EQUITY, NOT "CASH FOR TRASH" IN BAILOUT Kucinich Announces Plan for Ownership Society

[kpete]

September 22, 2008 at 10:00:22

Headlined on 9/22/08:
EQUITY, NOT "CASH FOR TRASH" IN BAILOUT Kucinich Announces Plan for Ownership Society

by Dennis Kucinich Page 1 of 1 page(s)

www.opednews.com

Congressman Dennis Kucinich (D-OH) today made the following statement announcing a plan for a new Ownership Society:

"The Wall Street financial disaster is an opportunity to create a genuine ownership society. If Congress invests $700 billion in the market, then the American people must get something of real value for their investment.


"Simply purchasing bad debt, "cash for trash" and not receiving anything of value or giving $700 billion and not having a commensurate equity interest in Wall Street firms is unacceptable. No "cash for trash".

"Since the bailout will cost each and every American about $2,300, tomorrow I will offer legislation to create a United States Mutual Trust Fund, which will take control of $700 billion in stock assets, at market value and not higher, convert those assets to shares, and distribute $2,300 worth of shares to new individual savings accounts in the name of each and every American."

Kucinich arrived at the $2,300 figure by dividing the cost of the bailout ($700 billion) by the US population (over 300 million).

http://www.opednews.com/articles/EQUITY-NOT-CASH-FOR-TRAS-by-Dennis-Kucinich-080922-836.html

[phusion]

1. I'll take it! n/t

[Javaman]

2. I agree...

By creating a trust fund, it takes control of the money out of the hands of the fed, who got us here, and into, hopefully, a non-partisan situation.

[orwell]

3. Sorry...

...they will never be sold at current market value. If they were it would be of no benefit to the banks that the Fed is trying to bail out.

While DK is right co-opt the term ownership society from the overlords, this specific plan would not work.

I would prefer something along the lines of a Federal Agency to buy up distressed mortgages at some price lower than face value, reprice them to current market values, and allow the existing mortgage owner to have first right of refusal at the new price/interest rate. The government could then capture the income stream from the repriced mortgage's interest.

Something like this plan is being proposed by Nouriel Roubini, one of the few economists who has called this crisis correctly from the beginning.

http://www.rgemonitor.com/blog/roubini/

[unblock]

6. that's not really correct.

equity investments are done right current market value. on the margin you are correct in that the actual price is slightly off, in part due to the nature of supply and demand, and in part because of the marginal utility of the additional investment. the larger the new investment, the greater the difference from current market value, because the more the picture of the company changes with the extra cash. this could be good or bad, depending on what the company can do with the extra cash.

generally speaking, though, if a big company were trading at $25 per share and they wanted to raise another $10 million, they would do it pretty much at $25 per share.

[orwell]

15. I must have read the original post incorrectly...

...if DK is talking about new shares in the companies that hold distressed securities than I was posting about something different. I made the broad assumption that he was talking about direct ownership of the distressed assets and the issuance of shares in these distressed assets. My comments about market value as opposed to face value reflect this assumption.

If he is talking about the holding companies of the distressed assets being forced to issue new stock in some proportion to the distressed assets they are being relieved of, the issuing company has received no real relief in that they have essentially watered the stock. On the books they lose the toxic asset and replace it with a either higher quality borrowing or Treasury paper, but to do so they must issue new stock. In effect the quantities on the balance sheet wouldn't change only the quality. But the new stock, which would be dilutive to existing shareholders, would only represent that qualitative difference.

I also have a conceptual problem with this. I don't want the Federal Government/taxpayers to own stock in private corporations, especially corporations that are this poorly run. This was the same problem I had with the quasi-public nature of Fannie and Freddie. Either make them government programs or call them private corporations. What we seem to be evolving into is the worst of both worlds - private profit with socialized losses.

The elephant in the room is the reality that most of these poorly managed entities need to be allowed to fail. The long term costs of continuing this charade are far greater than the short term benefit of this feel-good disaster management.

[unblock]

16. the idea, as i understand it, is to let the losses stay with those who deserve them

but give them enough cash to cover the losees. in exchange, take an equity share, so the stockholders pay via share dilution.

then hand the government's equity to all americans via individual accounts. this avoids the government ownership issue you mention.

[orwell]

17. I need to see the actual proposed bill before I comment further...

...there is not enough at the link to answer these questions. Another question quickly arises. If there is an even split of this proposed new equity, many people who pay little or no taxes at all would receive the same quantity of shares as those who pay a significant amount in taxes.

Do you have a link to something more substantive about DK's actual proposal?

[unblock]

20. try this link, it seems clear he wants an equal division for every man, woman, and child.

http://rawstory.com/news/2008/Kucinich_No_cash_for_trash_give_0922.html

i don't think this is unreasonable. it's not just current income tax payers who pay. everyone pays. my 2-year old will be paying interest on this extra debt for years to come, services will be underfunded, and we'll all pay higher mortgages and rents and so on.

[orwell]

25. Thanks...

...from the link:

The former Democratic presidential candidate said he would be introducing a bill this week to create a "United States Mutual Trust Fund" to convert assets purchased by the government into shares that would be distributed to every man, woman and child in the country. Every American would receive about $2,300 worth of shares because that is the cost of the bailout package to each individual, Kucinich said.

The way this reads to me, the shares would represent the toxic assets purchased by the Government, not an equity position in the financial companies that presently hold the assets. If that is so I stick by my original post. IF however the new Frank/Dodd proposal that talks about a direct equity stake in the companies themselves then your original comment and both of our subsequent discussions would seem to be relevant.

As they would say, we will only know in the fullness of time.

I think the even split part of the proposal is ludicrous.

Thanks again for the link. I am fundamentally against any of the proposals I have seen so far but the least harmful seems to be Roubini's.

http://www.rgemonitor.com/blog/roubini/

[unblock]

27. i read the previous paragraph as implying equity in the companies themselves

“Simply purchasing bad debt, 'cash for trash' and not receiving anything of value or giving $700 billion and not having a commensurate equity interest in Wall Street firms is unacceptable," Kucinich said in a news release Monday. "No 'cash for trash.'"


regardless, there are now various competing proposals and tweaks, who knows what the final package will entail.

one week to decide if we go very fascist or very socialist or something in-between!

[JDPriestly]

78. They've been using Social Security tax money to secure

the deficit and even to fund costs for years. Just consider this money to be a way of repaying some of the funds stolen from those accounts. If you earn money at all, you pay Social Security taxes.

[alstephenson]

48. Right on, orwell.

[bjobotts]

71. Start by confiscating the holdings of those who profiteered from these corps last 8yrs

[bjobotts]

73. Just like IRS does when caught cheating on taxes. Don't reward the wealthy.

[bjobotts]

74. Then the taxpayer not only ownstheir bad debts but owns their holdings like jets and yachts

[JDPriestly]

79. Right.

A lot of the people who invested in the funds that have caused the problem -- the hedge funds and the risky derivatives -- are extremely rich. Selling off one of their houses or one of their luxury cars or maybe their yacht would not really hurt them -- not the way that having to carry this debt will hurt ordinary Americans.

[JDPriestly]

77. The value in the distressed assets will increase if not recover

over time. This is an excellent idea. Even if the assets do not recover current value, this beats a giveaway.

[Pete2069]

36. Why not it is our money

It is time we get something in return ,, except excuse after
excuse from the whiners..
What is next bailout Bush Sr. Carlyle Group corporation!!!

[dweller]

4. oh man

if this is not at the top of the GP by tonite, i will be surprised.

i love this guy!
dp

[dweller]

61. oh yeah, it's nighttime, he's there

you guys rock!

dp

[GreenPartyVoter]

5. kick

[SammyWinstonJack]

7. ...

:kick:

[mackdaddy]

8. The Saudies havd Sovereign Wealth Funds, Why not US

Why should only other governments and royal families be able to buy up our assets.

We should get an equity position, and not just the trash they created. Any extra after everything is done could be used to pay back the $ they raided out of the Social Security trust fund since Regan.

Also, null out all of these golden parachute executive plans, just like they have been killing off the worker pension plans when the big corps go bust.(eg Enron, and TWA) The execs should be LAST in line to get their severance/pension packages, and the rank and file workers should always be first.

[MsLeopard]

9. Kick for Dennis

Go Dennis! If only we had 435 of him in the House.....

[quiet.american]

10. We can dream, can't we? Thanks, Dennis for always saying nothing is impossible! nt

[bunnies]

11. Damn Right!

Now thats what Im talking about! Get behind this Obama... You'll win in a landslide!

[wildbilln864]

12. k&r for Dennis Kucinich!

A great American patriot! :patriot:

[Greyhound]

13. Another K&R for one of the few voices of sanity left in DC. n/t

:kick: & R

[vanderBeth]

14. k&r!!!!!!!!!!

[Hun Joro]

18. K & R

[KansDem]

19. K&R!!!

You can include me and my family, Dennis! :D

[Waiting For Everyman]

21. Good one, Dennis!

Kinda like Savings Bonds, only stockier.

[Greyhound]

22. Kick this again.

Only one rec allowed. :(

[AzDar]

23. Kooch!!

:loveya:

[slampoet]

24. Isn't That What they Do In Alaska With the OIL PROFITS???

[Cronus Protagonist]

26. That's a lot fairer than a "homeowner" bailout

And also a lot better than the BFEE "solution".

[crickets]

28. K&R - Go, Dennis.

:dem:

[lonestarnot]

29. Now there is a leader with the American People in mind!

Dennis yes! :yourock:

[SalviaBlue]

30. K&R Go Dennis!!

[mcollier]

31. WRITE YOUR FEDERAL SENATE AND CONGRESSIONAL REPRESENTATIVES....

THESE MESSAGES MUST BE COMMUNICATED TO THEM...


https://forms.house.gov/wyr/welcome.shtml

http://www.senate.gov/general/contact_information/senators_cfm.cfm

[redqueen]

84. ****TOLL FREE NUMBERS HERE!**** Please call!

1 (800) 828 - 0498
1 (800) 614 - 2803
1 (866) 340 - 9281
1 (866) 338 - 1015
1 (877) 851 - 6437
1 (800) 459 - 1887

[kestrel91316]

32. Now THAT'S a plan I could get behind! NO CASH FOR TRASH!!!!

[valerief]

33. K&R

:kick:

[bluesmail]

34. Wake Up America ***** Wake Up America

This man is brilliant, and on OUR side.

[kimmerspixelated]

39. I hope Dennis gets a spot in the Obama cabinet!

He simply rocks!

[dana_b]

51. that's what I was thinking too!

he rocks!

[Naturyl]

35. K&R for The Man in Washington who Stands Tall (n/t)

[GinaMaria]

37. you know it's bad when

the conservatives see it the same way we do. Just got an email from RightMarch (like to keep tabs on what they are doing). They are bitterly against this as we are. They are referring to it as socialization, but had a picture of guy being pick pocketed. If even half the Cons in this country stay home election day or vote Obama.... this is looking good.

Maybe Bush-co was a uniter after all. We are all united against him and his tactics!

[Joe Chi Minh]

38. Dennis' solutions are always too just - and even rational. That can't be right.

[dweller]

40. if DK can pull this off

i plan to invest every dime slowly and suredly into Green tech and alternative energy in the market.

dp

[Truth2Tell]

41. K&R

Too bad this, or even anything approximating this, is DOA. Thanks Nancy.

[LonelyLRLiberal]

42. Actually, I heard an economist on NPR this morning saying we should be getting ownership.

He gave several reasons for this - one is that there is going to be a huge argument about how much to give for the bad loan portfolio under the Bush proposal. He said it makes more sense to make a capital investment in exchange for shares. He didn't go as far as Kucinich does in proposing separate accounts for each American, but basically it's the same idea.

[katty]

43. When will Americans JUST SAY NO??!!!!

[DRoseDARs]

44. Of course, that $700 billion figure is out-of-date; ballooned overnight to $1.8 trillion.

The $2300 should be revised to $5900 ($5914.285) or $6000.

[Kurovski]

45. K&R. (nt)

[NikolaC]

46. As Usual

Dennis rocks!

[RoccoR5955]

47. Once again Dennis Kucinich, proves his worth!

He truly works for WE THE PEOPLE!

I would add that if any profits are seen from these 'investments' in these corporations, that WE THE PEOPLE see dividends FIRST, and then stockholders, and lastly executives and CEOs.

As stockholders, and the largest stockholders in some of these corporations, WE THE PEOPLE should have a say in the stipend that executives of these corporations are paid, and if they are even paid at all!

[mdmc]

49. God bless Kucinich

[NorthCarolina]

50. I forget, why isn't Kucinich our candidate?

I really wish America had been "aware" enough to support this guy in the primaries. I trust him more than any other politician in DC today.

[defendandprotect]

60. Either "ears too big" or a threatening "populist" -- i.e., an honest man -- !!

[dudewheresmycountry]

52. Cash for Trash

I am not sure I want to be involved in $2,300.00 worth of trash..........

[magellan]

58. You're going to be involved to the tune of $2300 if this bailout goes through

Like it or not. Every man, woman and child in this nation is into this for at least $2300. Why not add on the possibility of a return on your forced investment, rather than just kissing it goodbye for yourself and any kids and grandkids you may (eventually) have?

[Naturyl]

53. Kucinich has regained my avatar today, hehehe.

Love Joe Biden but I've got to recognize the never-ending leadership of Dennis Kucinich.

I'm voting Obama/Biden - for Dennis! :)

[southerncrone]

54. The Ultimate Warrior!

Any citizen who doesn't recognize that this great man fights for each & every one of us every day, is completely clueless & doesn't deserve to live in this great country.

Dennis, :yourock:!

[clear eye]

55. And no "TRICKLE DOWN" economic rescue

through the financial institutions. First they want to give the money to the wealthiest so it will boost the economy and save the rest of us, and now they want to do the same with the financial institutions, only with more money than we even have. That'll work real well. Right. On the other hand, if they've gotten themselves addicted to phony paper and can't do their jobs and are causing trouble for the rest of us, we'll buy whatever they have of value, run it right and make money ourselves. I like it. It will also never make it through the Joint Economic Committee meeting Wednesday when they craft the bill.

Oh yeah, and I love how he used the neocon phrase "ownership society" and turned it against them. It was originally coined to sugarcoat the idea of individual savings and investments instead of Social Security. It was so Orwellian, it scared me at the time. I mean, I thought it might work. The young folks were buying it. Thank heavens the Baby Boomers, many of whom had themselves made investing mistakes at some point in their lives, didn't fall for it.

[Kaleko]

56. Why does this article have only 9 diggs so far?

Go to it, Digg it out the yin yang, people.

http://www.opednews.com/articles/EQUITY-NOT-CASH-FOR-TRAS-by-Dennis-Kucinich-080922-836.html

[Revlon10]

57. NO CASH FOR TRASH!!!!

NO CASH FOR TRASH!!!! Hell No.

I want to let them fall the same way, they let Americans lose their homes.
Why do we have to bail them out? Let the ship sink.
These people were the highest paid in our society, they had the top Jobs, they made ridiculous amounts of money F them
Let then fall, its been a year people have been suffering. Let them suffer.
If we must bail than I what in on Kucinich Plan for Ownership Society.
F them.

[defendandprotect]

59. And why is no one talking about our anti-monopoly laws ... amid "too big to fail" BS--???

[trickyguy]

62. Be glad to receive a check. But no trash please.

[Iwillnevergiveup]

63. PROUDLY

Rec #103

Dennis damn well better win his race - we need him more than ever speaking truth to power.

[BraneMatter]

64. Huh???

Who the hell wants shares in trash??? Even 100% of nothing is still nothing.

If the instruments were worth anything much, then why do they need such a huge bailout?

Why should the taxpayer be stuck with the garbage securities and stocks?

What will happen is that Paulson, given free reign, will sell off any assests worth anything to the sharks at pennies on the dollar, and the taxpayer will get the left over junk. The sharks are already circling and smelling blood in the water.

I say NO BAILOUT, PERIOD.

[clear eye]

83. No. no. no. Kucinich is saying DON'T buy the intruments, buy

equity in the banks themselves. He's no fool.

[zeek 463]

65. can I cash in my $2,300 buck worth of trash right now

I just want to make sure the stinking goverment has the cash to cover it.

[Douglas Carpenter]

66. KICK AND RECOMMENDED ---

[trthnd4jstc]

67. That's Right Representative Dennis Kucinech. You Rock! Thank You! n/t

[vanderBeth]

68. kick

:kick:

[spag68]

69. Kucinich

After all that has been done to Dennis, it is really good for my heart, to see he still has a sense of humor.

[judasdisney]

70. Kucinich damn well better be in Obama's cabinet

[lligrd]

72. Kucinich Deserve A Hell Of A Lot More Respect Than

anyone gives him. (I realize some of us are the exception.)

[99th_Monkey]

75. Brilliant!!! You Go Dennis!!!! I've never been prouder to have supported Kucinich as 1st choice ~nt

[JDPriestly]

76. Instead of bailing out rich guys, we invest to improve each other's lives.

[Auggie]

80. BushCo must be steaming

Screw 'em

[sui generis]

81. hopefully tax free if above par

so is it a negotiable asset? Can an enterprising person acquire say 1,000,000 accounts/investors and manage it in an LP? That would be an instant 2,300,000,000 dollar derivative with significant market leverage.

Cute idea - but it can't work. What makes a fund work is the management expense earned for administering it with the highest possible back office efficiency. That would mean that the IRS would become the administrator - woo, hoo, plan B anyone?

[me b zola]

82. K&R

:kick: