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Alternative Plan to the Paulson's Bank Bailout Plan in 2008

laska

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The following plan was put forth by a friend of Sal Khan of Khan Academy back in 2008. Basically his idea was that instead of pumping more money into the black hole of the current banking system that got us into the mess in the first place, create an entirely new financial system by creating several new banks with a five year backing by the federal government and give them the bailout money. Give each man, woman, and child in the nation one share of each bank. So say 50 banks are created, one in each state, each with like 300 million shares given to the public, and they are given the 700 billion(which only 100 billion may have been needed in Sal's opinion), so say 2 billion to each bank at 100 billion bailout. These banks would have a clean slate and wouldn't have the need to hold the cash against past bad investments. With the five year backing of the federal government and clean slate, people would want to put their money in these banks. Instead of having a handful of banks that are too big to fail located in pretty much one geographical region of NY, it creates 50 banks spread across the nation. It eliminates the dilemma where banks can say hey why not go after the high risk investments with the potential of high returns as the government will just bail us out if the risks materialize.

The Bailout videos at the below link goes over the Paulson and Sal's friend's plan.

https://www.khanacademy.org/economi.../bank-bailout/v/bailout-14--possible-solution
 
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...and MY plan was to send every taxpayer who paid between $100 and $30,000 in taxes in 2006 (or thereabouts) a $10K credit card expiring in 6 months, that could not be used for cash or mortgage payments. Now, that would have stimulated. But our Fearless Leaders only give money to billionaires, or losers, never to the hard working middle class.
 
...and MY plan was to send every taxpayer who paid between $100 and $30,000 in taxes in 2006 (or thereabouts) a $10K credit card expiring in 6 months, that could not be used for cash or mortgage payments. Now, that would have stimulated. But our Fearless Leaders only give money to billionaires, or losers, never to the hard working middle class.

How would you have enforced how people spent their refunds? There are people who find a way to convert their food stamps to cash, so I imagine they would have been able to do that no matter how you tried to prevent it. These are the same idiots who would pay a fortune in tax prep, fees, and "interest" for a refund anticipation loan.
 
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How would you have enforced how people spent there refunds? There are people who find a way to convert their food stamps to cash, so I imagine they would have been able to do that no matter how you tried to prevent it. These are the same idiots who would pay a fortune in tax prep, fees, and "interest" for a refund anticipation loan.

If they "converted it to cash", they still would have spent it. I doubt very many would have gone through the machinations of conversion, lost 20-50% and then made a mortgage payment. So, "mission accomplished".
 
If they "converted it to cash", they still would have spent it. I doubt very many would have gone through the machinations of conversion, lost 20-50% and then made a mortgage payment. So, "mission accomplished".

No they would have done it as quickly as possible before the supply-demand of crack and weed started shutting them out and harshed their mellow.
 
No they would have done it as quickly as possible before the supply-demand of crack and weed started shutting them out and harshed their mellow.

Read my post again. This only went to tax payers. Most of us who pay taxes don't put all our money into weed. What money we do so with is generally only a small percentage.

Are you doubting my genius?
 
Read my post again. This only went to tax payers. Most of us who pay taxes don't put all our money into weed. What money we do so with is generally only a small percentage.

Are you doubting my genius?


You do realize that there are people who work just enough to get the max earned income credit as possible, which is something like $5100 already? Care to guess what a great many I know have done with their EIC?

Up in smoke :smoking:
 
You do realize that there are people who work just enough to get the max earned income credit as possible, which is something like $5100 already? Care to guess what a great many I know have done with their EIC?

Up in smoke :smoking:

EIC is not "paying taxes", it's getting free money. My proposal was to give these cards to people who PAID FIT, which is us middle class types that actually produce something. If you got EIC, you didn't pay taxes, you took taxes. So, I think your fears are unfounded.
 
If they "converted it to cash", they still would have spent it. I doubt very many would have gone through the machinations of conversion, lost 20-50% and then made a mortgage payment. So, "mission accomplished".

The velocity of money. Right on! It makes a difference how quickly money is spent.
 
You do realize that there are people who work just enough to get the max earned income credit as possible, which is something like $5100 already? Care to guess what a great many I know have done with their EIC?

Up in smoke :smoking:

You mean spent. Yeah, that's sort of the purpose of handling a huge credit freeze and vast recession caused by cutting taxes on the rich and otherwise created an huge income gap. Money in the hands of rich people is wasted on bubbles and hedgefund bets. Money in the hands of working people is spend, incentivizing investment in the production of real goods and services, or it is invested in mom and pop startups, which also involve the production of real goods and services. Either way we're all better off (unless you're a hedgefund manager and screw them)
 
...and MY plan was to send every taxpayer who paid between $100 and $30,000 in taxes in 2006 (or thereabouts) a $10K credit card expiring in 6 months, that could not be used for cash or mortgage payments. Now, that would have stimulated. But our Fearless Leaders only give money to billionaires, or losers, never to the hard working middle class.

I like your plan better. Even Xero should like your plan better, as it allows each individual to allocate what they do with the stimulous money, based upon their own needs, and thus the issue of how to allocate is resolved rationally and in the best interest of the country.
 
How would you have enforced how people spent their refunds? There are people who find a way to convert their food stamps to cash, so I imagine they would have been able to do that no matter how you tried to prevent it. These are the same idiots who would pay a fortune in tax prep, fees, and "interest" for a refund anticipation loan.

It doesn't matter. you can't protect idiots from themselves. however, more demand would have been generated, and we would have immediately have stopped losing jobs.

People who needed to catch up their debt assumably would have done that, and thus the banks would have been saved. People who needed a new car would have purchased one, thus the auto manufacturers crises would have been resolved. You name it, and some money would have flowed into that industry.

Crises adverted.
 
You do realize that there are people who work just enough to get the max earned income credit as possible, which is something like $5100 already? Care to guess what a great many I know have done with their EIC?

Up in smoke :smoking:

So what? Even crack dealers and pot growers need income, and they spend their income on stuff like food and cars and lawyers, just like everyone else. Seriously. A buck being spent by a crack dealer is just as valuable in our economy as a buck being spent by a teacher or preacher or indian chief.
 
EIC is not "paying taxes", it's getting free money. My proposal s to give these cards to people who PAID FIT, which is us middle class types that actually produce something. If you got EIC, you didn't pay taxes, you took taxes. So, I think your fears are unfounded.

Morally, I agree with you.

however, the best bang for the buck would have been if we gave most of the money to the welfare crowd as they are the ones who spend 100% of what they get.

It would have been more effective and more implementable just to send a check to everyone who paid social security tax.
 
...and MY plan was to send every taxpayer who paid between $100 and $30,000 in taxes in 2006 (or thereabouts) a $10K credit card expiring in 6 months, that could not be used for cash or mortgage payments. Now, that would have stimulated. But our Fearless Leaders only give money to billionaires, or losers, never to the hard working middle class.

an interesting idea. here's mine :

every time wall street destroys the economy, a WPA type program goes into effect automatically, and massive public works programs begin. these programs employ those displaced by the economic crash. when the economy recovers, the WPA phases out automatically.

also, no corporation is allowed to get big enough that its fall would destroy the economy. cities don't allow rickety structures to be built which could collapse and destroy everything around them. neither should a nation.

do these two things, and we'll never need another bailout.
 
So what? Even crack dealers and pot growers need income, and they spend their income on stuff like food and cars and lawyers, just like everyone else. Seriously. A buck being spent by a crack dealer is just as valuable in our economy as a buck being spent by a teacher or preacher or indian chief.

So, you want to punish those who spend those dollars on stocks.
 
So, you want to punish those who spend those dollars on stocks.

For the purpose of a focused one time stimulus, yes. People who buy stocks usually have incomes. They can buy all the stocks they like with their incomes. For being a positive to the economy, they finally get a thank you that they can amuse themselves with. The poor get EIC and the rich get legions of politicians, lawyers and CPAs to minimize their taxes. Just for once, let the middle class get a reward. Now, we taxpayers can buy us some toys.
 
an interesting idea. here's mine :

every time wall street destroys the economy, a WPA type program goes into effect automatically, and massive public works programs begin. these programs employ those displaced by the economic crash. when the economy recovers, the WPA phases out automatically.

also, no corporation is allowed to get big enough that its fall would destroy the economy. cities don't allow rickety structures to be built which could collapse and destroy everything around them. neither should a nation.

do these two things, and we'll never need another bailout.

I do like the WPA concept and if we exchanged money for effort, I think more of the population would soften their resentment against welfare. How this would be done deserves serious thought but in principle, a good concept.

Too big to fail is unconscionable and that nobody addresses this in Washington has been bitterly disappointing. They really reveal what puppets they are.
 
So, you want to punish those who spend those dollars on stocks.

Did I say that? I mean seriously, how does my post about crack dealers contributing to our economy end up with a response from you about punishing people who purchase stocks?

A much more logical interpretation of what I said would be something like "so we should give refundable tax credits to crack dealers so they can grow their industry."
 
Did I say that? I mean seriously, how does my post about crack dealers contributing to our economy end up with a response from you about punishing people who purchase stocks?

A much more logical interpretation of what I said would be something like "so we should give refundable tax credits to crack dealers so they can grow their industry."

You think crack dealers contribute to the economy. I think investors contribute to the economy.
 
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