One of the podcasts I listen to often is This American Life. This weeks story, called " is about credit default swaps. Never heard of them? Me neither. But it is one reason why we can't just turn this thing around without some serious government regulation of borrowing money and insurance on borrowing money. There are actually companies out there paying for insurance on other company's loans. The insurance is cheap with a modest return if your company makes good payments. The insurance price goes up with a great returns if your company is riskier. Does this sound a bit like gambling? That's why AIG had to be bailed out. They lost the bets and did not have the capital to pay out. There are regulations on house insurance for the average consumer but none on "credit default swaps" that are turning out to be the downfall of the economy. Crazy! You could say that episode it is Part 2 because they did another show, " a while back that explained how the mortgage mess got started. The recent one can still be downloaded for free until Sunday. The other you have to listen from the website or pay 0.95 to download it. Both are worth a listen (about an hour each).
As I am writing this the DOW closed today at 9,447.11. Wow! I have yet to contribute to our IRAs this year and it looks like now is the time to buy. It may go down further but since I have a long time to retirement this might give me a bit of a head start (and make up for what I am losing right now!)
The following is an email that has been bouncing around. Wouldn't that be a surprise if it really happened. Unfortunately it would cause way more problems than it would solve, because too many Americans are foolish and greedy when it comes to money. Isn't that the REAL reason we are in this mess?
The Birk Economic Recovery Plan:
I’m against the $85,000,000,000.00 bailout of AIG. Instead, I’m in favor of giving $85,000,000,000 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 you r parent’s medical insurance - health care improves
Enable Deadbeat Moms and 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…instead of trickling out a puny $1000.00 ( ‘vote buy’ ) economic incentive that is being proposed by one of our candidates for President.
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. Let American General go back to being American General.
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 more than I do the geniuses at AIG or in Washington DC .
And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam. Ahhh…I feel so much better getting that off my chest.
Kindest personal regards,
T. J. Birkenmeier, A Creative Guy & Citizen of the Republic
PS: Feel free to pass this along to your pals as it’s either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!
Too bad this guy didn't have a calculator!
That is only $425 per person! I'll take the $1000!