My musings on the economy, life, technology, business and things I find interesting.

Thursday, September 25, 2008

A Bailout for the Rest of Us

Before you start reading this I want you to keep something in your mind as you read this post

My absurd bailout solution, which is done "tongue in cheek", IS a better solution then what is being proposed. That's how ridiculous the current solution is.

My Solution: The American Patriot Bailout
The bottom line is the US government is more than willing to give out money for crap, my bailout lets Americans dump their crap on the government instead of the same old names.
  • Big problems need big solutions so we're going to jump right up to 2 Trillion dollars of funds for buying crap
  • Funds will help create a market for current illiquid assets (crap) held by American families
  • Only American citizens (not corporations) will be eligible to participate
  • Funds will be distributed through the new FED window: The American Patriot Fund Window. That's the APFW, sorry it doesn't have the same ring as McCains MFI
  • 50% of the proceeds from the sale of patriot assets to citizens will be allocated into a new account called the Registered Patriot Savings Fund provided to each citizen. The funds must be used to buy off balance sheet assets held by banks.  A forceful and democratic price discovery process.
  • The government will mandate that all banks holding off balance sheet assets take representative sampling representing 10% of the total off balance sheet assets and offer them for auction.
  • These assets will be auctioned off over a 3 month period with no minimum bid required and requirement for the banks to sell to the highest bidder.
  • All banks must participate and as market values develop via the sale of the sampled assets, banks will be required to move assets back to their balance sheet assets and become capitalized accordingly.
  • The auctions will end when all assets are moved back on to the balance sheet and banks become fully capitalized or are forced into bankruptcy or FDIC protection.
    This will help Americans diversify into the assets held in such high esteem by Washington at discount prices.
  • A separate fund will be setup to buy all the failed banks at their true deep discount asset value (established via the patriot auction facility).

Eligible Assets for Sale by American Citizens to the FED

The FED shall pay full hold to maturity value for the following assets held by American citizens:
  • Poop (human, canine, bovine - apologies to the hipsters and libertarians with cats this is a Republican bill)
  • Festering food, the kind with the fuzzy mold is preferred as the government feels that it may become brie at maturity
  • Old underpants, skid marks will be allowed, edibles will be discounted to 80% of original value due to bio degradation risks
  • Old VHS tapes with recordings of Who's the Boss, Cheers, Knight Rider and Growing Pains. The government expects Full House to be worth a premium at maturity and will pay 110% of face value for these tapes.
We expect all families to hold sufficient of these assets to sell their full 20k limit to the government.

What this will Accomplish

  • Americans are suffering because these assets are illiquid, there is no market for them currently. The government will step in as a buyer of last resort. This will help create a market for these assets and should induce buying from our Asian overlords - we expect Germany to gobble up the entire US supply of Knight Rider Hasslehoff tapes.
  • After becoming well capitalized Americans will be able to afford the subsequent raises at the pump, and they will also be able to take a trip to Disney World as mandated by President Bush.
  • Americans will be able to gobble up the banks assets at fire sale prices, this will cause numerous banks to fail and will allow the government to buy up the resulting assets at fire sale prices.
  • Americans will benefit, not banks, not foreigners, not even Canadians (dammit)
  • American families will each have 10k to weather the resulting storm and 10k of future assets purchased for pennies on the dollar
  • The severe deflation will outpace the inflation caused by the 2 trillion dollar payout
You Can Not Trust the People In Charge: Bernake, Greenspan, the FED, Congress and the Bush administration have been either complacent or played contributory roles to the current mess. They are asking for a blank trillion dollar cheque to fix a problem they could have stopped in the first place.
Questioning of Bernake by Ron Paul

Bernake lies right out to Ron Paul - stating they will use market mechanisms to establish the value of the assets being purchased. He later admitted they would be purchasing at hold to maturity values and not using a reverse auction. Essentially they are asking the American public to be saddled with trillions in junk assets with the banks getting all the money. Hardly seems fair.

Other recent bailout interviews with Ron Paul worth watching:

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