If No Bailout, What Should We Do?

Lou, The inflation would be instantaneous and astronomical. There would be nothing left to buy. Gold would be $20,000 per oz. I think we had better try to not inject this much money into our financial system. NO Bail out. Just say no!!!!!! Deflation not inflation.

Change the Accounting Rules and Republicans are Right. Why doesn't someone play back all of the videos of the Democrat Group and their remarks. Every single time they said: '...this administration..' and '..the Republicans...' . Not partisan? Ha!

The question we should ask ourselves is, "What is the price of preserving capitalism?" To me, I would much rather take a hit on my portfolio (which eventually will bounce back) and let the market sort this out, rather than spending $2,300 of my tax money to push our economy into socialism.

The second sentence in my suggestion should have been as follows: Second, if the taxpayer earned “more” than $100,000, start working the payment down from $500,000 to $100,000 until their last year’s reported income amount is over $500,000, then pay them nothing.

We don't need a rescue! We need a good dose of reality and basic principles. That's what our country and the U.S. economy was founded on. That is what works. If we are true citizens of the U.S.A. we don't avoid consequences, we face them. Then, we pick-up the pieces and make our country greater! If you want government to control everything so that you don't have to face any consequences, you give away your freedom and also your ability to learn. That is what other countries do, not the U.S.A.

Alexis I have an idea for this blog...why not U and Neal Cavuto air these wonderful ideas on SAVING THE ECONOMY SPECIAL? EVEN HAVE THOSE EXPERTS FROM CODY WILLARD,ERIC BOLLING AND REBECCA GOMEZ comment on what all what has been shared this afternoon. Just an idea of mind.

Alexis, I agree with you. Something needs to be done. I am currently in college doing a double major in Finance and Economics and after listening to all of my professors and listening to all the different commentators on Fox, I think instead of a bailout we should loan the money to these firms and charge a low interest rate. I think that doing this would make the American people feel much, much better about this whole thing. Right now no one want to give free money to people who are perceived to have created this problem. I also think that there should be 0 capital gains tax. They also need to change the mark-to-market rule - this is crazy! It makes companies have to declare bankruptcy for no good reason! If this was changed right now it would free up capital for the companies which would be a huge help right now. The best thing about it is that changing mark-to-market doesn’t even need to go to our do-nothing congress, it could be done right now. You are right, there is no doubt that something needs to be done and for the American people that don’t see this and think times are hard now they are going to be much worse in the future. I just think that there is a better alternative than what was proposed in the bailout.

Why there is not more discussion of eliminating the flawed legislation that has pushed us into this situation I do not know: Reduce or eliminate the incentives to make loans to customers who do not hav sufficient income to pay them back, Inflict a severe penalty on any legislator who dares to call any business enitity "racist" for displaying an unwillingness to do business with any entity without the financial stability to repay the debt, Pare back or eliminate the components of Sarbanes Oxley that are stifling business innovation and development, and Scale back the capital gains tax to provide an incentive for private equity to fill the gap that taxpayers clearly do not want to fill. This does not seem complicated...

Alexis, I have heard several folks discuss suspending the "Mark to Market" accounting rule. Based on my experience as an executive with Hawaiian Electric Industries, Inc ( An electric utility holding company with a utility and a bank) we did find both Sarbanes-Oxley regulation and "Mark to Market" accounting as a major negative impact. When I look at the bailout proposal it appears the the bailout will have an effect similar to suspending the Mark to Market rule. It is not an exact relationship, but if companies do not have to mark those assets to market, they will not have to raise additional capital because of the mark to market accounting rules. I understand that the Chairman of the SEC has the authority to suspend the Mark to Market accounting rules and I understand the challenge that will creat for understanding balance sheets. However, if the SEC Chairman does suspend the Mark to Market rules and it works, many people in government will put in a very sad position of supporting a bailout that was not needed in the first place. Given the the public confidence in congress is already less than 10%, they can not fall too far. I suspect that there is extreme pressure on the SEC chairman to not take that action even though he could re-instate it if it proved wrong. Another puzzling aspect of the $700 billion bailout proposal is the comments that eventually the tax payer will make money. The tax peerson seems to be always coming, not going! Also if that assertion is true, why is some smart business folks coming to the rescue? Is it because assessing the "value" of these securities is so difficult. How does our government know that we a paying fair value? I would like to see some discussion on that point. I would propose a mixed approach that suspends the "Mark to Market" accounting rule and has our government (meaning us taxpayers) invest say $100 billion. I just thought of another crazy idea. Instead of using our tax money in a strange unaccountable manner, how about letting the American public come to the rescue with investments that would pay them back in non-taxable capital gains for their risk and faith in America. Each individual investment would give the investor some number of shares depending on the amount invested. One requirement, no CEO's with million dollar pay out packages for negative performance. I am thinking that this effort could be run by our government at not cost to the investors, except for a small percentage share of the capital gains. this way taxpayers who do not want to be involved need not be involved. How is that for a democratic approach? How on earth did folks who are supposed to be savy business and financial experts ever bet on assets that they could not put a reasonable value on? Thanks for your blogs, they are very informative. Aloha, Chuck Wall

A Bailout Proposition Everyone Will Love Here’s a solution that a) costs less, and b) most everyone would love it! Start with taking all the individual American people who filed income taxes last year and pay them money in the graduated following amounts: First, if their filing shows they earned less than $100,000 ($200,000 for a couple), and pay them $500,000 each (or $1,000,000 for a couple). It would cost the U.S. less than $350 billion dollars! Second, if they earned less than $100,000, start working the payment down from $500,000 to $100,000 until their last year’s reported income amount is over $500,000, then pay them nothing. I’m sure the total bill would be less than $700 billion, and every entity that uses blood and vessels as their main operating system would be happy, and those that use wire and electricity as their operating system wouldn’t feel anything. These amounts could be adjusted considering the total amount spent. It’s a great way to get voters to vote for elected officials legally while paying themselves legitimate money. I love this idea. It would cost less than $350 billion! How about you? Do you love it? I’d like to start a news show with it! Or, if you want, I'll run for President. Lou, an M. B. A. in Phoenix, AZ Louis G. Scolish, M. B. A. louisscolish@cox.net 602-695-9495

While I am against the bailout, I fully support introducing liquidity into our credit markets. Why not introduce capital into the credit market by lending it to regional banks who have demonstrated responsible lending practices to qualified borrowers instead of scooping up bad debt from irresponsible lenders and hoping they will make capital available again? Or, create a new lending institution with the proposed bailout funds and make loans available to qualified borrowers. Response to DJ Williams: Yes, that e-mail suggesting sending a check for $425,000 to all Americans over 18 years old has been circulating but the math is off. If you divide the $85 Billion by the 200 Million adults, you only come up with $425.00 per person, not $425,000.00.

Well considering that $85^9 divided by $200^6 equals 425 bucks and not $425,000 I guess that "bailing out the taxpayer" idea comes up a bit short. Therefore I will side with "let the free market handle it". The efficient market will provide a better solution over time than anything our govt can belch forth. Those marvels in DC have such an amazing track record of getting things right as it is.

First - suspend the mark to market rule. Second - eliminate the capital gains tax. Third - take the necessary measures to strengthen the dollar in the world market. Fourth - on Nov. 4th, go to the polls and vote for the opponent of anyone with "incumbent" by their name.

Buy stocks now, period.

Also, the Federal Reserve needs to be abolished. Inflation is on the rise and the USD is going to be worthless soon enough if we don't put an end to it.

The free-market can handle itself, these banks need to go bankrupt to liquidate their assets. It's ridiculous to try and pin their bad investments on us. We've been having economic troubles long before wall-street dug itself a deep hole. The 700 Billion Dollar bailout is not constitutional and should not be accepted in ANY way or form. We don't need to do anything but investigate these companies and wait for them to go bankrupt. When big business falls there will be smaller businesses who have been aching for the chance to make their name. This is called ebb and flow. It's how sound economics work. What goes up must come down.

Alexis: I have watched multiple shows, including yours, which try to explain this crisis and what we should do about it. Personally, I'm tired of the rhetoric (not from FBN of course!) and am leaning in the direction that many economists are in agreement - let them go bankrupt, a better model, a better company, will take its place. I stand to lose a lot if the market heads down much more but I'll be losing either way. I probably sound a lot like the rest of the people you've heard from. I survived the oil industry collapse in the early 80's and the dotcom bubble bursting. I've survived bad real estate markets where I've lost money. Not one governmental agency was there to help make up the loss. I'm prepared to go through another challenging time. Not only will I be better off long term but I believe the country will be too.

Gee allot fo people are saying don't sell stick it out. When they start paying your bills and mortgage you should stick, but, they are sounding like Key Lay of Enron don't sell the stock is fine. But if you are having problems with paying your mortgage and rading your retirement fund is the last resort. then folks tune out the financial talking heads because if yyou don't have a home where will you retire? The Problem is too many businesses start up and then get bought out by some other big company, and, then they start anohter business again and do the same thing. Its the in thing to do with Wall street morons today. Also the people who buy stock one min and then sell it another min are more fools that ruin the market. and of course the Big Morons who got $500,000 dollar homes and they make only 30-40 thousand a year hello you fools took the loans knowing that you probally won't be able to pay it now you deserve to lose it. I wish allot of people would step up and take responbility for the problems. Hey I did not forget the over paid CEO's with those golden parachutes they drive companies into the ground and leave with allot of money. Too many companies worry about their stock price instead of the products they make. Also people worry about their credit ratings instead of their families. There is allot of blame to go around which just see who stands up and admits it. But remember folks its your money not the TV financial talking heads.

In all of this there is not one word regarding a major cause. When are we going to hear of the resurection of Glass-Steagall? Force banks to be banks again. Here is my two cents. Set up a temporary RTC like vehicle and then say to any financial institution that is in trouble "Just give us your bad performing junk at no cost. We will then sell it and the profit goes into the Treasury. Meanwhile you can simply cross it off of your books. And if you get in trouble again---Goodbye. Ken Kesler

Instead of coporate welfare... The Common Sense Fix (from Dave Ramsey's Website) Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three step Common Sense Plan. I. INSURANCE a. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity. b. In order for a company to accept the government-backed insurance, they must do two things: 1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage. a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes. b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives. 2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs. c. This backstop will cost less than $50 billion—a small fraction of the current proposal. II. MARK TO MARKET a. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate. b. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing. III. CAPITAL GAINS TAX a. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing. b. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.

Alexis, Give Dave Ramsey a call. He'll explain it all to you. I don't know what should be done but I can tell you that giving $700 billion to a bunch of self-serving, lying, cheating, greedy, pompous windbags who caused the problem is not it. These crooks just passed a Continuing resolution with billions and billions of earmarks. Yeah, let's trust them to put the peoples' interest first.

Alexis, Thank you for this blog and thank you for your excellent reporting. I understand the need for government intervention for the credit crisis. I also understand that when you severely cut yourself and need stitches you do not treat the injury with a band aid. In my amateurish opinion the bill that was voted on in congress yesterday did little to fix the problem. It seems to me they are trying to put a bunch of Band-Aids on the problem when stitches are needed. Here is what I saw that was wrong with the bill that was defeated in Congress yesterday. I did not see anything in it that would stop Banks and mortgage lenders like Fanny May from continuing to make bad loans. Also, it did little to address the accounting practices such as mark to market accounting. Oversight seemed to be in this bill but how such oversight would work was a mystery. I think these issues could easily be addressed. The government could make a temporary rule on Banks and Mortgage companies that no home loans unless the buyer can put down twenty percent. That is just one idea. But if this is not addressed now it is doubtful that congress will have the guts to address the problem later. Then we will be facing the same problems again. Also I find it disgusting that politicians are pointing fingers at each other instead of dealing directly with the problem. They seem to be all about talking points and political clichés. It would have been nice to have seen our politicians after the bill was defeated to walk to the microphones and have said the following; “Obviously we have not come up with a solution to the credit crisis that we all can agree upon. So we are all going to meet and negotiate to get a better plan for the American people.” They did not say that, they just pointed fingers and many left for the Jewish holiday. Which leaves me scratching my head ,wondering if this is such a crisis why did congress not meet today. Finally, I am sick and tired of being told that this is the fault of Wall Street. Just about every American is to blame. Many of us have saved little and have high credit card debt. Many of us live from pay check to pay check because we want instant gratification and will go out and buy that big screen TV instead of saving for a rainy day. When problems come we blame everyone but ourselves. Most of us do not understand economics and so we blame the fat cats on Wall Street for all our problems. Wall Street, Main Street and the government have also had their hand in creating this problem. Until we all admit our mistakes and take actions to correct things, it will only get worse. Hope this all makes sense. Again, thank you for your reporting. I am slowly learning the world of finance. Something that I truly believe needs to be taught better in our public schools. Craig L. Getchius

Remember those guys who were called nuts and isolationists? The Ross Perots and the Pat Buchanans, these guys were the only ones looking out for the middle class of this country. Our GDP is not very strong and is the most important number in our ecomonic well being. We can't all go around and service each other if we have no manufacturing base left. Our GDP has been given away. When greed is allowed to rape your GDP, your ecomomy will shrivel. Of course it doesn't matter to the extremely wealthy, they can just go and live elsewhere, in the new country with the growing GDP.

I am not for the current bailout. I think if anything is done, it should be removing the mark to market rule and replacing it with a rolling average. I say let the banks who bet on those crazy loans they gave without requiring income documentation go broke. Another bank will step up and take their place. That's the beauty of capitalism. You take risks and you can be rewarded or fail. They were rewarded for years when the housing market was good, but now they are going to face to consequences of having a non-sensical lending policy. Also, we have overextended ourselves as a government, individuals and on the corporate level with easy credit. Maybe we need it to slow down to some extent so that we can get back in the black.

The housing market needs to have its rule change. Becouse speculators,appraisers and some bankers I believe are at the root of this problem. What needs to be changed is the FHA which every city goverment has to create affordable welfare housing. This market needs a real shift in behavior. Like if u take away the affordble housing model,force these local politicians to shift thier own behavior. Example the Mayor of Vicksburg believes that high end white middle class families are going to move here becouse he has affordable housing. That's not true. The FHA and other entites like it should be force to change with the forces of the marketplace. Rules should be in play where low incomers shouldn't be forced to deal high intrest rates. Not to mention some wealthy families too who bought their homes above thier budgets. Yet this depressed housing market,the root of this problem,needs to reexamine and evaulated. How does one shore up price,and load off unsold property inventories? One answer is an auction. Cut out some the middleman in real estate. Regulations within this market between appraisers and bankers need to be examine. Becouse of the banks have to offload bad debt and bad mortgages. Seriously this market needs to be evalvated,improved upon for everyone and last but not least the dollar needs to be strengthen once again.