A Thought on the Bailout

According to the Times: "To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes."

Try? The government will try?

Let's be clearer about this. It's the government. The government could have long ago directed all lenders to renegotiate terms with struggling borrowers and the government would not have had to take over the loans to do so. Regulating credit is the government's job.

Now, the government has taken over the loans. It could forgive all of the debt if it wanted. That wouldn't be smart, but it can certainly succeed in renegotiating terms on most of this debt. It is, in effect, the lender now and if your lender wants to reduce fees and interest rates or forgive penalties, the lender can. The government has to do everything possible not to foreclose on its own taxpayers.

Try is not good enough. The government must bee expected to vigorously pursue this part of the plan.

The True Face of Hubris

Goldmand Sachs and Morgan Stanley were, until recently, too good to take your deposits. They didn't need your checking account. They only wanted to deal with members of the "investor class" and that meant people with enough money left over every two weeks that they could buy stocks in taxable accounts.

But now... they suddenly want your deposits.

Don't do it, unless they pay a huge amount of interest, something north of 7%. They only want your money so that they can put it on their balance sheet as an asset. They want to seem innocent about it since your deposits are insured by tyhe government but make no mistake -- they want your money so they can shore up against all of the idiotic mortgages and consumer debt that they bought and packaged for resale but couldn't resell.

Just remember what these banks did. Every time you had to buy something on credit because you didn't have the cash, they registered your debt, packaged it with other debt and tried to sell it to a hedge fund. Now that nobody's buying, they want you to deposit money with them in order to... yep... back the very debt that you owe them and that they're trying to sell.

I have a better idea. You own my debt, Goldman Sachs? Then sell it to me. At market price. Which is 20 cents on the dollar at most.

Bail Out Wall Street? What's In It For Me?

So George Bush and Hank Paulson's Wall Street bailout plan is going to cost every American household between $2,000 and $5,000. Maybe the apocalypse is upon us and it must be done, but the American people deserve a return on this invesment. Indeed, congress needs to make sure that this is an investment, not a bailout.

The US government should get large equity stakes in all Wall Street firms that come begging for aid. The government should then use its position as a shareholder to pass resolutions that force these banks to act in the interests of the American people. The citizens of the United States, as shareholders, can demand fully green operations, investments in alternative energy and can demand that these banks no longer advise on job destroying mergers and that they refuse to underwrite debt offerings made by America's enemies.

Let's not bail out Wall Street. Let's take it over.

Healthcare Solved!

I'm told that the American people now own 80% of the world's largest insurance company. If that's the case, then 37 million no longer lack health insurance, right? Seems as if the owners of AIG should demand cheap and comprehensive healthcare from our new company.