Tuesday, March 24, 2009

Short End of the Stick Again

Here we go again with giving the taxpayers the short end of the stick when it comes to fixing the economy. The new Obama plan is to lure private investor to buy toxic assets by putting all the risk on the taxpayer. This sounds just wonderful and he will get very few takers because of last weeks AIG fiasco. Sure there will be some investors looking to cash in because they will have nothing to lose and can make a nice profit if they get to keep it. The only thing AIG fiasco did was prove how incompetent the Congress is at running the economy and if you climb into bed with the feds you never know what you are going to come away with.

If some private investor makes a huge profit on this scheme is the government suddenly going to decide that it needs a bigger piece of the profit because it assumed all the risk? How can anyone guess at this point because Congress is all over the map and running on emotion vice good solid principle. No one has been thinking anything through for the last six months and the economy is showing the scars and the tax payers are fed up. Why don't be reduce the tax payers exposure to risk and put the burden back on the gamblers that brought this crisis about. There are other ways to get people to invest that don't include the taxpayer. How about zero capital gains tax on profits made on "toxic assets"? How about a tax break for companies that buy up these toxic assets?

There are ways of doing things that doesn't involve the government directly, plus after they screwed the pooch on AIG no one is going to want to play with them (Lucy & Charlie Brown scenario over and over). If this plan goes South as many believe it will then what? The taxpayer gets to foot the bill in trillions of dollars, which would mean more taxes for everyone or another economic collapse worse than the current one. I wonder how many houses the government could have bought for the $5 trillion and counting that it has already thrown down the toilet. Lets do the math:

5,000,000,000,000/250,000 (an average home price)=2,000,000 homes

Think about this, if they had done the home owner college type loan program, we probably could have saved every home from foreclosure and prevent the market collapse that has smoked so many retirement accounts, stopped consumer spending, increased unemployment and tanked the housing market. Sure reality needed to visit the housing market, but it could have been a lot less radical. Lets do the math again with the idea of the college type loan program:

5,000,000,000,000/10,000 (couple of years of mortgage difference)=500,000,000 homes

That is right 500 million homes could have been saved, which is way more than the possible default mortgages considering that there are only 300+ million people in America and not everyone owns a home and only a small percentage of those are in default. You figure it out.

The gamblers on Wall Street lost and now the taxpayer is footing the bill. Lets hear what you have to say on the matter.

1 comment:

  1. The bailout is a systematic looting of the Treasury and Federal Reserve by Goldman Sachs et al.

    Paulson knew who to protect. Tax cheat Timmy is only continuing the fraud.

    I hope I live long enough to read the libertarian view on these years. For now, I follow Lew Rockwell dot com.