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Northwest Voices

Seattle Times letters to the editor

September 28, 2008 at 2:02 PM

$700 billion federal bailout

This too shall pass

Democratic capitalism is the worst system except for all the rest; therefore, we must occasionally manage its transition through turbulent times, such as our transition into the global economy.

This upheaval in our mostly capitalistic system is not unprecedented, and neither is massive governmental regulation — FDR’s New Deal comes to mind. Just as capitalism survived the Great Depression, thanks in part to the New Deal, so too will it survive this upheaval in our financial markets, with the help of this unfortunate but necessary bailout.

Ironically, it is because America is such an attractive place to invest that led to this financial catastrophe: Money influx into the United States made it very easy to get credit. Politicians encouraged increased homeownership and banks obliged with risky, subprime mortgages to buyers who could not pay their rising adjustable rates. Simultaneously, home values decreased.

Inevitably, home buyers with questionable credit defaulted on their loans and investors holding mortgage-backed securities incurred great losses. Eventually, lending dried up, but, in the words of wisdom made popular by Abraham Lincoln, ” this too shall pass.”

With this unfortunate but necessary bailout, even these daunting financial and economic challenges will pass. Eventually the government will sell the mortgage-backed securities and assets, which do, after all, have intrinsic value. The government will get much of the money back, taxpayers will be reimbursed, capitalism will continue to be the worst system except for all the rest and “this, too, shall pass.”

— Noel S. Williams, Lakewood

Paulson’s plan is scary

I am appalled by the lack of clear coverage on Treasury Secretary Henry Paulson’s bailout bill. Last week, The Seattle Times ran two contradicting, incomplete stories. Please set things straight. This is not just a bad bill, it is a deadly bill — deadly to the American way of life.

I keep hearing that this is a $700 billion bailout. It is not. The bill does not limit the amount of spending; it states that not more than $700 billion can be outstanding at one time. So, if a penny is paid back, it can then be spent again.

The bill gives sole discretion to the secretary in regards to how the money is spent, what can be bought, from whom and for how much. This means Paulson can pay double the price of something to his buddies or a penny on the dollar for people he doesn’t like. It’s the equivalent of buying indulgences, a true recipe for rampant corruption.

But the provision that makes this bill poison is aptly numbered as Section 8, which states that the activities of the secretary are non-reviewable, and may not be reviewed by any court of law or any administrative agency. Not even Congress or the Supreme Court of the United States can halt, punish or even see any wrongdoing.

Yes, it’s a scary time. Yes, I’m scared. But I am more scared for my country than for my wallet. This bill gives unprecedented power and opacity to a nonelected official in an administration that has already been shown it cannot be trusted. It shreds any pretense to democracy and the liberties promised by democracy.

Ben Franklin said, “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”

Passage of this bill will show that we deserve neither.

— Deborah Hardy, Renton

Raise taxes on

passive investments

For at least a while on Wednesday, 10-year federal Treasury notes were being sold at a negative yield [“Stocks mixed amid debate over bailout,” Business, Sept. 24]. Which is to say that investors were willing to buy bonds at a small loss, relying on the government guarantee that they wouldn’t lose more.

In today’s market, it’s hard for investors to avoid losing their money at an alarming rate, almost no matter where they put it.

So now they’re buying guaranteed losses. It’s safer that way.

Flash back a few years ago, when President Bush was pushing his tax cuts for investors. We were told investors needed low taxes in order to encourage them to invest.

Bunk. People with lots of money are desperate to find places to invest their money. It’s a constant challenge to try to find an investment with good returns or, these days, to find one with low risk of huge losses. People with lots of money never need any incentive to invest — it’s about the only thing they can do with their money.

The proposed Wall Street bailout should not saddle average Americans with a huge tax bill. It should be paid for by raising taxes on capital gains from passive investments.

And, here, a clear line should be drawn: Investors who are actually involved in creating jobs by starting companies should be able to retain the low tax rate. But most investments are entirely passive — mutual funds, shares of stock, bonds. These investors are not directly contributing to job creation, nor are they taking on large specific risk, nor do they help manage the companies. They do not deserve minuscule tax rates.

— Michael Hobbs, Kirkland

Four bailout-bill mustsI support the proposed bailout plan [“Bailout in limbo; candidates scheduled to debate,” page one, Sept. 26], but it must contain the following:

— Adequate oversight and accountability;

— No excessive compensation for officers of bailed-out companies;

— A taxpayer stake in bailed-out companies, through something like stock warrants, so that if and when the bailed-out companies regain value, the taxpayers’ bailout is recovered, perhaps with profit;

— Opportunity for endangered mortgage holders to renegotiate affordable repayment terms.

Without all four of these items, the bailout plan will not work. It would be no more than complicity in the largest theft in the history of civilization. A flawed plan will destabilize the very core of our nation: public trust.

— Bruce Joffe, Piedmont, Calif.

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