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Its not a loan. The banks need the liquidity from selling those assets NOW, not later so bonds aren't a realistic situation.
First, I'm not an expert and haven't been keeping up with is minute by minute. I understand what is going on, and I have feelings on both sides. I have an economics degree so I know about what is going on. I thought about this this morning in that haze when you first wake up and sometimes have some good ideas.
I think one of the major issues holding it up is how tax payers would be repaid for the loan. If there are 302 billion people in America, assuming 250 pay tax (just stay with me here) so that is under $3 a person in this bailout.
So my idea: why not issue $10 bonds that are tax deductible that can be called in a minimum 5-7 years (or later) depending on the profitability of the bank at that time (like a share of stock) These bonds would be optional, but because they are tax deductible they will be more attractive. This way people can give the money themselves, and the government wouldn't have to flip the bill. Also, the only way the government has to pay the $700 billion would be back to the bondholders if the banks fail. Obviously there would need to be some wrinkles ironed out, but couldn't this work? I mean I'm only 24, but I would be willing to throw $50-$100 at it.
what do you think?
Its not a loan. The banks need the liquidity from selling those assets NOW, not later so bonds aren't a realistic situation.
thunder dan don't convince yourself this is right....its not, period.
but wouldn't the bond be giving them that money? I'm saying, the government forks over $700 billion today, these bonds are sold to citizens to make up that deficit held by the government. Instead of imposing the bill of this bailout on everyone, it would only be to those bond holders. That way the bank would get their money right now, and bondholders could get their money back when it comes time to call the bonds. The only way this bill passed on to every tax payer is if the banks still fail reguardless of the loan because the government would have to of backed these bonds with the guarntee of a percentage of the bond price being paid back.
So say they sell 700 million $10 bonds at $10/ea (I think that is 700 billion)- in 10 years I can turn my bond in and get $15 (or a percentage of the market price, forget the numbers, I'm just hypothetically speaking) when I turn it in. Like most bonds, the longer I wait the more I can get, and they have an max out date (like in 30 years)
I still think this could work- it would be citizen voluntary giving money as an investment. Just stick all the financial firms accepting money together and create a mutual fund type holding, but they would be government issued bonds
Your plan just increases the debt risk to the US government. As it is now they're just going to buy assets they can turn around and sell and at the very least get back the majority of the money they're in. They're also setting a price that once set will drive private speculation into these securities.
I just don't see the role of bonds here other than to give artificially make these securities better than you.
This will not work because your calculations are off by a factor of 1000. The population is about 302 million, not 302 billion. This make the cost per person in your example about $3000, not $3.
damn I knew it was too good/simple to be true
(what was I thinking, America with 300 billion people!?)
if we ever get 297 billion more people though I think my plan would be perfect, so I think we should table it for a couple years
What I have learned is how much a billion actually is- it's a load of zeros
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