Bailout in Jeopardy

There's gridlock in Washington over the bailout of financial institutions.

I can't say I'm disappointed, and I can't say I'm happy. I don't want a bailout, but I'm not so sure I want the fallout from no bailout either.

As with any bill that involves a large sum of money, the party in control of Congress wants to give away the store and bail out people who took out mortgages they had no business taking out. And, inexplicably, the President seems to be in the same generosity boat. I wonder about George Bush's principles some times.

You know, it was the attitude of "I want me some of that action" that got us here in the first place. That same attitude will always raise its tempting head in times of irrational market bubbles. It's a mob mentality that is driven, in part, by the fear of missing out on the cookies sitting on the table, no matter how poisonous they may end up being. I guess it's human nature, but what is dismaying about it is that the so called experts with cooler heads who should know better (insert your own cliche) seem to be taken in by it as well.

It's about greed, of course. It's about insane profit and power positioning.

I emailed my brokerage, Scottrade, to ask them about their exposure to the financial meltdown.

This was their response:

Dear Mr. Howe,

Thanks for your email. Scottrade has no exposure to any derivatives, or mortgage backed securities. Scottrade invests free cash balances in treasury types of securities. You may view our audited financials at www.scottradefinancials.com.

Then the email went on to talk about SIPC and whatnot. But I was pleased to see that Scottrade, more than anything else, maintained a clear thinking, principled position with regards to how it manages its free cash balances.

With regards to solutions, I received this email, and it seems like a pretty good idea to me.

The Birk Economic Recovery Plan

Hi Pals,

I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a 'We Deserve It Dividend'.

To make the math simple, let's assume there are 200,000,000 bon-a-fide U.S. Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a 'We Deserve It Dividend'.

Of course, it would NOT be tax free. So let's assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads
Put away money for college - it'll be there
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs
Invest in the market - capital drives growth
Pay for your parent's medical insurance - health care improves
Enable Deadbeat Dads to come clean - or else

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. Of course this is also for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!

As for AIG - liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can "never work."

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion 'We Deserve It Dividend' more than I do the geniuses at AIG or in Washington DC .

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

Kindest personal regards,

PS: Feel free to pass this along to your pals as it's either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!

Anyway, be prepared for rough waters still to come. We ain't out of the woods by any shot of the imagination. Best wishes to you and your financial survival.