Interesting Alternative to the Financial Crisis

The following is a copy of an email I received recently. I found this email to be very entertaining. The facts are a bit flawed and the structure of this piece is not Pulitzer Prize winning, but the underlining message is interesting. As always, please let me know what you think.

An Alternative Solution to the Wall Street Crisis and the Housing Industry $85 Billion Throw Away and Bailout Plan...
A Must Read - The US and the Best Financial Solution

I'm against the $85,000,000,000 Billion Bailout of AIG, and the rest...

Instead, I'm in favor of giving $85,000,000,000 to Americans in a We Deserve It Dividend, and let the let the chips of financial failure stay where they belong. To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. The US population is about 301,000,000 /- counting every man, woman and child.

So 200,000,000 might be a good guess at Adults 18 Plus and up so divide 200 million adults 18+ into $85 billon that equals $425,000.00. My plan is to give $425,000 to every person 18+ as the We Deserve It Dividend.

Let those who failed our trust fail on their own and $425,000 each may eliminate the losses of those who purchased the Stock...

My proposal does not include a Tax Increase, and we should be able to pay our Federal Income Tax as though we earned the money over a period of 30 years so this adds only $14,000 a year to our Gross Income.

We could look at it this way too so assume a flat tax rate (No more Free Rides for those Earning the Most.) of 30%. Every individual 18+ has to pay $127,500 in Taxes today.
This sends $25,500,000,000 right back to Uncle Sam, and leaves every one almost $300.000 in their pocket.

A husband and wife team has $595,000. What would you do with $297,500 to $595,000.00 for your family?

* Paying off your Mortgage solves the Housing Crisis.
* Repaying College Loans eases the pressure of our new Grads and puts money back in to be loaned.
* Putting away Money for the Kids and College - OK - That could drive up the price of Gold because I am not sure I am going to jump back into Wall Street until there is Transparency like the online Checkbook that Palin uses for the State of Alaska and this eliminates the illegal accounting practices used to get where we are today.
* Place your Savings in the Bank for a fair rate and we create Money to Loan to Entrepreneurs.
* Buying a New Car would create new jobs, and with Transparency on Wall Street, I may invest and Capital Drives Growth.
* Pay for your Own or your Parent's Medical Insurance, and Health Care improves and companies like Blue Cross become competitive again.
* Deadbeat Dads have to Pay Up in advance...

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. These properties have real value. Let the private sector bargain hunters cut it up and clean it up. Here's my rationale. We deserve it and AIG doesn't. Are you sure this is a crazy idea, and I say Country First.

I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than I trust the genius of Washington...

Send this to your own Congressmen because it makes more sense than what they are doing today. There is an alternative to Politics, Democrats, and Republican ... Place the People of America First and then Country First has real meaning...

The Financial crisis of Sept 2008

"Free market capitalism" is supposed to be the best path to prosperity. I guess our current financial crisis is simply an anomaly, a brief and temporary correction. I’m sure it comes to no one’s surprise that our economy only practices free market discipline for the poor and middle classes, and socialism for the rich. Wealth is more concentrated today in the hands of the wealthiest 1% of Americans, than at any other period of our nation’s history.

This financial crisis is over thirty years in the making. It is no accident that today the financial sector (including finance, insurance, and real estate) accounts for 20% of our nation’s GDP, while manufacturing currently accounts for only 12%. The history behind this fact is very revealing about our current financial crisis. Sometime in the late 1970s and throughout the 1980s, our “enlightened” government officials anointed the financial sector sacred at the expense of other sectors of our economy, in particular manufacturing. Over the course of these past thirty years, the government has come to the aid of finance time and time again with hundreds of billions of dollars of “bailouts.” Currently, 40% of all corporate profits derive from the financial sector, and only 10% from manufacturing. It’s important to note, that the wealth generated by finance is highly concentrated in the hands of the top of the American economic scale, while workers potentially see more of a “trickle down” from the wealth generated by industry. This should explain why the government rushes to the rescue of finance, while allowing manufacturing to wither away.

There is a ton of money to be made from workers who earn little and spend a lot. As manufacturing shrinks, so does the salary of American workers. Debt enabled the financial sector to balloon to 20% of our nation’s GDP and dominate our economy. The financial sector has grown so rapidly these past thirty years because of debt. In the 1950s, the private and public debt of America was about $5 trillion. In the mid-1980s, the private and public debt of America was about $10 trillion. In 2006, private debt in America was about $43 trillion. This is the party that finance has been bingeing on over the past thirty years. In 2007, the private and public debt of America was three times the GDP. This ratio is higher than the worse years of the Great Depression.

The financial sector has reaped great profits at the expense of Americans and our nation’s economic future. The mortgage crisis has exposed the corrupt and destructive practices of the financial sector. The Americans that are losing their homes to foreclosures today are the victims, not the causes of our financial crisis. Finance has packaged billions of dollars of mortgages together in CDOs (collateralized debt obligations). These CDOs have generated enormous amounts of wealth for the financial sector. Finance purposely gave out loans to unqualified burrowers who had no incomes, no jobs, and no assets. This practice was known as providing “ninja” loans. It is estimated that there is currently $500 billion of “ninja” loans circulating in our financial sector today. Finance routinely packaged “sound” loans with “ninja” loans and sold them off as CDOs to large domestic banks like Freddie and Fannie, as well as to foreign financial institutions. As a result, Americans were preyed upon by finance in order to make huge profits.

What does this mean for Americans and America? You be the judge… Should we continue to allow our economy to function in this manner, or should we find alternatives that correct the destruction caused by the financial sector in these past thirty years?

* Please check the facts I have posted above. The information I cite here comes from: Phillips, Kevin. Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. New York: Penguin Group, 2008. This is a great book. Please get a copy and read it. I welcome any and all comments. I look forward to future conversations and productive debates.

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