Government Bailout Idea

[Pappy]

I got this in an e-mail and thought it was an interesting idea, even if it would never happen. This is not intended to be political and, in fact, I removed one line that I thought could have been construed as a political statement.

I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000.00 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 medical coverage
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...

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. 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" better than the geniuses at AIG or in Washington DC. And remember this plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.
Economy problems solved!

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

[billfrommich]

I believe the math is in error. Otherwise I have no comment.

[burrellski]

pretty sure $85 billion / 200,000,000 = $425 per person

[LCHIEN]

pretty sure $85 billion / 200,000,000 = $425 per person

what's three or four decimal places among friends?

[radhak]

The real breakthru would be to allocate $85 Trillion to AIG, then take it away. So you get those missing 3 zeros at the end : Ta-da! $425,000 per person. And since we are two in my family, that's a cool $600,000 for us. Even after the mortgage and stuff, we'd have lots leftover - Festool, here I come !

Ok, so where do I apply for my share?

[jziegler]

They used the British billion, not the American billion. (look it up on Wikipedia if you want)

Jim

[cabinetman]

What? No line item for new tools?
.

[herb fellows]

Ok, so the math is wrong. How's about we hold a lottery and determine the number of people who could receive, let's say $100,000. I could live with that. Better odds than the state lotteries, by far.
Beats the **** out of paying $10k each, which is the figure I heard this insane bailout is going to cost the American taxpayer.

So how do other countries remain solvent and give health care to all their citizens? Ya gotta wonder.....

[pierhogunn]

Wow, does anyone else's ARSE feel a little sore over all of this? I'm buying stock in Johnson and Johnson, and those guys that make preperation H.

[cgallery]

They used the British billion, not the American billion. (look it up on Wikipedia if you want)

Jim

LOL. Whomever wrote this thinks things here are even worse than they actually may or may not be.

[diamondman]

Another solution

Actually you are right about not paying the money to Wall St. whose greed and unethical behavior got us into this mess. A plan that is more practical might be for the government to bail out the people who are about to default on variable mortgages that they shouldn't have been sold in the first place. The government could also guarantee all home mortgages (not investment property) so that mortgage backed securities would regain their value. Some of the money used for that purpose could be regained by taxing investment houses and banks that initiated these bad loans thus wiping out some of the obscene profits they were making before the collapse.

[jackellis]

The math is clearly wrong. Even in the case of the $700 billion, the cost spread over 200 million taxpayers is about $3500 per. While I don't care for the idea of bailing anyone out, my (hopefully) apolitical take on this is as follows:

$3,500 would be a small price to pay in order to protect my retirement nest egg, which has already lost a lot more than $3500 in value.

One of the proponents is the Fed Chairman, who has a Ph.D in economics. He's something of an expert in the Great Depression, which was the subject of his doctoral thesis.

The problem is much more widespread than simply bailing out people who did dumb things. The whole credit system all of us depend on for making credit card purchases, home mortgages, small business loans, home equity loans, etc. is in danger of seizing up. If it does, you'll have to pay cash for everything you buy or face interest rates that make 18% look like a bargain. The purpose of the $700 billion is to convince depositors that their money is safe in the bank, convince overseas investors who have money invested here that they won't lose it all, and provide the banks with confidence they won't be lending money to one another that will end up in a rat hole. Lenders and homeowners are having to dump assets on the market at whatever price a buyer is willing to pay, which is creating a vicious cycle that's the opposite of the bubble that propelled real estate prices upward. Some of that is needed to take the air out of inflated home and other asset prices, but the value of your home suffers as well, and it could take a decade or more for things to sort themselves out, even with a 21st century version of the New Deal.

FWIW, I am totally teed off that many of the executives who created this mess have walked away with sizable severance payments.

[Black wallnut]

The really tough line is to do nothing and allow these companies to fail. Methinks a naturally occurring recession, although unbearable for many might actually be shorter in duration and shallower in depth than a protracted bailout. It would also be fair to those companies that are not in trouble. An alternative IMHO is to pay off the debt of the failing companies and then liquidate them.

I wonder if the tax rebate just put this financial crisis off for a few months; would it have happened months ago had it not been for uncle's infusion of cash into the marketplace?

[radhak]

Actually you are right about not paying the money to Wall St. whose greed and unethical behavior got us into this mess. A plan that is more practical might be for the government to bail out the people who are about to default on variable mortgages that they shouldn't have been sold in the first place. The government could also guarantee all home mortgages (not investment property) so that mortgage backed securities would regain their value. Some of the money used for that purpose could be regained by taxing investment houses and banks that initiated these bad loans thus wiping out some of the obscene profits they were making before the collapse.

Far from practical : the total debt of Fredddie/Fannie is around $5 Trillion, and no govt is big enough to bail out all of that. So how much of that will the govt bail out? Who will determine the beneficiaries? I exercised a tremendous amount of personal responsibility in taking out my mortgage, and don't see myself in trouble because of it (ie, unless my company folds and leaves me jobless) - but dang if I'm gonna accept my neighbour being given a handout just because she was reckless in buying a house she should not have. I too was tempted left-and-right with all sorts of loans and rates et al. I kept my head, burnt some night oil, asked around and did the right thing. Why should others - who did not do all that - benefit more than me now?

Also, why should only mortgages be backed by the govt, leaving other investors high and dry? I don't see any rationale in that.

Greed is not limited to Wall Street - it's what keeps this society moving. It's only when there's a road-bump that everybody screams for the powers-that-be to 'do something', other times they say 'get out my way while I grab that pot of gold that does belong to me'. Today all entities (wall street, investment banks, etc) involved are so big that they cast shadows on everything around them, and they want to take advantage of that and say, 'If we fall, we might crush you, so you might as well sweat blood to keep us standing'.

Cynically speaking, they should all be left to crash - it'd be good for society in the long term. But being part of the same society, I shall wait and watch, hoping these financial gurus know what they are doing, while in my heart-of-hearts, I'm d**n sure that altruism does not drive them - they stand to lose more than the average joe if this thing does not work out. Greed is Good !

[Uncle Cracker]

Even though I'm a pinhead, I realize that American companies making money is good for our economy. What I have a problem with is twofold: 1) Something should be done to control the amount of profit that is being shipped offshore, and 2) There needs to be some sanity reinserted about stuffing the pockets of departing CEO's, who are given million$ to go away after they have looted their companies and then run them into the ground...