$700 Bn - Contd.

I'm writing this in the back-drop of McCain returning to the campaign trail and the house rejecting the first version of the bailout bill.

There is a lot of grouse in the heart of America regarding the bailout. This would have been a Slam dunk if it had been a year earlier as this being an election year. With as many or more than a third of the population being against this, the Congressmen and Senators are very concerned about facing the electorate.

Even among those who support this, they would like to see some pay-back from the wallstreet folks. The regular Joe had seen the high-life of the banking folks during the boom and they would like to see the wallstreet go through pain like everyone else in America when they are in trouble. Its the principle that Adults are responsible for their deeds and a feeling that they are not alone and that everybody pays for their mistakes. Above all, they see that this whole thing is being schemed by Wall-street and being bailed out by people from Wall-street (Hank Paulsen and the Treasury is filled with people from the street).

I'm confident that eventually, they would come up with a bill and would pass. But the bill should have
1. A Fairness
2. Helping folks on the Main-street
3. A pay-back of somekind from Wall-street
4. Help the good performing banks and let some poor banks go down.

I understand and agree that the US Economy needs government assistance. However, who gets the help, how they get it is what I'm more concerned.

Identify the best institutions that is not affected by this mess and reward them to get more strong by funding them the most;
Identify the financial instruments that without which the economy would go down (not the investors) and support them (like Money market, retirement accounts etc)
Identify the first-time home buyers and the primary residence with a proper income-hom ratio and help them.
The bill should have provision to recover the economy and not the investors per se.

Let the free market take care of the rest. The better ones will survive and the best will thrive.

$700 Billion Question

I was enraged like everyone else on the proposed bailout by the US govt. for the Wall street. My take on this is that this is one of the necessary evils. This is ridiculous that everyone of the business leaders and the media cheered the wallstreet crowd during the years of the real estate bubble. Between 2001 and 2007 year over year wallstreet investment banking firms like Goldman Sachs (Hank Paulson the Treasury secretary was the CEO till end of 2005) paid record bonuses (12 billion + every year)- http://www.wsws.org/articles/2006/dec2006/blan-d22.shtml. In 2006, Godman CEO received $67.9million as bonus.

The whole bailout will make sense if the govt. does two things.
1. Calculate all the bonuses paid out by these firms between 2001 and 2007 and make it mandatory for these firms to pay the entire bonus alone back to the govt, for all the firms that is getting the help from the government.

2. When the govt. eats up the loss of banks so do they eat the loss of Individual homeowner. This bailout is outrageous but it should be fair on all the affected parties and cannot be selective.

Will write more on this

A good talk on economy

These are good points which I had been reading for the past 10 years plus. You all might have heard of S Gurumurthy - he is the head of the Swadeshi Jagran Manch ( Suthesi vizhipunarvu Iyakkam). I came to know of him through his writings in Thuglak 10 yrs back. He had been suggesting this demise of the Dollar for the past 10years, I didn't get it when I was there but I could see the whole scheme while I came here.

His article "Engae Pogirom?" was an eye opener for me. It was discussing India's Economy since 500 years. How we were doing our day to day business from Education to daily life and how it was screwed by the English invasion. If you guys get a chance get it and read it. Thats why I always felt theres got to be a middleway between Communism and Capitalism and the mid-way is having a strong local economy and there is no doubt. Thats why as he lays out India is in a very good position in terms of the local consumption. The consumption increases the number of transactions, in every transaction atleast three people get benefited (buyer, seller and the agent). Though I don't agree with few of stuff on what he said, I agree with him to the most part. Two issues that I don't agree with him are

1. His take on Thailand PM Thakshin Sinawatra. It is indeed true that he said lets stimulate the local consumption but he was booted out of power because he is a business man and he screwed the government upto 200$ million on taxes to be paid in a recent stock purchase swap of various family held business. So the Army with the blessing of the King stepped in.

2. US having to land first in the moon.... Any country should work towards its advancement and someone or ther other has to do this. The EU is doing this with its own R&D. India is doing its own. Its good that US is leading the charge by pumping money to do this.

The concept is if you kill one person, you goto Jail, but if you kill hundreds (read veerappan) you can get "Pothu Manippu" thats the equivalent of others supporting the $$$$!

and you don't have a choice. Because the only folks who talk in these terms in India is the BJP and people won't put them in power stamping them as communal. So don't worry India like every other country will help protect the $$! So if you have the $, you are safe and if you go down, you are not alone - everybody will be with you in the underground. You can start holding accounts in various currencies to hedge your bet.