Tuesday, September 30, 2008

Economist: Why Bankruptcy is Better than Wall Street Bailout

This is the kind of smart economist I was talking about... "Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown. This bailout was a terrible idea. Here's why."

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Bailout = Rescue? Really?

Overnight the former "Bailout" Plan is now referred to as a "Rescue" Plan. I find that this slight change, clearly brought on by strategic PR players might really confuse your average Joe. So I have decided to make sure that definitions of Bailout and Rescue are clear.

Bailout:
Definition 1
Excessive selling of a firm's stock by its stockholders, perceived as a lack of their confidence in the profitability or viability of the firm.
Definition 2
To provide emergency financial help to keep a firm afloat.

Rescue:
1. to free or deliver from confinement, violence, danger, or evil.
2. Law. to liberate or take by forcible or illegal means from lawful custody. –noun
3. the act of rescuing.

That's a great spin from the Government Leaders and PR folks who really want this plan passed! GREAT! How else do we get people motivated to take action- good old FUD (fear, uncertainty and doubt)? Marketers have been trying this for years, and as most good marketers are seeing, it doesn't work. But, leave it to the government and their PR firms to put it to the test again.

It's almost funny to watch people who will not buy a consumer good with the FUD motivation, but they will elect a government or put bad policies into place...

I charge people to be as critical of your government leaders as you are of corporations that you purchase you goods from. THINK PEOPLE!!!

Monday, September 29, 2008

It didn't pass...

and I have to say "thank god." I swear if the tax payers have to pay for some really stupid decisions on the part of other Americans we might as well become socialists. I work my tail off most days and I have been working my tail off since I was in high school. I still have school loans, I don't own my car, I don't own a house. I am trying to take care of my debt before I get a bunch more. And this day in age, with all of the uncertainty in the market, I am not going to be able to get a loan for a house, because some people made some REALLY DUMB decisions. And now they are telling me that not only do I not qualify for a home loan anymore because I don't have 20% down, (even with excellent credit) but on top of that, those tax dollars you pay, those are going to bail out these greedy people who were at one point living the American Dream. It's not fair.

And if there is one thing I get after working in the corporate world for the past 10 years, is that life is not fair. But do we need the government to say it now too?!?!? I am an optimist. I am always looking for the situation that will please everyone. But I really feel like we are missing something big here. There HAS to be a way for us to prevent the failing of more large banks and financial institutions but also doesn't stop our entire economy from growing. And I should note that it should also not further separate the elitist upper class and the quickly booming lower income class.

I studied Economics, and I KNOW that there are some REALLY smart Economists out there that we could really use to shake some sense into our leaders. When Corporations attempt to break into a new market. The first thing they do is RESEARCH. They find the smartest people in the field and they get them in-house to help break into that new market. Now, all the sudden the government is setting economic policy that will help or hinder our nations ability to grow for decades to come and they clearly haven't talked to anyone with any real intelligence on the matter.

Maybe they need to poll some creative economics students... Get the people who haven't fallen victim to the "system" yet and can still think outside of the box.

I did just read this quote on another blog and fell in love:
"Capitalism will always survive in the United States as long as the government is willing to use socialism to bail it out." - Nathra Nader, Ralph Nader's father

Wednesday, September 17, 2008

Bail Out Schmail Out

If one more private company gets a government bailout I am going to scream!!! This is ridiculous! These companies have approved bad loans, they have made investments in people that didn't meet certain standards. Now things have finally started to really crumble because the foundation that rocketed Bear Sterns, Freddie and Fannie Mac, Lehman, AIG, Merrill Lynch, and soon to see WaMu wasn't a true foundation. It's like having an unlicensed contractor pour your concrete. You don't know what you are going to get, and yet, these companies got greedy. They thought, we can get this huge house built on this super cheap foundation! GENIUS!

WRONG! It was not genius, it was greedy. And now the Government, who clearly doesn't believe in, or understand basic Economics, is bailing out everyone and their mother. And guess what? It's not even real money. The Government hasn't had it's own money since 1938. Our debt has spiraled out of control and today we wonder why offering private companies BILLIONS of dollars isn't enough. Has anyone checked how much a US Dollar is actually worth lately? It's because a US Dollar isn't worth what it used to be worth. And it's all because it's not real money. It's all fake. Where does this "bailout" come from? It comes from an existing debt of $9 TRILLION.

So, let's re-cap:
  1. Advertising/Marketing sells the American Dream,
  2. People make poor financial decisions in the hopes of attaining the American Dream,
  3. Un-educated mortgage brokers find loop-holes in the systems and get these less than desirable people approved for loans they can't afford,
  4. Banks approve these loans because they are greedy for the money, because of an increase in competition in the banking industry
  5. Greedy private companies look outside the US for backing for these loans
  6. Everyone lives happily for about 5 years, until the ARM's actually adjust their rates... opps!
  7. People can't make new rate payments
  8. People start losing jobs and can't make payments
  9. Banks/ Investment Firms start working with some people and selling off more of their "bad loans" to overseas investors
  10. Banks/Investment Firms wake up and realize they are doomed and try to sell to the competition or even better- beg for government funding!
  11. The government bails out the first 4 large investment firms claiming that if they let them go down, it would hurt the economy. (I don't know if they live in my neighborhood, but the economy is already hurt) Even though the government just bailed them out with fake money, that's not going to hurt the economy at all!
And now we have a chose your own adventure story on our hands
Option 1:
  1. Suddenly what used to be a highly competitive industry is run by the government
  2. It becomes impossible to get a loan for a house, a new business, or school because requirements for these are so high because of the fear of more defaults.
  3. Growth stops, we continue to lose jobs, people continue to lose their houses, people can't afford to educate themselves beyond the free high school level, no one has medical coverage because it too has become too expensive and without a shelter or health, we have lost the first two levels of Maslow's hierarchy of needs.
  4. The gap between those that have and those that don't grows significantly and we see poverty levels higher than the great depression.
Option 2:
  1. The government stops helping companies, lets economics take hold of the system and there will be lawsuits.
  2. No one wins, just the lawyers
Option 3:
  1. The government stops bailing out large investment companies, forcing them to be sold at pennies on the dollar or go bankrupt.
  2. People who have their money protected under FDIC regulations get their money back
  3. Greedy CEO's and management teams lose their salaries, and possibly their houses- wow, now they really know what they have done.
  4. Regulations are put in place about who can become a mortgage broker (more than a 6 week course this time)
  5. There are less regulations on who can get money. The standards we have today are sufficient, but they should not get any tighter.
  6. Responsible people with good credit ratings are able to get loans and help to rebuild the economy because as Americans, that's what we do, we man-up and get back to work
  7. There are some government funded community building projects that help the economy grow
  8. The debt still grows, but hopefully we have some economic growth to back it up.

Tuesday, September 9, 2008

Are voters smart?

My brother is a bright guy. He was always getting better grades than me in school. He is an architect, so he has this ability to understand numbers and be creative at the same time.

Today we were discussing Sarah Palin and the voters in this country. In the past few days there have been a few reports of McCain winning over white female voters in this country because of Sarah Palin. I don't get it. I don't understand choosing a book based on its cover, especially in this case. Palin might actually become president. McCain is the oldest presidential nominee we have ever had, and he's not dying now, but 4 years at his age is a LONG time. Palin is a good looking, young, female Republican. But she is also a supporter of aerial hunting of wolves in Alaska. She believes that getting oil from ANWR will benefit the country and won't impact the environment, or at least she's willing to forgo the environment for what is BELIEVED to be "about a year and a half worth of U.S. oil consumption and many months of natural gas."

I wonder why we are talking about sucking more from our environment when we don't even know if we will have a planet and safe ground to live on 20 years from now. Shouldn't we be focused on creating new energy sources. I am not smart enough to tell you which one, but I do know that the one that we have been using for the past century isn't working- it's killing the environment and it's not sustainable, because for some reason, we keep going to war over it.

So, back to the part about voters being smart. Why is it that all the sudden all of these women are flocking to Sarah Palin? Who are these women, why don't they care about her disregard for the environment? Or is it because she's not pro-choice? I wonder if it's because people don't educate themselves. So, as a woman, I ask that these women at least read the following two articles and you decide what's best for your country, for your earth, for your family...
Article 1
Article 2