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alstry (34.97)

Why aren't banks utilities???

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May 28, 2009 – Comments (6)

If you really think about it, pretty much ALL of the Wall Street Banks are insolvent but for the TAXPAYERS bailout of the banks.  If they were citizens, they would have been foreclosed upon and kicked out of their homes and the homes sold to a new family/owner.

Right now, WITHOUT entitlement obligations, America has been infected with about $40-$50 Trillion dollars worth of Debt.  At 6% per year, that is about 25% of the GDP going to pay interest and only interest.  For many, interest consumes a MUCH GREATER pecentage of their annual income factoring mortgages, credit cards, and auto loans.

For every dime spent on interest, it is a dime that is not spent on goods and services and other enterprises furthering the productivity of the nation. 

We are loaning our banks trillions of dollars at 1/4% and they are turning right around and loaning back to taxpayers at 4% by buying treasuries.  Could you imagine if your government loaned you a billion dollars at 1/4 percent and you turned around and purchased at Billion dollars of treasuries making a 3 and 3/4 spread on one billion.....or about $37 million per year for the mathematically challenged.  Now multiply that by three or five and we are talking some serious numbers.

Ask yourself, why not take the $12 trillion we have allocated to bailing out the banking system and create BankOUSA.  After levering up only 3X or 4X(much less than the current 10X) loan the money to the people at 1/4 of 1% for the express purpose of paying off the debt to the banks(Alstry doesn't like to take the bank's assets without due process even if they are insolvent).  With the banks paid off, the toxic debt issue would immediately go away as there would be no Toxic Debt....debts would be satisfied

As a result of the above, the collective interest obligation to the nation would decrease by almost $3 Trillion dollar per year....imagine the stimulous of an extra $3 Trillion in the economy that was previously only going to pay interest that could now be allocated to goods and services or paying down principal.

Think of all the progress we could make in medical advancements, green technology, and creating jobs for the unemployed.....for it is Alstry's belief that anyone that receives welfare should do some kind of social service in return....aside for the quid pro quo aspect, it furthers self esteem and self reliance.

Right now our industrial system is broken...there is simply too much debt/interest burdening our citizens, corportions, and government for our GDP to sustain at current rates causing the FU virus and shutting down our economy.

As the economy slows and the interest obligations remain, the interest payments consume a greater and greater percentage of GDP until every dime of GDP is going to pay interest.  The process accellerates as things slow and we are experienceing that now with record housing price declines, record foreclosures, and rising unemployment with no end in sight. 

Alstrynomics calls this process Concentric Contraction and its progression is inevitable unless a radical new policy direction is implemented.  Your government officials and bankers are certain of the outcome regardless of what you are told because you can't escape the certainty of the math.

If you are making 100K per year and 25% of your income is going to pay interest, if your income drops to $50K per year but your interest payments remains the same, now 50% of your income is going to pay taxes and you have instead of $75K available for non interest expenses, you only have $25K which dramatically decreases your ability to consume goods and services.

Imagine this happening to every aspect of our economy including citizens, corporations, and governments......pretty soon, no one has much to spend on anything except interest.....and your government still needs its taxes!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Prepare...if this ZOMBIFICATOIIN process continues where a greater and greater percentage of the revenues is simply paying interest.....our economy is certain to get much worse....MUCH WORSE.....and if we continue to cut people off of credit and welfare without a means for generating an income.....SOCIAL UNREST WILL BE ALL BUT GUARANTEED........

Isn't it time banks became public utilities serving the public....we gave them $12 Trillion after all.

 

 

 

6 Comments – Post Your Own

#1) On May 28, 2009 at 12:15 PM, alstry (34.97) wrote:

In light of the above......

Ask yourself who does Congress work for.......we the people....or the banks on Wall Street?????

Now.....it is clear that the light is turning on in a few of your heads;)

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#2) On May 28, 2009 at 12:50 PM, russiangambit (29.45) wrote:

Alstry, I see better now where you are going with the banks nationalization idea.

As the things stand now: 1. We loaned the banks billions of dollars 2. Now banks use this money to to earn their way out the hole using the high spreads. And who is paying the spreads - us again.

So, these are not really the loans, this is free money for the banks because we get loans repayment with our own money. Banks don't add any value in this process, so why should they be paid?

If banks are nationalized, then , at least, the profits if any, will go back to the Treasury. Unfortunately nationalization has other issues - like promoting bad business practices to suit political cause. Just look at  Freddie and Fanny.

If the Treasury could set up a very simple utility bank that would loan money to population at 0.5% with a collateral, and no special exceptions for minorities, poor etc. You must have a collateral. This is not free money. Otherwise it will turn into a giant government sponsored credit card with a default rate of 90%.

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#3) On May 28, 2009 at 1:12 PM, alstry (34.97) wrote:

Russian,

Of course...you are not removing collareral or responsibility...simply profit which should be allocated to the taxpayer since the taxpayer is the one that bailed out the bank.

As the economy would eventually grow, the citizen would be in a better position to support government and banks would take equity interests in productive enterprises instead of being a debt parasite on the economy.

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#4) On May 28, 2009 at 1:59 PM, Entrepreneur58 (40.13) wrote:

The Fed has 2 choices. 

It can allow the debt to go bad and let the people who save their money in safe places end up with all the goodies at the end.

OR

It can try to inflate asset values so the banks can stay in business at the expense of fixed income investors.

NOW

Since the government is run by bankers and ex-bankers, we know which way the Fed is going.

 BUT

The bond market is starting to throw up all over Fed's "no banker left behind" plan.  This could get very interesting.

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#5) On May 28, 2009 at 3:52 PM, jddubya (61.95) wrote:

If you are making 100K per year and 25% of your income is going to pay interest, if your income drops to $50K per year but your interest payments remains the same, now 50% of your income is going to pay taxes and you have instead of $75K available for non interest expenses, you only have $25K which dramatically decreases your ability to consume goods and services.

 

Whoa now!  check these numbers!  You're assuming this person is paying $25k  in non-mortgage related interest per year?

A person paying 25k per year interest????  This means they have over $100k in non-mortgage credit extended.

Other than your numbers problem, your point is well taken though.

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#6) On May 28, 2009 at 4:20 PM, alstry (34.97) wrote:

My numbers include mortgage interest......

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