Dear Congress



Treasury Secretary Paulson is asking you to rush through a $700 billion package because "we’re literally maybe days away from a complete meltdown of our financial system".



Paulson states that it must be done quickly and that it is better than the alternatives. Fed Chairman Bernanke agrees.



The first question Congress should ask is how would Paulson or Bernanke know?



It was only a month ago Paulson was reiterating to anyone who would listen how sound our banking system is. The fact of the matter is that neither Paulson nor Bernanke saw this coming, yet now Congress is supposed to trust they now "know" the solution.



Problem Defined



Before one can work out a solution, the first step is to identify the problem. The problem is not a lack of liquidity, it is not a lack of trust, it is not lack of consumer confidence, it is not subprime lending, and in fact the problem is not housing at all.



The problem is consumers and corporations are deep in debt with no way to service that debt.



Attempts to bail out banks and brokers at taxpayer expense will do nothing but add to consumer debt, weaken the US dollar, and literally waste $700+ billion dollars that can and should go to more productive uses.



What Caused The Problem?





The Fed

Congress

Fractional Reserve Lending

The Treasury



Fed Uncertainty Principle

Uncertainty Principle Corollary Number Two

Why The Paulson Solution Fails

The Barney Frank Non-Solution

We're going to be buying up a lot of mortgage paper

We should be more willing to write down the mortgages. We’ll become the lender. The government will wind up in a controlling position so that we can reduce the number of foreclosures.

Banks Need To Recapitalize

Alternatives Discussed

Taxpayer Gets Nothing From Current Bailout Proposals

saving

Recapitalizing Banks

Reduce the capital gains tax by 50% for any investor willing to cash out stocks and invest in 5 year bank CDs.



Eliminate the difference between long term and short term capital gains.



Eliminate taxable interest on savings accounts, CDs, and US treasuries.

Jobs, Jobs, Jobs

Waste In Iraq

Congressional Spending

Who Am I?

Desire To Believe