Should the government be using taxpayer money to rescue Wall Street? The Denver Post asked two economic experts to weigh in on why a bailout is needed — and why it shouldn’t be done.
The only thing the so-called $700 billion financial bailout proposed by Congress will do is burn taxpayers’ hard-earned money.
The sad fact is, we simply don’t have enough money to fix it. Combined with at least 11 other “mini-bailouts,” including Fannie Mae, Freddie Mac, AIG and Bear Stearns, this so-called solution will leave taxpayers on the hook for at least $1.8 trillion.
Giving (Treasury Secretary Henry) Paulson, (Fed Chairman Ben) Bernanke, Wall Street, et al., more of our money is, as some leaders have said, “like a paying an arsonist to put out the fire.”
These same two gentlemen repeatedly assured us that everything was under control since two Bear Stearns hedge funds collapsed in 2007. They were wrong then, and they are wrong now.
It’s time we fire the arsonists.
Total wealth in the U.S. is about $57 trillion. The total value of all derivatives is about $600 trillion. Derivatives are financial agreements between two parties often backed only by their “promise,” and little or no assets.
In 2002, investor Warren Buffett said, “Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
Mortgages and falling home prices are said to be the source of our problems. Experts estimate that 10 percent of mortgages have been or will be foreclosed on. If we assume only 10 percent of these derivatives cannot be honored, then the total rescue cost could be $60 trillion, or $3 trillion more than our entire country is worth.
Bottom line: We don’t have enough money to fix the financial toxic waste that these geniuses with their MBAs, Ph.D.s and fancy computer models created.
To prevent the stock market from collapsing, here’s a plan for bolstering confidence and our economy:
1. Double the time period for unemployment benefits.
2. Increase aid to states to enhance welfare, “workfare” and child care.
3. Increase aid to states to increase pay to teachers.
4. Create and fund important infrastructure projects to revitalize our roads, bridges and utility grid.
5. Provide tax incentives to promote energy efficiency and solar power, and a $10,000 credit for any new vehicle that can run 40 miles continuously without the use of liquid fuels.
Oh, yes. I almost forgot.
Point 6. FIRE THE ARSONISTS!
