Troubled Assets Relief Program (T. A. R. P.) should stand for tarp, a covering over the taxpayer's eyes so they don't see that this is just a wealth distribution scheme for big business. This whole thing is such a mess, first the administration asked for $700 billion dollars for a bailout program and said that they would create accountability by buying up bad mortgage assets to hold until such a time that the mortgages would increase in value and be able to be sold to pay back taxpayers who are ultimately paying the bill to bail out Wall Street.
Earlier this week Mr. Paulson from the Treasury said he decided that that was a poor plan to buy bad mortgage debt and instead told us, that after getting this money, he decided to just buy stock in the failing companies to faster inject cash into the failing institutions. The problem with that is instead of having some land or property that would eventually be worth something again when the market recovers, Mr. Paulson has basically a handful of worthless pieces of paper bought from failing institutions that have a good chance of filing bankruptcy in the future leaving the taxpayer with worthless paper in exchange for $700 billion dollars. The other problem with just buying worthless stocks is that Mr. Paulson, the President, or the Congress has no way of restricting what these institutions do with the money that they are given.
It was never the Administration's intention to hold these institutions accountable for the money in the first place. If you look at what President Bush and Mr. Paulson originally asked for it was for $700 billion dollars to spend in which ever way they see fit, to anyone they see fit, for whatever way the institutions that receive the money see fit. Are the American taxpayers the only ones that saw this for what it really was, a wealth distribution program where every man woman and child would give $2300 to the fat cats on Wall Street who are making millions and getting big bonuses even though they ran their companies into the dirt with their greed. And what happened?
The institutions that received the bailout money, that the Bush Administration's "intention" was to free up money tied up in bad mortgage deals to lend out to people, to get the economy moving again, decided that they still don't want to free up money for lending. President Bush was on national TV pleading with the financial institutions to fee up that money, but without the teeth of regulation and oversight there is not much chance of the institutions using the money for much more than to shore up their accounts, buy other failed banks, and/or give their management people and stockholders something. We've already seen how they been spending money knowing that they are getting bailed out by the taxpayers, there were big parties, million dollars a month for people on retainer, and holiday bonuses of up to $230,000 for administration making close to $400,000 base salary. So for those paying attention it is Fat Cats - $350 Billion, taxpayers nada.
Now that the 2nd bailout plan didn't work, Mr. Paulson has a new, new plan on another way to use the 2nd half of the $700 Billion bailout money to bail out these financial institutions. Again I don't see much for regulations or ways to insure accountability. This latest play doesn't directly help mortgage holders that are either already in foreclosure or will be shortly. That's the one thing I don't really understand. One one hand I can't see giving money to people who obviously knew they were trying to buy properties they couldn't afford. On the other hand, there are a lot of banks and mortgage companies that took advantage of the housing bubble to convince people to take out money against their mortgages because the value of their homes had went up so much. Many of these people didn't fully understand what the banks were getting them in to and they took their lending institution at their word that they were sitting in a good spot to take on more debt. To a certain extent, if the government would just take over them loans that are on amounts higher than what the property is worth, reorganize the mortgages so that the people could have payments that they could afford, then the mortgages wouldn't be bad debt and shouldn't strain the financial institutions of Wall Street.
Now the major domestic car manufacturers want to be bailed out too, they are claiming that they will be forced into bankruptcy if they are not. Originally Obama and the Democratic Congress wanted the Bush administration to help bail them out too, but the Bush Administration didn't want to include the auto makers. Now the Bush Administration says that they would be willing to support bailing out car manufacturers long as there are no strings holding car makers to use the money to make more energy efficient cars to make the auto makers more competitive with other car makers. Again the Republicans don't want to place any restrictions on car makers on how they use that money. What is the sense if that? If we are going to bail them out shouldn't we retain the right to say how we want this money used?
President Bush recently made a speech claiming that the fault is not fault the free market system. This is one of the first things I agree with that Bush has said in a long time. The free market would be a working system without trying to bail out industries. It's not like these financial institutions didn't know what was happening, they just were hedging their bets that the government would bail them out. The auto makers and Republicans have been fighting any effort to make strides to increase mileage per gallon or make alternative fueled vehicles, two things that have caused the big three auto makers to lose ground to foreign car makers. The Bush Administration has already wasted $350 billion dollars that has no regulations on how it's spent for these failing industries to take and cut and run when that runs out. These industries should have just failed in the first place, they are going to any way, the only difference is this way taxpayers are going to be out $700 billion dollars first.
All in all this is a hell of a Christmas bonus for big business from the lame duck Bush Administration at taxpayers expense.
Showing posts with label taxpayers. Show all posts
Showing posts with label taxpayers. Show all posts
Saturday, November 15, 2008
Sunday, November 9, 2008
Bailing Out Automobile Manufacturers
Well we have been helping all other big businesses and industries, so now the automobile manufacturers want to get in the act too. I mean after all we have been giving the oil industry tax breaks and making it possible for them to record record profits for two quarters in a row even though the rest the country is in financial chaos. We are rewarding the banking and financial industry hundreds of billions for their ungodly salaries, greed and waste. It's only fair for the government (the American tax payers) to turn around and bail out the automobile manufacturers. These are companies who have resisted all the mpg mandates that the government tried to impose on them to make their cars better for the environment and more completable with foreign imports. They have been pushing bigger and bigger SUVs and even most their other car models are getting on average less mpg than they did 10 years ago. The people in the rest of the world have been shaking their heads at us Americans in disgust as we zip around in our gas guzzling SUVs Why has the auto industry push these dinosaurs of responsible automotive design? They make the highest profit margin on the SUVs and they can get around some of the environmental and safety requirements, so in other words greed. So now because the auto industry also hire a large number of people that are making ungodly amounts of money, we are supposed to bail them out for their refusal to make autos that can compete with cars designed overseas.
There are reasons that bailing out the auto industry is as stupid as the breaks we have been giving the oil and banking industries. As mentioned above, The government has been trying to push regulations for higher mpg, which would have made the American companies more competitive against foreign companies and would have forced companies to make more smaller and mid sized autos instead of huge SUVs that according to advertisements they push as something people just got to have. Many of the American automotive companies are tied in with foreign companies to make cars in Europe that would fit the bill for suddenly economy minded American consumers, Some of the foreign manufacturers make cars in the U.S. to sell in the U.S. aren't these basically cars made in America? The automotive manufacturer's will have no better use of the money than the banking industry. The president was just on the TV pleading with the banking industry to not sit on, or invest in acquiring other defunct banks with the money that was given them from the government to free up money for lending, the auto industry will probably not put that money into retooling like it would be meant to used, instead they will probably use it to pump up their worth and pay their shareholders and executives as they wait out the crunch while waiting for a better time to again push SUVs back at the American public.
The biggest fear by oil companies both abroad and at home is that the American public start conserving oil enough it will drive the prices way down. We have already made Saudi government nervous because we have been conservative and it has drove down prices. One of the best things we could do for our country is wean ourselves from foreign oil. If American car manufacturers made smaller cars with better mpg it would tend to drive the cost of oil down even more reducing our dependence on oil from parts of the countries that aren't necessarily friends of ours. In a way if we bail out the auto manufacturers, we are enabling them to make bigger cars that drive more of our energy dollars overseas.
Most of all if we are to have unregulated capitalism we have to allow the market fall on big industries and institutions that continue to do stupid things for greed, if the banking institutions weren't thinking the government would bail them out they would have never took such chances or paid their administration people so well. It's the same way with the auto industry, if they wouldn't have got lost in their greed of high markup SUVs they would have been concentrating on building competitive energy efficient vehicles. They would still be hit by the economic situation that our country is in, but they wouldn't have set themselves up for the loss of business to car manufacturers who have already retooled to make energy efficient vehicles long ago.
There are reasons that bailing out the auto industry is as stupid as the breaks we have been giving the oil and banking industries. As mentioned above, The government has been trying to push regulations for higher mpg, which would have made the American companies more competitive against foreign companies and would have forced companies to make more smaller and mid sized autos instead of huge SUVs that according to advertisements they push as something people just got to have. Many of the American automotive companies are tied in with foreign companies to make cars in Europe that would fit the bill for suddenly economy minded American consumers, Some of the foreign manufacturers make cars in the U.S. to sell in the U.S. aren't these basically cars made in America? The automotive manufacturer's will have no better use of the money than the banking industry. The president was just on the TV pleading with the banking industry to not sit on, or invest in acquiring other defunct banks with the money that was given them from the government to free up money for lending, the auto industry will probably not put that money into retooling like it would be meant to used, instead they will probably use it to pump up their worth and pay their shareholders and executives as they wait out the crunch while waiting for a better time to again push SUVs back at the American public.
The biggest fear by oil companies both abroad and at home is that the American public start conserving oil enough it will drive the prices way down. We have already made Saudi government nervous because we have been conservative and it has drove down prices. One of the best things we could do for our country is wean ourselves from foreign oil. If American car manufacturers made smaller cars with better mpg it would tend to drive the cost of oil down even more reducing our dependence on oil from parts of the countries that aren't necessarily friends of ours. In a way if we bail out the auto manufacturers, we are enabling them to make bigger cars that drive more of our energy dollars overseas.
Most of all if we are to have unregulated capitalism we have to allow the market fall on big industries and institutions that continue to do stupid things for greed, if the banking institutions weren't thinking the government would bail them out they would have never took such chances or paid their administration people so well. It's the same way with the auto industry, if they wouldn't have got lost in their greed of high markup SUVs they would have been concentrating on building competitive energy efficient vehicles. They would still be hit by the economic situation that our country is in, but they wouldn't have set themselves up for the loss of business to car manufacturers who have already retooled to make energy efficient vehicles long ago.
Monday, September 29, 2008
Bailing Out Wall Street
It's the politicians that just don't get it, or maybe they did but they decided to milk any available money they could from the populace any way. Let's look at it in a different way.
Say I buy a car from a dealer, the dealer wants to make big money off me so the price has been jacked up to the point where it is really over-valued. I drive it off the lot and it's price devalues a couple of thousand dollars, but that's not all. It turns out that the car is a real lemon requiring lots of money to be constantly stuck into it to keep it running, it gets to the point where I can not afford to keep the car because it has ate up all my money keeping it running, and if I sell it I will have to take a big loss because I can not recoup what I have stuck into it. Eventually I lose my job cause my car is not dependable and I'm late too often.
But it's not just my car with these problems, it's everyone's that has bought this particular make and model. Eventually word gets out and everyone quits buying this particular make and model. The dealer, having bought this make and model in huge numbers, even though he knew of the car's short comings, because he figured that he could make the most money from selling such high priced cars, is now stuck with a lot full of them and they are not selling. The dealer now is losing money and decides to file for bankruptcy. The government now steps in and says, "Oh this is bad, this dealer is really going to lose money and probably will have to go out of business. He will have to lay off mechanics, sales people, other people working in the office all of which have benefited from the high price of the car and the high commissions. This is going to have an effect on everyone, the people at the car washes, the people selling gas, people who sell tires and service, not to mention all the people who get money from the dealer and his employees like when they go to the bar, grocery store, buys a house, etc. We have to do something to protect the dealer's interests because it will affect all these other people and wreck the economy."
So the government comes up with the idea of collecting money from all the broke people who have been taken by the dealer's bad cars and they give that money to the dealer so that he can stay in business selling over priced crappy cars to other unsuspecting customers. At the same time the government, even though they know the car is over-valued and crappy, doesn't do anything for me, the person who is stuck with an expensive car that is not worth anything. This does nothing to make my car not a lemon, it doesn't get my job back, and it doesn't get my money back from all the repairs etc.
The dealer has a big fancy home, vacation home, mobile home, boats, ATVs, cars, SUVs, eats out a lot, gets paid vacations, and bonuses. I am stuck, broke from making repairs, no job, no 401s, and no running car........
Ok, it's maybe not quite the same thing, but in many ways it is. Wall Street has got itself in a bind. It's not because they didn't know it was coming, it was because everyone thought they could make their ungodly profits and get back out before the shit hit the fan. The financial people in Wall Street knew this, the president of the United States knew this, but everyone thought they'd be long gone before the ship went down, or maybe they figured that the government would not allow them to fail and bail them out. The president thought that he'd be out of office before the pumped up markets fail and he would leaving this mess on the next president (most likely a Democrat) and then the Republicans could use it against them in the next election. The failing market happened a bit too early, so now the Bush Administration comes up with this plan to give the very people who took advantage of deregulation to gouge the American public 700 billion dollars, from the very people that were taken advantage of, so that they can stay in business as usual.
This 700 dollar bailout does nothing to cure the problem at hand. All it will do is bring the market back up temporarily to give share holders a chance to get their money back and jump ship. After the share holders jump ship the country will be back to this same spot it is in now, except that the tax payers will be 700 dollars poorer. I believe that we need to demand from our leaders to let the market adjust itself back to responsible financial policies and reinstate regulations to keep this from happening again.
Say I buy a car from a dealer, the dealer wants to make big money off me so the price has been jacked up to the point where it is really over-valued. I drive it off the lot and it's price devalues a couple of thousand dollars, but that's not all. It turns out that the car is a real lemon requiring lots of money to be constantly stuck into it to keep it running, it gets to the point where I can not afford to keep the car because it has ate up all my money keeping it running, and if I sell it I will have to take a big loss because I can not recoup what I have stuck into it. Eventually I lose my job cause my car is not dependable and I'm late too often.
But it's not just my car with these problems, it's everyone's that has bought this particular make and model. Eventually word gets out and everyone quits buying this particular make and model. The dealer, having bought this make and model in huge numbers, even though he knew of the car's short comings, because he figured that he could make the most money from selling such high priced cars, is now stuck with a lot full of them and they are not selling. The dealer now is losing money and decides to file for bankruptcy. The government now steps in and says, "Oh this is bad, this dealer is really going to lose money and probably will have to go out of business. He will have to lay off mechanics, sales people, other people working in the office all of which have benefited from the high price of the car and the high commissions. This is going to have an effect on everyone, the people at the car washes, the people selling gas, people who sell tires and service, not to mention all the people who get money from the dealer and his employees like when they go to the bar, grocery store, buys a house, etc. We have to do something to protect the dealer's interests because it will affect all these other people and wreck the economy."
So the government comes up with the idea of collecting money from all the broke people who have been taken by the dealer's bad cars and they give that money to the dealer so that he can stay in business selling over priced crappy cars to other unsuspecting customers. At the same time the government, even though they know the car is over-valued and crappy, doesn't do anything for me, the person who is stuck with an expensive car that is not worth anything. This does nothing to make my car not a lemon, it doesn't get my job back, and it doesn't get my money back from all the repairs etc.
The dealer has a big fancy home, vacation home, mobile home, boats, ATVs, cars, SUVs, eats out a lot, gets paid vacations, and bonuses. I am stuck, broke from making repairs, no job, no 401s, and no running car........
Ok, it's maybe not quite the same thing, but in many ways it is. Wall Street has got itself in a bind. It's not because they didn't know it was coming, it was because everyone thought they could make their ungodly profits and get back out before the shit hit the fan. The financial people in Wall Street knew this, the president of the United States knew this, but everyone thought they'd be long gone before the ship went down, or maybe they figured that the government would not allow them to fail and bail them out. The president thought that he'd be out of office before the pumped up markets fail and he would leaving this mess on the next president (most likely a Democrat) and then the Republicans could use it against them in the next election. The failing market happened a bit too early, so now the Bush Administration comes up with this plan to give the very people who took advantage of deregulation to gouge the American public 700 billion dollars, from the very people that were taken advantage of, so that they can stay in business as usual.
This 700 dollar bailout does nothing to cure the problem at hand. All it will do is bring the market back up temporarily to give share holders a chance to get their money back and jump ship. After the share holders jump ship the country will be back to this same spot it is in now, except that the tax payers will be 700 dollars poorer. I believe that we need to demand from our leaders to let the market adjust itself back to responsible financial policies and reinstate regulations to keep this from happening again.
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