Where is the Bailout Money Going?

The $700 billion dollar federal bailout plan is revolutionary in size and scope, including the involvement of the federal government in the banking system as preferred, albeit non-voting, shareholders. Many have been fearful that a mismanaged cash infusion would line the pockets of well-off bankers rather than benefit the financial well-being of the average American on “Main Street.”

According to a recent New York Times article, the additional funds are, thus far, not being used to foster increased lending but, in large measure, to buy up other banks. JP Morgan Chase is a case in point, receiving $25 billion dollars from the Treasury and using the funds to acquire smaller, ailing banks.

Such activity is not only being condoned by the U.S. Treasury, but actually encouraged. Treasury Secretary Paulson, among others, has promulgated tax code that allows the costs of mergers to be tax deductible, so taxpayers are footing the bill for large banks to pursue acquisitions, a macroeconomic benefit with far less obvious benefit to the average citizen.

Critics and cynics are given to wonder whether fewer banks are an asset or a liability for the US economy? Or is a consolidation of smaller, insolvent banks a smarter solution than simply buying up toxic loans and assets? If America behaved like England in this crisis, conditions of the bailout would require that any money given to banks be applied towards loans. Without these sorts of guarantees, will people lose faith in an economy that is doing poorly? We invite your discussion.

How to Give Back in Hard Times

Times are tough, we all know this. There is an obvious incentive to save every penny that you can. It is easy to concentrate on your family and friends and their survival. It is easy to forget that there are others struggling as well. Charities, when the economy is doing poorly, tend to suffer even more than the average person. Compounded with more people needing charity during hard times, this can cause a lot of struggle for me people.

Life insurance can be part of a solution to helping charities in these times. For people who want to give to charity, but cannot afford the loss of money, can cash out life insurance policies or donate the whole policy to a charity. The cash value can be used by these organization to aid more people than they currently are able to.

Learn more methods for giving to charity

Gov’t Gridlock: Is America Paying the Price?

Is fractured government, divided government and political gridlock responsible for America’s financial problems? Based on recent congressional testimony, the answer that is suggested is affirmative.

In the House Oversight Committee, chairman Henry Waxman, and chairman of the SEC, Christopher Cox, exchanged pointed views on congressional breakdown while Allen Greenspan, former Chair of the Federal Reserve, and Tom Davis, senior Republican on the House Oversight Committee, pointed fingers at political parties, complaining about their responsibility for the economic collapse.

Learn more about the causes of the financial crisis

Keynes’ Economic Theory: A Historic Solution to our Modern Crisis?

History is a great teacher.

Over 70 years ago, economist John Maynard Keynes lived through the troubles of the Great Depression and came up with a solution for such a crisis. What did Keynes’ figure out?

During the Great Depression, monetary policy became ineffective and institutional failures were triggered by falling asset prices. Keynes opposed the conventional wisdom of the time. He was not content to think that the economy would self-correct. Instead, Keynes realized that during economic downturns, people and businesses alike have a propensity to save.
Read more about Keynes economic theory

The Economy as a Red Balloon

In the past week, the Dow Jones Industrial Average, one of the barometric indicators of upward or downward pressure in the American stock market, has been rising and falling like a red balloon caught in a windstorm. Many feel as tossed and tumbled as that helpless balloon, asking themselves “What’s next?” and “When will the wind change?”

According to the Chairman of the Federal Reserve, Ben Bernanke, the key is for that metaphorical balloon to settle back down to earth. “Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away.” This is promising news for mid-to-long-term investors who have held on the wind tunnel that is the US economy the past two weeks, and suggests that stock market investors might be better off keeping that long term view.

Learn more about key economic indicators

Make a Comment. Win an iPod!*

Welcome to the America S.O.S. Comments page — your chance to sound off and win an iPod Nano that looks and sounds great!*

Raise your voice and share your opinion, comment, approval or disagreement on how to Save Our System (financially, that is). Tell others how we can improve the financial well-being of our financial institutions, government regulators, and the financial products and services you depend on.

Let’s pool a wealth of ideas and contribute to saving America’s financial future. The winning comments will be dispatched to Washington. Click the comment button below to add your point of view.

* Officlal Contest Rules

Must be 18 years of age or older to enter. Void where prohibited by law. Judges decisions are final. Winner to be selected on U.S. Election Day, Nov 4th, 2008 and posted in the Efinancialblog at www.EfinancialBlog.com .

Will the Bailout Help the Economy?

Over these last several, angst-ridden days, the red hot political topic has been the financial crisis that looms large over the American landscape. The $700 billion dollar bailout authorized by Congress begs a great many questions of the American taxpayer and, so far, this “perfect financial storm” has provided precious few answers.

Will the $700 billion relief plan bridge the chasm, or does it address just the tip of a titanic iceberg? Should the American taxpayer be held responsible for Wall Street institutions or is the rescue effort a question of survival, fundamental to buttressing America’s economic foundation? Is there a stimulus to energize market confidence and is it psychological, political or financial? Read more about the financial bailout

Buy/Sell Agreements for Business Owners

Have you ever wondered what would happen to your business if one of your owner partners dies?  For example, say you are 50% owner of a business and you have 2 partners with 25% interests.  If something happens to one of those owners with a 25% interest who will you in business with?  If you haven’t done any planning the answer is you will be in business with your deceased business partner’s spouse or children.  It can be a very uncomfortable situation.
Read more about protecting your company from tragedy