Uncle Sam to the Rescue

Posted: September 30, 2008 by April Watkins in Current Issues, Financial Markets, Issues, Our Government, Politics, Wall Street
Tags: , , ,

For what it’s worth, I should first disclose that I am no economist. In fact, I just don’t do numbers. Long ago, I painfully discovered that mathematics was not one of my God-given talents. I finally came to terms with the fact that I was math-challenged and gladly embraced my talent for words. After watching the panic on Wall Street and frenzy on Capitol Hill this past week, I am beginning to think that some of those folks might also lack the math talent, but insist on continuing the same financial practices over and over expecting a different and better outcome each time.

Apparently, those in charge of our country’s financial health and those with the power to expand and manipulate the financial markets, stock exchanges, banking, etc. have been asleep at the wheel and have awakened to a $700 Billion train wreck. Just this past week, Wall Street has seen the collapse of several major investment banks, and desperate buyouts and mergers of other banks and brokerages. At the same time, our main mortgage holders, two of which are quasi-federal institutions, have overextended their lending and ability to recover. The government has already taken control of Freddie Mac, Fanny Mae and the gigantic insurance entity, AIG in order to guarantee financial stability for 80% of Americans’ mortgages.

Now, we are warned that further capital outlays are necessary to provide stability for the remaining financial institutions in order to allow the corporations and the markets to effect readjustments and corrections. America’s action to the resolution of this problem will have a global affect and either serve to calm financial fears, or fuel a frenzied shifting of foreign assets and a further devaluation of the American dollar.

The President has informed us that plans for a government bailout of our financial sector have been developed by key government economists and the big three money guys: Secretary of the Treasury, Hank Paulson; SEC Chairman, Christopher Cox; and Federal Reserve Chairman, Ben Bernake. Aren’t these the same guys that are charged with the responsibility of monitoring and regulating our monies and markets? Call me cynical, but I don’t feel very confident that the group developing a solution to this crisis includes the very same people who have allowed this nightmare to occur. A bit like the fox guarding the chicken coup, wouldn’t you say?

All the top politicos have been meeting with the President and the three money amigos to discuss details of a government-funded bailout of enormous proportion for Wall Street’s commercial financial corporations. It is their belief that a free-market adjustment could not yield a market correction that would be sizable enough nor quickly enough to satisfy stockholders, foreign investors and global markets. So, it’s Uncle Sam to the rescue with OUR tax dollars.

On behalf of the average citizens…ah, taxpayers of America, I have some questions for this esteemed group:

  1. At what point did you all think, “This is beginning to really look bad.”? Was it at $50 Billion? $100 Billion? What’s the tipping over point for you guys to take action?
  2. Who is supervising your respective enormous staffs? Aren’t these employees hired to assess market situations and report back to you? Did your people fail to recognize the disturbing trends in the markets? Was there no actionable intelligence that warned of a mounting problem?
  3. Why should OUR tax dollars be used to fix a problem that WE didn’t cause? Moreover, why is it that normal American citizens have difficulty in getting sufficient assistance for loans, or bailouts, or even a grace period from you guys when we have a financial setback? This preferred-status arrangement doesn’t seem quite fair and balanced does it?
  4. Who is REALLY making demands for immediate action on a crisis with a price tag of an unprecedented measure? Media reports as of Friday, September 26, 2008 quote economic experts and various members of Congress as placing the blame on Wall Street as it issues threatening disasters if this $700 Billion is not infused into the financial sector immediately. This sounds a bit presumptuous of the Street to assume that the Federal government is obligated to bailout their corporations. Isn’t risk part of the equation of investing?

I think a most equitable starting point for any bailout of this mess is to first allocate the salaries of you guys, your inefficient staffs, the financial brokers involved, the greedy investment bankers and the lackadaisical mortgage lenders, who knowingly built a house of cards. Let’s start the bailout with your share on this investment in America’s financial future.

I am not so naïve to disregard the fact that we live in a global market economy and any crash, especially one of this magnitude, would send shockwaves around the world. I also understand that something must be done…and quickly, in order to preserve some confidence in the security of the financial sector in America. However, handing over this unprecedented, enormous sum of monetary aid just doesn’t seem to be an astute solution to a situation that can easily be replicated.

The American citizens deserve a better plan of recovery that includes oversight, checks-and-balances, transparency and accountability. Just as ludicrous, is the idea that the Federal Government can take over Freddie, Fannie and AIG and expect to be more resourceful or do a better job of mortgage tending than they did! When it comes to efficiency, the government is the worst. Just stop and think about how the Postal Service has declined. It’s appalling! Again, apparently no one at that government entity was monitoring and analyzing the postal/shipping/delivery market sector to forecast coming changes due to new technology and increased customer demand.

Regardless of the final tally on a bailout deal, this situation will impact each and every citizen in America. It will, no doubt, hamper funding for other necessities; such as alternative energy development, infrastructure repairs, military needs, educational investments, and possibly corporate expansion for more jobs. We must act to let our Congressman/woman know that we want to see alternative solutions, we want transparency, and we want accountability. This is only one of the critical issues that America is facing; which is why we need the leadership of a true statesman to guide us through these difficult times, putting our country first over financial or personal gains. And that is…Why It Matters.

xxx

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Comments
  1. Sarah & Tim says:

    Amen! The definition of insanity: doing the same thing over and over, while expecting different results. Yes, putting the men in charge of the solution who were the problem in the first place isn’t particularly encouraging…

    I subscribe to an independent finance magazine you may enjoy called Monetary Intelligence Magazine. You can actually request a complimentary copy at http://monetaryintel.com. They give it to you straight. Enjoy.

  2. […] garybaumgarten wrote an interesting post today onHere’s a quick excerptFor what it’s worth, I should first disclose that I am no economist.  In fact, I just don’t do numbers.  Long ago, I painfully discovered that mathematics was not one of my God-given talents.  I finally came to terms with the fact that I was math-challenged and gladly embraced my talent for words.  After watching the panic on Wall Street and frenzy on Capitol Hill this past week, I am beginning to think that some of those folks might also lack the math talent, but insist on continuing the same financial practices over and over expecting a different and better outcome each time. Apparently, those in charge of our country’s financial health and those with the power to expand and manipulate the financial markets, stock exchanges, banking, etc. have been asleep at the wheel and have awakened to a $700 Billion train wreck.  Just this past week, Wall Street has […] […]

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