Andrew Jackson, 7th President of the United States said,
“The brave man inattentive to his duty is worth little more to
his country than the coward who deserts in the hour of danger.”
So I am doing my small part to save my country. If you are an
American citizen, now is the time for you, too, to come to the aid
of our country.
As I write you, President Bush is preparing to go on national
television and try to convince you, with help from both Republican
and Democratic Congressional leaders, that we have only two
options regarding the current financial debacle:
1. Do nothing and hope we survive
2. Go $700,000,000,000 further into debt
This is a blatant lie, which is, of course, what we’ve come to
expect from the morons in Washington.
There IS, however, a third option on the table, and it IS the better
one. The media is not giving it any coverage, which is why I’m
writing you.
This whole mess is the result of a poorly written law called the
Sarbanes Oxley Act, which was hastily passed in 2002 by the
morons in Congress as a knee-jerk reaction to the Enron,
WorldCom, and Adelphia scandals. These companies had listed
the value of assets on their books at the price they thought they
were worth when they bought them, but never updated the value
on the books when it fell.
Sarbanes Oxley didn’t work because you can’t cause legislate
ethics. However, it does make publicly traded companies restate
what their assets are worth if sold, every single day. This accounting
procedure is called “MARK TO MARKETING”. It’s a good concept
and keeps companies from having loaded balance sheets.
However, it’s part of what caused this mess. Merrill Lynch had $30
billion tied up in sub-prime loans with houses. But those houses
didn’t suddenly become worthless because Merrill Lynch couldn’t
sell their bonds. Since they couldn’t sell them, they basically gave
them away for 22 cents on the dollar.
Now do you think all those houses lost 80% of their value underneath
that deal? No, they didn’t. But there was no market for the bonds
because they’re junk bonds. But at 22 cents on the dollar, it’s a
bargain because even if you foreclosed on every one of the houses,
you’d probably get $20 billion back.
The company that bought those for $6 billion got a deal. But there’s
no market for them, and that’s where these companies are stuck. They
can’t sell this stuff, but accounting-wise, they’ve had to mark it down
to market and it’s frozen the marketplace.
Economist Brian Wesbury has suggested a third alternative that could
solve a lot of this mess, without us bailing these companies out with
$700 billion of new debt.
If we change don’t force them to mark down to market value. and just
let them hold on to the sub-primes – a temporary change – that’ll free
up the market, which is frozen right now.
That one accounting rule is what made Merrill Lynch sell out. That
one accounting rule is what’s driving other companies into the dirt.
So the simple question is: “Would you rather let them temporality
change one accounting rule, or loan them $700 billion to buy out
their bad paper?”
Here’s Brian’s idea. We just extend the FHA insurance program
across these sub-primes. This means that you and I are guaranteeing
the lender that they’re not going to lose as much, or anything, on
those mortgages. I don’t like guaranteeing them, but it’s better
than BUYING them.
Instead of $700 billion in taxpayer debt, we just extend the insurance.
You could probably do that for less than $40 billion.
If the government insured those mortgages, they would then be
marketable, could be sold, and the companies would stay afloat.
And WE THE PEOPLE don’t have to get into the mortgage business.
WE CAN DO THIS WITHOUT going into debt $700 billion.
HERE’S WHAT I’M ASKING YOU TO DO:
Email your representative in Congress and your Senators. Tell them
to CHANGE THE MARK-TO-MARKET accounting law and extend
insurance, but NOT TO EXTEND LOANS.
Tell them that if they do extend loans, YOU WILL FIRE THEM
AND SEND THEM HOME.
If you’ll let your Congressmen know that you know about this,
and that you’ll vote against them if they don’t vote to change the
mark-to-market law, they will listen.
If you’re as ticked off as I am, this is the time for you to step up
and do something about it. This is being railroaded down your t
hroat, but you can stop it.
To email your representative in Congress, click here:
https://forms.house.gov/wyr/welcome.shtml
To email your senators, click here:
http://www.senate.gov/general/contact_information/senators_cfm.cfm
Please do this immediately. Your kids’ and grandkids’ futures depend on it.
Sincerely,
GLENN SHEPARD
ONE VERY ANGRY AMERICAN
*Special thanks to Dave Ramsey and his team for making all of this available.
Most of these are his words, with slight editorials by me.