Average home cost in USA – around $215,000. Lets say the average home cost for a home in foreclosure is $200,000. We can buy around 3.5 Million homes with $700 Billion. Easy and straight forward. Why does this not happen? Simply because these Wall Street executives have packaged them, sold them and named them so many times that no one knows about the original mortgage.
So now that the Congress has decided to spend $700Billion to rescue these Wall St bankers who drew around $400Billion salaries and $60 Billion as bonuses just last year, the questions is where does the money come from?
I would have not bothered if the money was coming from Investors. Means they are willing to pay for it. Like the way they invested in these so called Financial Institutions whom I call the Thugs. But since Congress is going to invest which earns nothing -nada- from anywhere except from the tax payer, I am wondering about my future tax bills. There are only two ways to take this tab – either increase the taxes or decrease spending. They chose to spend 700B. So the second option is out of question. So increase taxes is the other way out. But we all are not going to see any increase in taxes.
So the question is – where does the money come from?
Simple – Take Country Equity Loan. Sounds weird? Yes. Like the way we take Home Equity Loan against our homes, Govt would take Country Equity Loan against the country. In simple words, we are mortgaging our nation to bail out these thugs. Now if this was in national interest, I was for it. But who is going to gain out of it – The Chinese and the Saudis and the Sheikhs (in the form of Sovereign funds). Since they were the ones who bought MOST of these shares, they were the ones who were loosing on it. What it means? We would borrow from the Chinese and the Sheikhs to pay them back.
And why do we have to pay them back at the first place? It was like any investment going bad. Now the real answer is – Once we pay them back, they would reinvest the same money in these banks, these corporate executives or the white collared Thugs would again draw billions in salaries and bonus. We would pay taxes to keep their lifestyle.
Why do we have to bail them out? Since they are hand in glove with the Congress. Simple. Where would the money actually go? Around 300 Billion in executive pays on Wall St. (let’s presume there is no Bonus this year). Means in the very first year of we pumping in the money in Wall St, it would be disbursed as salary for these Thugs. So once they get their salaries, they would be running their companies. Or else they wouldn’t. The bottom line is from 700Billion, we would be paying Wall Street salaries for 2 years.
How does it help the economy?
Note: These are personal opinions and reflections of the blog author(s).