How the Toxic Asset Plan Helps Me

Well, the new plan is out. The goverment will buy up toxic assets from troubled banks. After doing this they will sell them at discounted prices in an auction format. How will this toxic asset plan help me and you? It's quite simple.

The new plan will be put into motion with tax payers dollars, so all Americans will be paying for the solution (However the tax might not be as big as we all think, since these bad assets still have good value). You won't see any immediate effects, but it certainly will help the banks. I know, I know. This isn't what you want to hear. However, the way I see it is that it really is the only solution. We will all see results in the future. It will be easier to obtain loans. We will be able to get mortgages at lower rates. We will be able to refinance our mortgages at lower rates. Entrepreneurs will find it easier to obtain business loans at low interest rates.

With the increase in loans being made, the country becomes more productive. The Stock market will increase, there will be more jobs, and real estate values will start to inch their ways back up.

The negatives of this plan?
- Increase in taxes (pehaps only a small amount).
- Increase in inflation as the economy begins to pick up.

All in all, I feel this is a good move on the part of the government that should and will work.

Green Technology will Finally Work

It seems like the country has been trying to go "green" for the past 25 years. Year in, and year out we hear about the future which includes electric cars, solar power, wind power, advanced hybrids (like the Aptera 2e), less reliance on oil, and energy efficient appliances. Finally I believe we have a president and an administration in Washington who is seriously trying to put this country on a "Green" Path.

Going green certainly won't be easy. However, doing so will put less pressure the US economy and cause less destruction to the environment. If we can rely more heavily on solar, wind, natural gas and electric power rather then oil, it will make the United States more independent as an economy. If there is such a thing as reverse globalization, then this would be it. The more independent the US economy is, the better.

Global warming is another topic in the news a lot lately. Supposedly the environment is getting worse then we had expected. Sure, we won't live to see the devestating effects, but do we really want the Human race to end one day because of things that could have been avoided?

I'm looking for Obama to Go Green and set this country on a path that other presidents will follow. Let's all do our part.

90% Tax on AIG Bonuses

Well this is just in.  The House has approved a 90% tax on bonuses issued to AIG executives with a househouse income over $250,000 a year.  I like this move.  It's not taking back the bonuses, but taxing it to recover the taxes the rest of the American People have paid to bail them out.  

The bill passed is 328-93.

Seems like both Republicans and Democrats agree with this bill that does not only cover AIG but other corporations that received tax payers bailout money.

Nice work!

AIG Bonuses should not be taken away

So as we have heard, AIG continues to give out multi-million dollar bonuses to their executives even though the company has taking hundreds of billions of dollars from tax payers. This isn't fair, is it?

First, please understand, I don't think a single one of the executives at AIG deserve an extra penny for all the problems this company has caused this nation. They have probably been the largest culprit in this financial collapse. It was AIG's greed and lack of rules that caused so much of this mess. If it weren't for these greedy executives the economy might actually not be a disaster right now.

However with all this said, taking away bonuses that these executives were promised (in their contracts) to receive would be both illegal and unjust. They were employed by the shareholders of AIG and provided with contracts (although I'm not exactly sure of the details) that clearly stated they would be given these bonuses. Most likely the bonuses were based on some sort of incentive. It's hard to think of any incentive that they would have reached but they may simply have been based on hours worked, clients brought in, etc. This contract was issued before the whole bailout began.

Another Point. Most of these executives made mistakes, were too greedy, and took too many risks. However, these are the same executives appointed by the board of directors and/or CEO of AIG. They were the same executives that were believed to be the best qualified for the company's share holders. Greed gets the best of us. Just like it got to those of us who purchased houses that we had to foreclose on, bought stock that lost 50% of its value, didn't put enough money into an emergency (layoff) fund, or even bought a car that turned out to be a lemon. These are all risks we took. Were we all too risky? Should we not be allowed to foreclose on our homes or get out of the mortgage via a short sale because we took the risk? Absolutely not! When someone buys a house in the United States they do so knowing they have a mortgage to pay, and if they don't pay the mortgage they will lose the home due to foreclosure. On top of this, their credit rating will be negatively effected for 7-10 years. What if the government decided to end the practice of foreclosures and force all home owners to pay their mortgages off no matter how long it takes them (with plenty of added interest and late payments)? This would basicially tie all "greedy" home buyers to a lifetime of debt. This would be unfair, illegal, and unjust because it is not what the buyer understood at the time of his/her purchase.

So, let's provide these bonuses to the executives, but don't allow it to happen again in the future. With this bailout plan there should be strict new guidelines and limits for executive compensation. All future contracts that refer to bonus's should also have that fine little print that explains the incentives and bonuses may be withheld due to certain circumstances.... like this one.

Check out AIG Bailout Discussion, to see where all the billions of dollars in AIG bailout money went.

Go ahead and tell me how foolish I am now.

Higher Taxes for Wealthy is Not Democracy

America.

Home of the free? Yes.

Home of the brave? Yes.  

Home of Democracy? Not really

Here's why.  Democracy was created to allow people to try and achieve the American Dream.  Democracy should mean that no matter how successful you become, you should not have to pay a larger percentage of taxes then anyone else.  Democracy is supposed to encourage entrepreneurship, not discourage it.  Obama's new ideas of taxing the richer people in the United States at a higher percentage then the middle and lower classes is surely not democracy.  

If John makes $50,000 a year, he should pay the same percentage of his income to Uncle Sam as Todd who makes $300,000 a year.  Why should he pay a higher percentage?  At a 15% income tax, John would be paying $7500, while Todd would have to hand over $45,000 to the IRS.  Why should Todd have to pay a higher percentage when he already is paying a huge amount more every year?  This is against everything that democracy stands for.  Whether you are rich or poor you should still have to hand over the same percentage of income as one another, unless you are below the poverty line.  Why should we punish those Americans who have worked their butts off educating themselves, just to help those who were lazy and had no desire to make anything of themselves?  Sure, there are those of you who will say that the rich are rich simply because they have had greater means of educating themselves.  This is true in many cases.  However it is totally false in the majority of cases.  

There are solutions to raising tax revenue without taxing the rich's income.  It is called "Sales Tax".  Currently the national average sales tax is around 6%.  If we raised this amount to 23%, we could effectively eliminate income taxes all together.  This would in turn put a greater tax burden on the rich who spend more money, and reduce the burden on the poor who have less to spend.  This would be a solution, but is it a practical one?

Sales taxes to replace income taxes is of great debate among polititians today.  On the Political side of things, it seems all fine and dandy.  However on the economic side, it has the potential to be a huge disaster.  Once you stop taxing income and only taxing the purchase of goods and services, the amount of spending nationwide should see a large decrease.  With the large decrease in spending, there comes a large increase in savings.  This would harm the economy especially in a time of recession.  

There are economies in this world that have achieved eliminating income taxes in favor of a larger sales tax.  It can work, but are the politicians and economist in Washington smart enough to make it work?  Probably not.