Treasury Secretary Henry Paulson is holding hearings to take a look at the package. Paulson, as we all remember, was given what amounts to a blank check and unrestricted use of taxpayer’s money to do with as he wishes. He conveyed a convincing story to reel in members of the House and Senate to go along with his plan. To date there has already been billions handed out around the financial industry. These handouts have been instituted without strings. This has lead to a gross misuse of these funds without any accountability. AIG is the perfect example of this misuse as they continue to fund “Executive Retreats” at taxpayer’s expense.

Now, Paulson has changed his tone and is looking to change the auspices of his plan. In his press conference held Nov. 12, Paulson babbled on about nothing. He spent more time spinning the truth then focusing on the ineffectiveness of the current plan. After reading his words, I’m thinking his remarks were written by Dr. Seuss.

What will he come up with next? Only the Shadow knows.

We, as American taxpayers have been duped. We were told that the plan would be a good thing for our economy but, as it urns out there real was no plan. Our tax dollars have been flying out of the Treasury door at an alarming rate. These funds have been used by the recipients as they have seen fit and little stabilization has been realized, if any. The markets still fall every day and have finished each week of trading on a down note. Financial institutions are not using the funds to make more money available in the credit market; instead, they use the funds to cover capital losses and executive bonuses.

The move towards this bailout legislation was opposed by the majority of Americans, but they moved forward with it. We can now say “I told you so.”

Now the auto industry will receive $25 billion with another $25 billion waiting in the wings. I have already voiced my opinion on that subject, “Big Three Bailout”.

Our government believes that there is an unrestricted surplus of our tax dollars available for them to use as they wish. Our Founding Fathers never intended for collected taxes to be used in this way. The taxes collected by the government from citizens were intended to be used for the good of all citizens not a select few. We live in a free market, capitalistic society, and one where businesses succeed of fail based on their business practices. If greed drives the business, it is destined for failure and this has been realized in our financial industry. Where is it that our government can find the right to interfere in that market?

In 1979 Chrysler Corp’s then CEO Lee Iacocca made a trip to Washington to look for a bailout for his struggling company. He was successful in securing $1.2 billion in federal loan guarantees and Chrysler had recovered but the end of 1983. But, what was the actual cost and did this bailout actually prove to be the element of success for Chrysler. In an article by James K. Hickle from July 13, 1983 and published by The Heritage Foundation, Mr. Hickle addresses the real reason for Chrysler’s recovery. To summarize, Chrysler Corp operated as if they had filed Chapter 11 without actually doing so. They contacted their suppliers and renegotiated their debts and contracts. Chrysler’s work force also suffered. 20,000 white collar jobs were cut and 46,000 hourly employees lost their jobs.

“Many observers, including Senator William Proxmire (D-Wisc.) complain that the number of employees laid off at Chrysler in this period is at least as large—and may even have been larger—than the number of jobs that probably would have been lost had Chrysler actually been forced into bankruptcy.”

”The truth is that the Chrysler Corporation has gone bankrupt by every normal definition of the word. In the past three years, Chrysler has renegotiated its debts and restructured its organization in a way that greatly resembles a company going through Chapter 11 bankruptcy. Its creditors, like those of bankrupt firms, were forced to swallow sizeable losses.

This was the result of a clause in the Chrysler Corporation Loan Guarantee Act of 1979 that required creditors to make certain "concessions" to Chrysler. With this clause to exploit and with Treasury Department officials, including then-Secretary William Miller, pressuring its creditors, Chrysler was able to pay off more than $600 million in debts at just 30 cents on the dollar.

So who will be next? Will Wal-Mart and Target, Lowes and Home Depot or a couple of the big warehouse clubs come seeking “Bailout”? Where will this end and what will the cost be for the government’s meddling in the business world? If I bet the farm on investments or a business venture and it went south, would I have the availability of some one else’s money? Just because you are “Big Business” and have friends in high places, does this give you the right to fringe benefits at taxpayer’s expense?

So what does this all mean? It looks like we are heading down this same road, only at a much larger scale. The rules are changing from day to day, thus making this bailout more volatile than the market or economy itself.

If we do not study and learn from history, we are destined to repeat our mistakes. Our government is heading do that exact slippery slope.

John Stone

TakingBackAmerica.org

TakingBackAmerica.org recently contacted AIG’s Board of Directors. An email was addressed to the BOD after the reported “Parties” the company held at taxpayers expense after receiving almost $118 billion in “Bailout” money from the feds.

TakingBackAmerica.org demanded that the Board explain the company’s actions and demanded that the responsible parties be held accountable for the misappropriation of funds. The email pointed out the company’s policies on Corporate Responsibility and asked them how they were showing this with their actions.

As an American taxpayer and now shareholder and speaking for all American taxpayers, TakinBackAmerica.org called them to task.

TakingBackAmerica.org received the following email reply at 8:12 PM, October 29, 2008.

In response to your email addressed to the Board of Directors, one of the events mention in your email was a business event held by an AIG subsidiary and was mischaracterized as an “Executive Retreat”.  The story which was reported widely in the press is not accurate. This event in question was held by AIG’s U.S. life insurance subsidiary for independent life insurance agents—not for AIG employees—who were the top sales producers for the company. The vast majority of the 100 attendees were independent business people and their guests, not AIG employees. 

Another event, "the hunt", was held for customers of the AIG property casualty insurance companies in the U.K. and Europe should have been canceled, and we're sorry that it was not.  The expenses associated with this event will be reimbursed and disciplinary action is being taken against AIG employees who exhibited poor judgment in allowing this event to proceed.

AIG wishes that these events had not happened and regrets that they were not cancelled.

We understand that our company is now facing very different challenges, and that we owe our employees and the American public new standards and approaches.  All further events not essential to the conduct of our business have been canceled, in line with AIG's stricter new corporate expense policy to stop all non-essential conferences, meetings and activities that do not clearly maximize value and customer service given the current conditions.  Furthermore, AIG agreed to establish a Special Governance Committee to institute new expense management controls. These new controls and protections will be designed at the Board level to prevent any future unwarranted expenditures.  We continue to reevaluate the costs of all aspects of our operation in light of the new circumstances in which we are operating.

AIG is focused on rebuilding its businesses, committed to protecting the interests of the U.S. taxpayers and our shareholders, and in repaying the Fed credit facility as expeditiously as possible.

Susan Davidson

Assistant Director

AIG Investor Relations

Just how much is the media to blame for the current financial crisis in the US?

In this day and age of the information superhighway, we receive our news faster than ever before. We learn of developing events as they happen and before any true verification of the facts has taken place. It’s like watching the raw feed from one of our news networks as information changes by the second. Some thrive on this real life drama and at times makes for great entertainment. This type of second by second coverage is detrimental in financial news and the way our market system functions.

All of our news networks have their “contributors” who are, or claim to be, experts in their field. They make their comments and issue their warnings or approvals based on their beliefs of what is right. This morning it was announced that WaMu collapsed and was bought out by JP Morgan Chase. It has been reported that it is the largest banking collapse in history, ever.

I wonder how true this actually is.

I will generalize this because I don’t claim to be any type of financial expert and I haven’t looked at the WaMu numbers (and wouldn’t understand it anyway).

We must make a comparison here. Just how does the current “crisis” stack up to that of the one that threw this country into the Great Depression? Again I say that I am no where even close to being a financial expert. I would like to see how dire our current situation is when a real dollar for dollar comparison is made. We need to look at real value from now and then with comparisons that include inflation, unemployment, population, trade, debt to income ratio and all economic factors which affect the economic balance of our country.

We also need to stop the news networks from being the Grim Reapers of financial reporting. We need to look at who (or whom) is actually loosing great amounts of money here. If you lost a million dollars last week in the market, are you now poor? That is very highly unlikely. Are you a foreign investor that has felt your wallet get a little lighter? Sorry, I don’t really care.

If you have worked or currently work for one of these financial firms that are now in trouble and holding out their hands for a bail out, you are either part of the problem you too are a victim of your firm’s corporate greed. Corporate fiscal policy and budgeting should include planning for the future and not just the short term. Fast money means almost always inevitable financial death. If I took care of my household budget the same way corporations handle theirs, my family would be living in a discarded refrigerator box.

If you received a mortgage that you can’t afford, chance is that it is not entirely your fault. If you misrepresented yourself in doing so, that’s a whole different issue. Mortgage companies were more interested in making instant money than making sure that their investors money was secure. This blame does not only fall on the shoulders of the mortgage companies, but on the big money investors as well. The “make me money and make it fast” mentality is what has brought us to this crisis (or is it really a crisis?).

The old adage that Rome wasn’t built in a day, can certainly be applied to wealth. What ever happened to working hard towards prosperity instead of fast? Fast money is unstable. Slow and steady wins the race.

I don’t know about you but, I for one do not want MY hard earned money to be used to bail out these greedy companies and agencies that haven’t planed for the future. If I have too, so should they. If by letting them crash means that I have to tighten my personal financial belt, so be it. It’s been tightened before and I survived andIll survive again. It wouldn’t bother me one bit if Freddy and Fannie or Lemman and WaMu went down in flames.