Wednesday, September 24, 2008

New Anti-Bailout Petition

FreedomWorks, the organization behind "Renters Against Government Bailouts," has new petition for Congress. "Congress: Stop the Wall Street Bailout." Everyone is invited to sign the petition.

Alternatively, if you support a version of the bailout that gives "aid to innocent homeowners who are facing foreclosure," Barack Obama would like your support.


  1. Those of you opposed to a bailout of any sort should consider the consequences of your actions. I have a client right now, has approx 700 million in hard (very illiquid) to no liabilities, yet I am desperately trying to keep him out of bankruptcy. Why?

    The answer is, his 60 million dollar revolving line of credit was frozen. Not because of anything he did, but because his bank took a hit from another bank, a cross default kicked in and now they are out of covenant. In order to get back into covenant, they froze our guy's line and he cant find anyone willing to make the loan right now!

    Not only is he willing to pledge everything he has, he has tried factoring - nothing...he has tied memoing - nothing...NO ONE IS WILLING TO MAKE A GOD DAMN LOAN!!!

    Next week, he will probably miss payroll and probably 10% of the workforce will walk. If that happens, he will be unable to function, and will need to lay off about 900 employees and sell his business, piecemeal.

    What happens when those 900 employees hit the streets? How many more businesses will they bring down with them, all because he cant get a stupid revolving line of credit on assets worth 10X the size of the loan.

    Whose to say its not even your employer I am trying to save, or a major vendor of yours? Whose to say another attorney is working with your boss on this same problem, even as we speak. Even worse, I have a whole handful of small-medium sized business clients heading down that same path unless we get the credit markets moving again soon.

    I abhor bailouts generally, I really do. And for the first 14 years of my professional life I was as free market as you can get. That changed about 2 weeks ago, when I saw something economic theory suggests, but you never see - a market failure. I see no alternative to the bailout other than massive job loss, and that doesnt sound good to me.

    I think a lot of the specifics need to get worked and improved upon out before it gets passed - parts of it now are absolutely terrible as is. However if those parts get worked out, your opposition should be based on something other than BS venom based at "fat cats" or "wall street" greed. This thing hits closer to home than you think. My concern here is 900 middle to upper middle class workers - the backbone of the modern american economy. Is that who we want to hurt and hurt severely by simply saying NO, but not offering any viable alternative?

    Since no one seems to have another viable suggestion on how to get this segment of the economy - completely unrelated to housing or mortgages moving again, I am begrudgingly in support of a bailout of some type. It sucks, but its much better than the alternative.

    So in sum, please think this opposition of yours through - less this be your employer that I am talking about liquidating, even as we speak.

    Also, if you do have a suggestion that will get credit moving again without some form of bailout, please let me know - I have a client who will gladly pay you $600 an hour to figure it out.

  2. Have your client sell an equity stake in the company. China and the Middle East have plenty of spare cash. He could probably find a vulture investor in the U.S. willing to buy at the right price as well. Keep in mind that beggars can't be choosers. He will have to offer any potential investor a very good deal in order to raise the cash quickly. That took me a minute. Your client owes me $10.

    For the record, I support the Dodd version of the bailout plan, but not the Bernanke/Paulson version. The Bernanke/Paulson version is severely flawed. If Bernanke gets his way and overpays for these bad debts, their plan won't even rescue the U.S. financial system as intended.

  3. Is the "Dodd Version" the version that expands this folly to include bailouts for car loans, student loans, and credit card loans?

    Jobs need to be lost.

    Pain needs to be felt.

    There is no free lunch.

    It is time to pay the piper and a long run of difficult economic times is the only way to restore fundamentals.

    Running the Treasury like a Xerox machine just prolongs the problem and rewards the evil maestros who wrote this sad, sad financial tune.

  4. Anonymous said...
    Is the "Dodd Version" the version that expands this folly to include bailouts for car loans, student loans, and credit card loans?

    I don't know. That proposal would obviously be stupid.

  5. "In the dark of night over the weekend when most people were snoozing, the Treasury dramatically expanded its bailout plan to include buying student loans, car loans, credit card debt and any other "troubled" assets held by banks.

    A Monday counterproposal by Senate Banking Committee Chairman Christopher J. Dodd included such consumer loans as well as mortgages, just as the Treasury's draft did Saturday night."

  6. Thanks anonymous. I think that is a bad idea because the bailout would be much less targeted. It's the mortgage loans that are causing the most trouble. Those are the only ones that should be bought. And they should only be bought at market prices.

  7. "Alternatively, if you support a version of the bailout that gives 'aid to innocent homeowners who are facing foreclosure,' Barack Obama would like your support."

    NEVER NEVER NEVER NEVER! I'd rather lose everything and end up begging naked on the streets before supporting that EVIL RACIST PIG, Barak Osama!!!!

    There are things more dear than money.

  8. anonymous said...
    "There are things more dear than money."

    What are you, a communist?

  9. Damn hippies begging naked on the streets. Get a job, hippie!

  10. anon 3.56,

    Come clean with the employees.

    Tell them how bad it is.

    Offer them bonds convertible to shares in the business with a buy-back option in 5 years. 8% interest at the company's option.

    Tell them how bad it is.

    Offer them shares in place of salary for 2 months.

    Caution them that as "owners", they can lose their investment.

    Be up front about how bad it is.

  11. James - good idea, but no dice. The only ones with that sort of cash are the hedge funds & they are hoarding cash in anticipation of upcoming redemptions. Weve put out a few feelers overseas, but so far, nothing (at least not quickly enough)

    Same thing with an IPO - we'd be willing to do in and get slaughtered in this market. Problem is with the securitities regs (even in section D registration) much less the underwriting.

    Again, this is exactly the type of disaster the credit markets are supposed to meet. This is a several hundred million dollar company looking for a comparatively small loan. Market failures arent supposed to happen, and yet they are...

  12. KH - well probably be doing something along those lines. The problem is, past experience dictates these things never go well. Employees want cash - pure and simple. They have bills to pay and obligations to meet, and convertible securities will not meet that need.

    We expect at least 10% of them to walk out and when that happens, poof, the whole thing goes away - 200 million in value and several hundred jobs due to the failure of the credit markets.

    If any of you are in tech, R&D, and the like, understand these are the problems the powers that be are facing. As repugnant as a bailout might be, it will fix these issues - fast. Just be cognizant of what you are really dealing with in terms of an absolute "No bailout" stance...

  13. The $700 billion bailout offered will be nothing more than dumping Perrier in the Pacific

    Marc Faber:
    US Needs as Much as $5 Trillion Financial Rescue

    "Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government's rescue package for the financial system may require as much as
    $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested....

    ``The $700 billion is really nothing,'' Faber said in a television interview. ``The treasury is just giving out this figure when the end figure may be $5 trillion.''..."

    Considering how the US Government always, and I mean ALWAYS underestimates how much something will cost, and completely ignores the cost over-runs and the real final price tag, is it wrong to say that Five TRILLION Dollars is the real world cost of what this mess is going to really end up being?

  14. If we are forced to bail out Wall Street, all profits and the $700B should be put into the Social Security System. Tell the goverment to keep their grubby hands off these funds and stop robbing the Americans of the funds we have put into this system!!!
    We all win.

  15. This is ridiculous!
    I am noticing all the news channels pumping the public with scare tactics just to convince the American people that this bail out is necessary.
    What a load of garbage!
    They keep blaming the people of this country for these problems..nevermind it was George Bush that put us in a war that costs BILLIONS..nevermind that it was Bush that blocked all proposals for alternative fuel research which allowed them to raise prices of oil to such levels that no one could afford to pay their bills AND BUY GAS FOR THEIR CARS SO THEY COULD GO TO WORK!..nevermind that it was Bush that got on T.V. and told the American people everything was fine..nevermind that Pelosi just mentioned openly that this money would NOT GO TO HELP AMERICANS THAT LOST THEIR HOMES..nevermind that
    Washington Mutual (just one of many) PAID THEIR NEW CEO A 20 MILLION DOLLAR PACKAGE AND THEN TURNED AROUND TO ASK THE GOVERNMENT FOR A BAIL OUT..nevermind that this bail out legislation would go to help ALIENS to purchase foreclosed homes of AMERICANS..nevermind that the President is now trying to STEAL PUBLIC TAXPAYER MONIES TO PAY FOR PRIVATE INDUSTRIES THAT HAVE LIED AND CHEATED FOR YEARS AGAINST THE PUBLIC OF THIS COUNTRY.
    nevermind all that..
    just give King George what he wants or else we will all have to pay.
    Nothing at all to do with the government elected officials that have proven time and time again to be the real enemy to the American people!
    And now..under closed and secretive doors..they try to hatch another plan to harm each and every one of us!
    I say hanging is too good for them!

  16. We can stop the Great Bailout!

    Given the now likely passage of the Great Bailout, I'm mad as hell and I'm not going to take this anymore!

    If you're mad as hell too and want to stop the passage of the Great Bailout, please visit to sign a petition, right now!

    Then spread the word about to as many people as you can, right away!

    This is our last chance to speak up.

  17. Wouldn't a universal absolution of debt be an appropriate restart of the economic scenario at this point, especially in the US?

    It is a strategy that dates to ancient Hebrew tradition, where it was at one stage applied in 49 year cycles to resolve the accumulative complexities of a credit driven system.

    It will immediately enable the broad consumer base to start spending on strength of regular income, implying an upward revival of market forces, working its way up through retail, wholesale and industry, with credit facilities kicking in in due course.

    A debt free entity is a creditable entity, which is the fundamental factor about which the credit industry turns -- the usual bad apples obviously excluded.

    This would be a simple and straightforward immediate solution, eliminating the impossible proper administration of gigantic proportions of the proposed 700 billion top-down bailout injection, which is a gamble at the best and will take time to filter down in effect to the ordinary taxpayer/voter. Imbalances in liquidity could be resolved by a combination of a tax strategy and an immediately restored credit environment --?

  18. Hey everyone go to Jefferson's Plea and sign a new anti-Bailout petition written using Thomas Jefferson's words. Ever so relevant in today's times.

  19. I only wish I had $700 million dollars to be frozen!!!

    Kill Bill Vol. 2008 !!!!!

    No Bail Out!

  20. Bail out petition for Tax Payers!!!

    I think the tax payer should be bailed out from credit, loans, and foreclosure by the US government. If they bailed out the spenders, instead of the receivers, I think the economy would repair quicker.

    I found a petition online that just started in blogspot, that wants to bail out the US tax payers.. I got a email talking about it, i thought I would do my part and share it here...

    what do ya'll think?? Bail us out or can we fend for ourselves?? there sure is a lot of people losing their homes, and I think it's unfair that the gov't let lenders have such crazy laws...

    For instance, my step mother lost her house b/c she was 1 day late with her payment... One freaking day! They forclosed on it asap b/c there was no law against it... Disgusting. The worse part is that her $70,000 house was almost paid off, and only $15,000 or so was left... but the real estate values had dropped and there was a loop hole for the bank so they took it... crooks

    this **** needs to stop b/c its killing america