Readers & Thinkers: 228 Wasted Resources

Dear All-

On Monday, I was shocked and appalled by the House rejection of a bill to support America’s financial system. These people do virtually nothing all year round and the one time they have to do something useful, they blow it. Here are the names of 228 people that you should consider not reelecting ( These 228 people need to get a Starbucks coffee and sniff really really hard before going back to “work” again. Here are some things they should think about while they’re sniffing.

(1) If you don’t like Paulson and Bernanke’s plan, then add some safeguards like I have mentioned, including a small independent committee of economists and practitioners and an independent pricing team. You can also add your own, provided they are reasonable and not overly cumbersome. I agree that any company that benefits from this plan should not get a free lunch, but should pay up in equity or something of that sort.

(2) Bernanke spent his whole life at understanding why the great depression occurred, so give him a little bit of trust when he says the consequences of a financial collapse will hurt more than just Wall Street. It will hurt the entire back bone of the US economy.

(3) It’s not just rich people who are benefiting from this package. Every person in the United States who has a 401k retirement plan or a bank account or an investment account has suffered and will suffer more directly and indirectly. Monday alone took out 10% of people’s real wealth. It will hurt Americans who did it right, they worked hard and they saved. Ordinary people are worried about their savings. You’re hurting them too.

(4) The US financial system is more important than just for making greedy Wall Street bankers rich. The US financial system leads the world in functionality, in helping small companies get funding to expand, in providing loans to people needing to buy houses or finance purchases of goods and services. The US financial system is one of the reasons entrepreneurs from everywhere locate in the US. The US financial system is one of the most prestigious examples of a well functioning state to the rest of the world. It’s why it was so important for the terrorists to attack the twin towers. It’s the nation’s symbol of progress and advancement.

(5) Some very intelligent people, including Joseph Stiglitz (Nobel Prize winner), have spoken very clearly that doing nothing will cause an even greater crisis in the real US economy as lending dries up and businesses can’t find loans to operate. This may lead to many people being fired and unemployment rising.

This will affect EVERYONE, not just Wall Street. What is so ironic is that the 228 representatives who voted against it will watch their own little constituencies suffer even more. Bankers may lose millions of dollars, but the people in these towns will lose their jobs with many less prospects given the industries they are in. Republicans (133) and Democrats (95) voted against it, particularly in Texas, Florida, Ohio, and Georgia. Do they think these economies are immune to a financial crisis or do they think politics is more important than national prosperity?

(6) The root cause of all this mess is NOT Wall Street, it started at the end of the 1990s when government officials put pressure on Fannie and Freddie to make loans to lower income people who did not necessarily fit the typical criteria for making loans. This combined with a greed for profits led to relaxed lending standards and an amazing housing bubble which most banks had exposure too. And once again, by not acting now on this important bailout, you will cause low income home owners even more pain. It’s too easy to just blame Bush for this as Ms. Pelosi did in her speech. It wasn’t only bank’s greed, it was also the idea to give loans to more and more people who couldn’t afford those loans. Isn’t that what Pelosi believes in? She began her speech by blaming Bush’s failed economic policies. She said “Bernanke calls it the Great Depression, I don’t even know what was so great about it.” If she has issues with Bush please save the speeches for after she passes the bill. For now she should work with the others to get a reasonable bill through ASAP. At least she voted “YES”, what about all those republicans who hid under a blanket?

(7) The Great Depression occurred because our monetary system was new and our government didn’t know entirely how to handle situations of this sort. Fortunately, we have learned something with the work of men like Keynes and others. Please do not show your utter ignorance and cause America to lose almost 100 years of learning.

(8) Finally, let’s not forget the most important thing yet. This is not a current tax on the people. It’s a current government expenditure that in theory could be a future liability for the US taxpayer, but it may also turn out to be a great investment. This investment may save the US economy from a deeper recession and also make a profit for the tax payer. The profits may even be greater if there is some kind of combination of purchasing the mortgages with equity participation in the companies. It’s simple if the US government buys junk for 25 cents partly because no one wants it or can afford it and sells it later when the liquidity crisis is over for 45 cents, that works for the tax payer.

(9) And remember that most of us do agree that this bailout isn’t the point we wanted to reach, that Paulson and Bernanke should have acted much earlier (in fact should not have let Lehman go bust), and that the lax lending standards in the housing market along with Wall Street’s greed contributed to the mess. But doing something is BETTER (FOR ALL OF US) than doing nothing.

Finally, I joked a few emails ago about the US becoming a third world economy. I urge you to please reconsider your 228 votes of ignorance and do the world and the US the great favor of pushing your mental and political boundaries and understanding that very intelligent people who have thought of these issues for centuries think a vote of YES is more appropriate than a vote of no in any conceivable scenario. Don’t let the US become a third world country. But just in case you don’t get it, I’m unpacking my abacus.



September 30, 2008

p.s. I emailed a kinder-version of this document to Ms. Pelosi and Mr. Boehner.