Federal Government Bailout-Shocking Analysis
(panamalaw.org) Scope of Bailout – Let us assume for purposes that the bailout stops at one billion dollars. It will likely exceed that with the FDIC extra funding requested, Fannie Mae, Freddie Mac, AIG, the car manufacturers asking for a bailout etc. So at one billion dollars every person in the USA gets $3500 more in debt and this is without any interest. If you figure that of the 285 or so million people in the USA only 35 million work then it becomes $28,000 for each working person. Then one must add in interest to this and over the years with interest this could be a six digits easily. This is in addition to the debt load already being carried by each American already which before the bailout is $25,000 approx. This brings the total debt load for each American to about $55,000, without any interest. Now if the bailout gets any bigger this figure will increase.
Another Type of Bailout – Imagine if the Federal Government went to the homeowners and said hey we believe in you and want to help. For the same $1 trillion dollars they could pay off $150,000 in mortgage debt for over 6.5 million homeowners. So which would have been better for the people. Having 6.5 million people running around with $150,000 less in mortgage debt, lower payments, more disposable income, more equity, more delinquent loans paid off etc or bailing out a few big corporations.
The large corporate executives get to keep their stock, their stock options, their personal credit, their assets, their multiple houses, their boats, the jets etc and you get to pay for their reckless business practices that gave them all this wealth and of course due to your goodwill giving they get to keep what they have right down to the multi-million dollar salaries. What a bailout.
The US Congress did not even approve the bailout. The Federal Reserve a private corporation that is owned by the large banks that stands to benefit from the bailout without greater interest payments and the Treasury did it without Congress. Ever wonder how they are going to collect all this debt from an already seriously broken economy. The IRS can’t get blood from a stone no matter how aggressive they become. The bailout beneficiaries must be having a party and the Americans get to pick up the check.
What Next – Well it seems that the approach is to take over Fannie Mae and Freddie Mac, which is responsible for 50% of the mortgages. Then if you add in the Federal Housing Administration loan guarantees you get up to 75% of the mortgages. They will have to enable people with weak credit to buy houses and very soon. The interest rates are low so qualifying will be easier. They will probably go into the same variable rate loans that were in part responsible for the problem to start with. So here we go again. The same sub-prime mortgages to fuel the housing frenzy are back again like Jason from 'Friday the 13th'.
This is how they will make demand for houses and also create an alibi for the bailouts that will, show that bailouts do in fact work. They just enable every one to buy a house again. Now prices are low, rates are low, so they get the sales moving with easy qualifying and they have a housing boom again at bargain prices. The unsold inventory the lenders are holding gets sold. The lender has a cash flow again. The sale proceeds and pays off the bad debt loans that were written off.
The problem is a lot of people are not working so they can’t qualify nor can they be counted on to make the payments on their debt in the long run. This is just some sort of a band-aid that will get things limping along for a while and just postpone the inevitable. The productive jobs are gone and that is the problem. Making government jobs does not cut it. They need to make products and export them.
Nothing is being done to fix this. Imagine the next bailout. If they get away with this one and it looks like they have, then they will keep doing it again and again. The big companies have probably all begun to lobby for bailouts. What a great way to run your business. Don’t think they’ll ever outlaw lobbying so a new form of corporate welfare has been born and will further increase the tax burden on an already over burdened economy.
