Wednesday, October 15, 2008

Thoughts about the "Crisis" and the "Bailout"

So, we are to have a new Bank of the United States. I thought Andrew Jackson got rid of that in 1836. $700 billion. That’s $700,000,000.00. I don’t know if you got the email I’ve received a couple of times, but if you take that amount and divide it among all the adults in the United States, we could each have something like $280,000. Each. That’s after taxes.

HEY CONGRESS! You want to save the economy and help people? Send us each just $200,000. A lot of us would pay off our house and that would send cash flowing into the troubled banks. Others would be able to catch up on their back payments. The poor could finally afford a few nice things, like a house, a car, a college education, and 400 channel cable TV. Oh wait, a lot already have the cable.

And, with 200 million Americans spending that money on a new house or an addition to the house, a new car, new appliances, beer, decent clothes, CDs, DVDs, and so on, the economy will automatically kick up a notch. Yes, some people will waste the money and in two years will be no better off than they are now, but think of the few fun years you in Congress provided. What better way to buy votes? Much better than only helping the executives that drove their company into the ground.

But, since this plan makes too much sense and sounds too much like socialism (unlike the government running the banks, which apparently is not socialism for some reason), this brilliant idea was not even considered in Congress or by our Presidential hopefuls.

Seriously, one of Jackson’s reasons for killing the Bank of the US, is that it had too many foreign investors. The US Government is in debt. To who? To foreign investors and foreign banks. This puts the US in a horrible disadvantage. Many of these countries are in a precarious friendship with the US. If something should happen that would cause a break in relations, what happens to the money supply? I admit it is all too complex for me, but I know enough to be worried.

The US needs to stop spending so much, even for “good causes.” “The power of collecting and disbursing money at pleasure is the most dangerous power that can be intrusted to man…” We need to chop pork and make people and companies pay for the services they use. Maybe more of our interstates need to be toll roads, though those that use them will complain mightily. Maybe we could do away with a few government departments. Maybe someone in Congress needs to read the Constitution and see what the Government is supposed to do.

The banks are in a mess for two reasons. 1. The Clinton Administration thought it would be nice to let “the poor” (i.e. people with insufficient means) buy a house so they loosened the regulations. A “good cause.” 2. Greed, pure and simple. Banks were more than happy to extend credit to anyone, and to extend more credit than warranted. When we moved to our current town, we went to get pre-approved for a house loan. It would be our first house. I was going to be making $38,000 a year and I am the sole support for a family of six. The bank said, “You are approved for $200,000.” I said, “Are you nuts? Did you see how much I will be making? I didn’t get an A+ credit rating by being stupid.”

But, too many people were stupid. Others lost their jobs or had other unexpected hardships. They bought too much house (or too fancy a house) and when hard times hit, then they really suffered. The banks were stupid, they should suffer. Now the Nation is suffering, and that extends to the world. Other than sustenance farming, I don’t know what to do about it, I just needed to rant.

Buy my book: How to Fix-up Your House to Sell.

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