Federal Bailout Won't Work; Martial Law Would Not Surprise Ordinary Gal

Considering that every single prediction the Bush administration makes is dead wrong, I simultaneously do not believe is a federal bailout is necessary to resolve the economic crisis -- and I doubt that an bailout will work, if the economic picture is this bad.

I cannot for the life of me understand why the free marketers only become socialists when the need arises to rescue their rich friends from bad decisions. My hunch is that my frugal life would remain pretty much unchanged if the market shake-out were allowed.

I would not be at all surprised if the country is in sufficient chaos by inauguration day -- should Senator Barack Obama win the election -- for the current administration to declare martial law. On the other hand, I believe that the administration is illicit anyway. Gore won in 2000, and the Supreme Court overturned the results. The computer balloting of 2004 also is suspect by conspiracy theorists.

I hope there are some glad hearts out there to tell me how nuts I am.

AIG Holds Pension Funds for Milliions of Public Service Employees in Many States

News of the AIG federal bail out only scratches the surface of what is going on. Millions of schoolteachers, firefighters, and other government employees have 403bs managed by AIG.

The Jacksonville Police and Fire Pension Fund inaugurated a lawsuit against AIG in May of lying. According to Reuters, the fund “accuses New York-based AIG of repeatedly but falsely assuring investors that its risk management and diversification insulated it from credit market turmoil in 2007. Credit market problems led AIG to suffer a $7.8 billion first-quarter loss.”

Google links suggest that the California Public Employees Pension Fund, the largest in the country, was considering suing AIG for similar reasons.

MSNBC reporters and online sources are assuring people that FDIC savings and checking accounts are safe. Retirement funds typically are stock funds that are not insured by the FDIC. This misdirection by newscasters is not helpful; it does not answer the questions that people are asking: Are my AIG retirement funds safe?

AIG representatives are not returning phone calls. My did not, and I see posts on the Internet that other clients are getting the same treatment.

I am trying to move my funds into a different fund. The representative warned me that it is going to take time. Tens of thousands of people are also rolling over their funds from AIG into other accounts.

With the economy in meltdown, I wouldn’t be surprised if a lot of us wind up, like those poor Enron employees, with nothing. My mother is reminiscing about the great depression. Her father had six children and was jobless. The landlady kept track of missed rent, and the owner of the deli down the street provided food on on credit. “What can people do when no one has money?” my mother asks.

The end of defined payment pension funds and the inauguration of IRAs, 401ks, and 403bs, is turning into a huge swindle of hard-working Americans. We worker ants have routinely been salting away a percentage of our paychecks, forgoing cars and vacations, to save money for our old age.

On the other hand, some people bought homes they could not afford based on the fast talk of mortgage loan officers who promised that everything would turn out right in the end. These loans were made out of the funds that we worker ants were plowing into our retirement funds.

Now, those who wanted to live beyond their means are asking the federal government to bail them out. I include in this category the person who was working an ordinary job and wanted a 2,000-square-foot home, with swimming pool, hot tub, and two-car garage, purchased at 105% credit with escalating interest payments. I also include in this category investment bankers and brokers who have have been living the high life in New York and other investment capitals, looking out on cityscapes from million-dollar lofts and driving Ferraris. At least part of this money is that of those of us who have slogged through jobs we didn’t really like.

We did what we were supposed to do. We fulfilled our obligations. We lived responsibly. Now the rules of the game are changing. We are being told that it's too bad things didn't work out like we were promised they would (at least, not for us); so sorry that you lived modestly and sacrificed.

No Bail Out for Prudent Home Buyers: Open Letter to Senator Chris Dodd

OPEN LETTER TO SEN. CHRIS DODD
Chair, U.S. Senate Committee on Banking, Housing, and Urban Affairs

Dear Sen. Dodd: As I listen to you and other national leaders about plans for action about the housing, mortgage, banking and foreclosure crisis, I hear plans (some already underway) to bail out two groups:

• 
  Big spenders, such as the fat cats at Bear Stearns, who took big risks to make big profits as housing prices rose.
• Buyers who overspent, bought homes they could not afford, and now are in or face foreclosure as their mortgage payments rise.

What I do not hear about is help for those of us who bought prudently, can afford our mortgages, do not need to sell our homes, but have seen our savings in the form of equity eroded, so that we are now in price inversions. If we were to sell, we would lose everything – and more, such as any investment we put into the home for renovation.

Senator Dodd, I did not choose the appraiser for the mortgage loan. Countrywide did. Yet, only I am responsible for paying in full the mortgage – whether or not my little apartment condominium is now worth that. In fact, I bought in 2005 near the top of the market. The apartment is worth 20% less than that value. In addition, this complex was hit hard by hurricane Wilma; our leadership did not ask for government aid in a timely fashion, so my special assessments total about $9,000 – additional debts, which, like the mortgage are mine and mine alone to pay. My total loss, should I sell at this time, would be about $25,000. That may seem small compared with the loss of the Bear Stearns bigwigs and the $200,000 homes to be lost by people who took out no-money-down mortgages – but it is everything to me. And it was real money that I worked for and saved.

I am 60 years old, and my opportunities for starting life over and rebuilding my small savings are limited. These are compounded by ageism in a labor market that is constricting.

If you are going to bail out big investors who live in mansions and imprudent buyers who purchased homes they could not afford, why is there no help for those of us stuck in the middle, stuck in price inversions who have watched our savings be whittled away? Why does the mortgage holder – who chose the appraiser – not have to share in this loss?

I ask the Senate Banking and Finance Committee to find some way to compensate those of us who are paying the real cost of the gambles taken by those at the top of the money pyramid and those who bought homes they could not afford. We are the ones who behaved prudently, and we are the ones who pay taxes who bail out the others, while we suffer and sacrifice.