Includes thoughts and comments about energy needs, resources, conservation and their relationship to politics at home and around the world.

Friday, September 19, 2008

The Bailouts

I view the government's possible bailout of major financial institutions with terribly mixed emotions. I understand the concern for what could happen if we didn't do it for international players like AIG, but where does it end? What safeguards are going in to prevent the same thing from happening again? I don't like having my taxes used to bail out businesses that shouldn't have gotten into the mess in the first place. The same holds for bailing out borrowers who gambled on the market going up then got caught when the bubble burst. In fact, I'm tired of seeing the taxes I pay go to helping people continue to sit on their backsides.

In an ideal world, there would be no bailout. We would let the perpetrators stew in their own mess. And that still might be the best thing to do. But, if a bailout plan goes into effect, there are several safeguards that should be put into place, to wit:

  • Require minimum down payments of no less than 10% on all future residential purchases based only on strong borrower credit ratings;
  • Disallow subprime loan schemes that jack up future interest rates;
  • Encourage all stockholders to fight for control of executive compensation in private corporations;
  • Continue a ban on "short" sales of stock in financial institutions indefinitely;
    Disallow "golden parachutes" for CEOs of organizations being bailed out;
  • Declare a moratorium on all new residential construction until current used home inventories are back to normal levels.
We must do all we can to prevent a repeat of the mess that has led to the bailout fiasco. Keep government's involvement to a minimum and limited to oversight responsibility and sensible regulation of the financial industry.

The bailout plan first proposed by President GWB went through supposed bipartisan committees last week and over the weekend of September 26-28, 2008 was voted down by the House on the 30th. The vote was a clear indication that many in this country are uncomfortable with the whole concept of a government bailout and intervention in the private enterprise sector. Taxpayers are tired of non-taxpayers living off the fruit of their labors and resent having their taxes used to shore up the greedy folks on Wall Street.


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