Friday, September 26, 2008

No bailout of investment banks. Or at least use a Wall Street tax to pay for it.

The problem is that banks became investment banks (and insurance companies and every other financial instrument seller they could). So when they started buying stupid investments, like mortgages that the homeowner could never pay for, the stupidity spilled over into non-stupid things, like running a bank. 

Well, it looks like most of the big investment banks are turning into just regular banks and containing their losses. Or, they go out of business. Too bad for their stockholders and their bondholders, but it doesn't cost the taxpayer anything, so not such a tragedy. Businesses end all the time. That's capitalism.

So why exactly do we taxpayers need to buy these horrible loans? Why can't the investment banks just take a bath, take a loss, take the hit and move on? 

Good question.

Do you have any idea how much money $700 billion is?

There are 300 million Americans, counting infants, immigrants and everybody else in this country at this time.

$700 billion is more than $2,000 per person.

Guess what -- if you want an economic stimulus, send me a $2,000 check. I'll stimulate the economy. And I'll bet with that amount of money in every American's pocket, the banks that weren't so stupid to invest in those mortgages will be able to collect those checks as deposits and make loans to businesses.

Washington Mutual just went bankrupt. And life goes on.

Let the big banks that were dumb enough to invest in those mortgages go bankrupt. 

And if there's something fundamental I'm missing here about the financial industry where only the government can rescue the entire sector of the economy, then at the very least have the financial industry pay for their own bailout with a transaction fee for every stock or bond bought or sold. Representative DeFazio from Oregon is pushing for a Wall Street tax of 25 cents per transaction to pay for this bailout

Wall Street should pay for their own mess. I don't want to.


Aloysius said...

I agree with you but once you think about this you won't agree with yourself. You see this bank failure has Democrat written all over it.

Look at this presentation and you'll see all the funding for activists and community organizers that will come out of the bailout and you be going "sign me up for the bailout".

Aloysius said...

More reasons why you will probably regret speaking out against fat cats:

Aloysius said...

Are you ashamed of the Democrats yet?