and making corporate bankruptcy harder to declare.
  2. Baily Hank will operate like a special mutual fund, owned by the people.
  3. The amount of bailout funds received versus market value is equivalent to the number of seats on the Board of every company THE PEOPLE have. This percentage will then stay constant. For instance, if a company is valued $1 billion, and received $750 million from Baily Hank, then 3/4ths of the seats are controlled by we, the people of the United States.
  4. Companies under Baily Hank must pay out dividends to its shareholders, us.
  5. A company under Baily Hank can buy itself out of the government holding company, but only for equal or more REAL value than it received to be “saved” by Baily Hank. So, if Baily Hank gave $400 million in 2008 dollars to the company, that company’s board must pay that amount or more (in 2008 dollars) to us, the people of the United States.
  6. Certain special rules apply to any company receiving funds out of Baily Hank, like CEO pay rules mentioned in my previous post.
Alternatively, Baily Hank can be a special high-interest loan (prime + 10%). If the companies really want to be bailed out, they need to pay it back. I prefer the above plan better, though. I may be missing some important rules, though. Thoughts?
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Idealink by vijtable is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
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