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Bail me out!
December 5, 2008 - John Stack
The current bailouts being considered and put into action remind me of a different bailout recently. When George Bush was asked what his feelings on Roe V Wade, he responded that he didn’t have a preference of how the Katrina victims got out of New Orleans. But I digress.
In the current financial bailout, no one seems to know what’s going on, or even exactly WHY we are bailing them out, or what from. Yes, many banks are failing, going bankrupt, etc. But what is the bailout money supposed to do? The ideas behind the bailout and what the money is to be used for have changed to hardly reflect the original $700 billion dollar deal. How was $700 Billion even arrived at? I think it was arrived at about the same way the DEC arrived at 848.88 miles of snowmobile trails on Wild Forest lands. (Which is to say it seems to comes out of the clear blue sky).
This week the Government Accountability Office sent a report to Congress that said there seems to be no mechanism in place to track where the taxpayer money has is being spent. And $150 Billion has all ready been shelled out! Is it on more outrageous bonuses? Is it going to dividend payments for investors? Are they loosening credit? One thing is for sure, Citibank is making sure they still keep their name on the new Shea stadium, to the tune of $400 Million dollars.
Unbelievably, Neel Kashkari, who heads the treasury department's Office of Financial Stability, said the agency was ‘developing its own compliance program and indicated that it disagreed with the need to work with regulators.’ Fire him. NOW. They doled out $150 billion dollars with no plan whatsoever to oversee where it went. And, now they say they are coming up with a compliance program on their own, to be implemented….? So far, the money has been given with obviously no strings attached at all.
Which brings me to the auto bailout. I am more for the auto bailout than the financial bailout. Right now, I could walk down to HSBC and get a mortgage on for a new house for $125,000. I’ve only owned my current home for 18 months. I surely don’t even make $100,000 and my credit is probably around average. And I still owe a lot on my current house. But, banks around here are still willing to lend to people with competent credit and wages. I don’t understand the financial crisis enough to see how this bailout helps me. I do understand the bailout isn’t really to help regular folk get mortgages. We still can get mortgages, so its not helping us. But, the auto industry is coming in, asking for loans of about $34 billion and they are rightfully being put through the grinder. But, with over $150 Billion all ready given to banks, with no actual promise at all for the money, $34 billion seems like a drop in the bucket comparatively. At least if we invest in the auto industry, we (taxpayers) end up owning billion dollar plants and the means to produce millions of cars a year, even if they default. If the banks default, we end up with a great big IOU on a piece of paper I can use as bedding in my sons bird cage.
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