Since the Senate is voting on Bailout Legislation tomorrow....
Dear Senator:
I beg that you reject the current legislation being proposed to bailout the financial system with any taxpayer money. This government action will do nothing but prolong the current problems.
Please consider a couple of things. This month, there were over $7 Trillion in loans and leases in the US according the Federal Reserve Bank in St. Louis, a new record. Given this fact alone, there is no shortage of credit. In addition, why would banks loan money between themselves when the Fed has made it so easy to borrow from the bank of last resort?
Consumer loans also reached an all-time high of $845 Billion according to the St. Louis Fed. Just yesterday, Lowes gave my wife a no-questions asked $2000 credit line. After filling out the application, it was $13,500. She does not even have a job. Again, more evidence there is no credit crunch.
A government bailout does nothing to alleviate the real problem, housing prices that are over inflated. It is five states causing the problem as houses were not priced at market prices because money was too easy. More money just prolongs the current problem as housing prices have to reflect a market reality and they simply do not today. I know this means a lot of pain for a lot of people, but these same people should never have been homeowners at these price levels in the first place.
Assume we have 3 million homes in foreclosure and they carry a $250,000 mortgage. This is close to the $700B congress is asking for. You would be better off buying the homes and selling them back to residents at half price only costing tax payers half the money. This would re-price homes and accelerate the needed price declines. Of course this in an over simplification, but buying derivatives does nothing but get bad assets of bank balance sheets. These banks should be allowed to go bankrupt and the valuable parts of the business sold off to better institutions.
Do not punish the taxpayers that were prudent and made good financial decisions. We all saw the new houses, cars, and consumer goods that people could not afford but some how bought. These are the people that need to bear the burden.
Respectfully yours,
Wichita, KS
Subscribe to:
Post Comments (Atom)
1 comment:
Amen! I wholeheartedly second this letter to my representatives as well, this "bailout" is illconceived BS. Let Darwin's theory carry itself out and eliminate the weak and stupid, it will be painful but credit worthy businessess and individuals will continue to find $$$. Find a more appropriate and more direct way to maintain liquidity in the market without buying worthless assets. Increasing FDIC insurance caps is a good start. Let's be real, there is no way the government can have much hope of re-couping $$$ from bad investments if the private sector couldn't make it work in the first place. More government is never the answer in a "market" economy. If there was any money to be recovered, it would be completely eradicated by bureaucratic mismanagement, corruption, oversepnding, and general inefficiency.
Post a Comment