The Trillion Dollar Give-Away: Preaching Capitalism, Practising Socialism

The NYT reported today that "The Bush administration on Saturday formally proposed a vast bailout of financial institutions in the United States, requesting unfettered authority for the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from the private firms.

The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt...."

Some thoughts....

• A few years ago, institutions got the bankruptcy law changed to their benefit. As usual, Congress gave it a grandiose name - Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. "The consumer credit industry had lobbied Congress for nearly ten years in an effort to pass the kind of bankruptcy reforms adopted in 2005. The industry went to great lengths to paint a picture of consumers using bankruptcy as a means of financial planning, running up huge credit card bills with complete disregard for their ability to repay them, and then discharging them in bankruptcy when the well ran dry. On October 17, 2005, the changes they'd been pushing for more than a decade took effect." (from /www.totalbankruptcy.com)
  It is bitterly ironic that these same financial institutions are now get bailed out by the government, rather than going bankrupt or getting bought out.
  
• The total money spent on this bail-out will easily exceed a trillion dollars. When financial institutions fail the government rushes to their aid. When individuals are suffering...
• Many students struggle to get financial aid in College. After graduation they often end up taking many years to pay off the loans, because of the terms. These students are the ones who could truly use financial assistance, but they do not get these 'bailouts.'
• According to the U.S. Census Bureau 45.7 million people were without health insurance was in 2007. They accounted for 15.3% of Americans. These people could get $21,884 each if the trillion dollars were spent on them- enough money to obtain life insurance for a few years. Further, according to the Chicago Tribune, "In 2009, the combined average premium and out-of-pocket costs for health-care coverage for an individual worker are projected to climb nearly 9 percent, to $3,826 a year, according to an annual study by Lincolnshire-based Hewitt Associates in preparation for open-enrollment season. Companies, meanwhile, will see their health-insurance costs rise 6.4 percent, to an annual tab of $8,863 per employee. "
  
• It is also depressing that folks who knowingly or through stupidity bought houses they could not afford will be able to keep their homes. There appears to be no risk associated with making asinine decisions.
• This is the country that tells others to deregulate, privatize, and protect property rights. Now every politician is talking about more regulation, and the government is buying assets, not selling them.
  

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Going Green..Affordably