A Visual Guide to the Financial Crisis:The Bailout

It’s been said several times already, but I’d like to reiterate the point that this chart is based on the flawed premise that the bailout was even needed. I don’t believe the notion that everything was necessarily caused by “greedy politicians and executives” and can’t really be pinpointed (ever seen that movie “The Cube”?)

Please read an old book called “The Law” by Frederick Bastiat. It’s only about 80 pages and can be found posted free online, try the link on my name. Published in 1850, but meant for today.

If I say A & B are similar, and A has property C, so B must have property C.

I hate rich people to. I hate how they provide me all these jobs. I hate how they are rich. I just hate them! Tax the hell out of them. I can’t stand how they worked so hard to get that money. I hate how my fat buy and lazy attitude can’t be that. I can’t wait til they aren’t rich anymore so i have an opportunity to create jobs. Taxing rich people, really motivates me to become richer!

And then we can take the good players off of your championship team and redistribute them to other teams, because these other teams have to work twice as hard to be as good as the best team

A Bailout still doesn’t guarantee a top economy again, are economy is ruined we have to re-structure are economy about 60% of our economy was based on spending and loaning money, not making money. Saying taxing corporations, you must only tax corporations that are clearly making profit and gains, but if you were to tax them to much they begin to loss capital and no longer can make gains. Their is many more ways we can save money during this crisis, cut government spending, government pensions etc. You cannot save an economy on borrowing money it wont work, that is what got us in this mess. You cannot start to rape the rich on taxes etc. They made that money and to tax 50% of it, why should they just have to get taxed to the sky over it. Management of companies need to much stricter, and who ever is controlling companies whether it be investors the board they need to control the company better.

I love all the comment immediately posted “TAX THE RICH HOW DARE YOU, All you scum sucking middle class people need to pull your share”, You people are the most full of shit hypocrites… Claiming that the middle class isn’t pulling their weight in America is down right ignorant and only proves changes like this need to happen.

THIS PLAN TAXES THE RICHEST %3 BECAUSE THEY SCREWED UP, all the people saying I make 100-200K a year and this will screw me need to learn to read, your being screwed too you just make enough money so your can shove your head up your own rectum and blame everyone else. The bottom 3rd of this chart is ALL, 100% of it, loopholes that the super rich use that none of the other tax brackets can use even if they were bad people like them, and people have the audacity to say “Well my dad is good friends with the CEO and paid for me to pass college so now I’m worth 100million dollars i shouldn’t have to pay taxes like the all the pieces of shit that make me all that money”. What? They used their power to play with your money, your chances of getting a home, paid the government to ignore it and make it easier to do, exploited the stupid with loans that the government should have made never able to exist, and when it all came crashing down just took YOUR (To all the they greedy 100k to 300kers that’s more your money than any ones) money and called it even…

And all this OMFG TAXING RICH PEOPLE WILL MAKE THEM LEAVE!!! Where are they going to go? What magical place exists where they pay less taxes than the US and has any chance of generating the money from a business that America does? Do you have to wait for a magic fairy to sprinkle rich people fairy dust so you can fly away to nevernever tax land? If someone takes their wealth and business some where else, forbid them from doing business in the USA see how quickly they flee the US… As a matter of fact I dare you to leave, I would love to have a piece of that sweet corporate monopoly you’ll behind….

Give up them chickens and silver sets when we are still asking nicely!
There’s gonna be a whole new set of rules when anarchy breaks out.

This is socialism and punishes the wealthy why rewarding Six Pack Joe for being mediocre all his life.

It’s idiocy to seek wealth anyway. These ‘rich’ people own things because they say they do. Drop us off in the fucking woods, and we’ll see how long their little green pieces of paper keep them well fed and warm, and safe from predators without idiots selling themselves for useless trash. People are fools as long as they forget life isn’t about amassing wealth and power. The solution presented is viable, shit, I already work for charity and try to make things right as it is, I would take all those hits if I could. But I am not wealthy; I don’t believe in exploiting idiots. In any case, the people with the money are the ones who make the rules. Who is going to tell them otherwise?

Middle class – what middle class if you work for a living you are working class. I’m not after taking the money off people who work and earned it I want to destroy the system that keeps that money after that guy dies. If you die and haven’t spent it tough it goes back into society. 100% inheritance tax – each generation starts over no leg ups, just a fair competitive struggle.

One life each – you have no more right to an easy ride than anyone else.

It never fails to astonish me how successful the American system has been at turning its citizens in feed for its Morlock overlords.

Billionaires while people starve, seriously wtf.

I would like to point out, that the blue section is taxation over a one year period to raise enough money to pay for the bailout. It is not decent into Karl Marx’s id.

I am for higher taxes to pay off the deficit, but the government size is just out of control. Decrease the size of government, cut back some of the junk programs and everyone wins.

@Damian – how exactly would imposing restrictions and taxes on people create any form conscience? The government can NEVER generate ethical actions from its citizens when it demands money through taxation, nor does it develop its own conscience. My decision to give must be my own in order for it to be ethical – me paying the government money so that a certain % of it can be passed onto “doing good” is not an ethical action on either my part or the part of the government. You can make any argument you want as to why people or the environment needs assistance, however, making it mandatory that everyone pay into such actions takes away any moral value of “doing good or bad”.

Jeez people, the rich do pay more in taxes already – its called the upper tax bracket.

Anyway, its better to keep taxes low as this puts more money in consumers pockets, which leads to more consumer spending and more taxable events. It’s only slightly counter-intuitive.

Doesn’t the thought of getting rich one day motivate the middle-classes to stay in their crappy corporate jobs? Or does that trick only work on me?

For people (not corporate entities) a flat tax combined with value-added-tax for sales seems to combine the best of both worlds. This way, each person pays into the system to cover shared services provided by state and federal governments and then they pay when they consumer goods. Ta-da.

Bring on the flames, I don’t care. I’m never reading this page again.

The rich do pay taxes. Loop holes do not get them out of their obligations contrary to popular belief. I have it on very good authority, my wife is a financial adviser. Stop spreading that rumor.

Yes, people reduce their taxes through right-offs. This is legal because they are exhibiting economic behavior the government (who we elect) wants to encourage. Generally (in the broadest of terms) this means they are contributing to economic growth.

After hearing that the UAW has given back on 2005 and 2005
how is it that they still pay their workers 11 billion a year more than the
foreign auto workers

figure a $25 dollar difference from $48 to $73 per hour including benefits and retirement funding
Multiply that times the 230, 000 still working for GM Ford and Chrysler
and it comes to $11 Billion a year which by the way is way bigger than the
aggregate $100 million the executives get beforethey begin to work for $1 per year.
and which by the way $73 per hour translates into into over $140000 per year per
employee .I know each working employee does not get that much but
it shows the untenable situationthe detroit automakers are in unless they break the
union contracts

Please cut and paste this and send to as many friends as you can

Thanks, Errol

The wealthy pay most of the taxes, so it should be no surprised that they get a larger percentage of the tax cut total back! It is only fair.

——

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers, he said, ‘I’m going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’declared the sixth man. He pointed to the tenth man,’ but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I!’

‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

That is the crappiest thing I have ever seen. Everyone wants to ignore the fact that all the problems of the current economy are predicted by the various free market systems. Everything that is happening in this crisis is a result of over-taxation and over-regulation which creates government favoritism towards certain businesses. So you propose that the means to fix it is more taxes and regulations so that the old favorite businesses fail and new ones can start the cycle all over again. That’s pure genius. What should it be this time? Green energy businesses? Bio-tech? Mind-altering drugs dispensers?

At the end of the day everyone is out for their own best interests. If your best interest is to give all your money to charity, then that is your business. I don’t work hard in my job so that my neighbour can eat before me. If I want to share my EARNINGS then that is my choice, but I should not be forced to do so. In the end it makes us all poorer. Russia realized it, China realized it (to a lesser degree), the European countries realized it at the turn of the 19th century. Let’s stop thinking that interventionist actions are the solution to interventionist-created problems.

This is so dumb. People are so caught up on taxing people who profit. Get over it our economic system is capitalism!

However, I agree that the bailout is stupid. Any time the government gets its hands in something it usually screws it up even more.

If your goal is to actually help our economy then passing the Fair Tax would be a great start. I’ll leave it up to the reader to figure out why. One initial benefit would be ~300 billion in savings just because we don’t have to comply with the stupid current tax code.

One last poke at people who think it is a good idea for corporations to pay taxes: stop voting! You are an idiot and don’t need to participate in making this country better.

Sounds like a good plan.
What will you need to do to have
law makers see it.

thanks from tony

Most of you “don’t tax the rich” drones are missing the point.

1 – nobody posting or reading this article is remotely close to being wealthy enough to really know how the very wealthy think

2 – nobody reading or posting here has a prayer of making that kind of money. Get over it – you’re not going to have that kind of money. Ever. Get used to it. Protecting the super-wealthy isn’t going to help you either.

3 – to tell us what “wealthy people will do” is plain fricking stupid, because you DON’T KNOW WHAT THEY WILL DO. Helloooooo? How can you even guess what they will do? You have NO IDEA; chances are that you’re living just within your means, or are sinking. How can you know how people think when they are 100% certain that availability of money will never even be even a factor in their quality of life, when you’ve never been in that situation?

4 – “Socialism” ? Don’t be stupid. That’s a knee-jerk rich-dude talking point. Want to see “socialism”? Look at how the ultra-wealthy have parroted for years “the free-market will take care of everything”. Look how quickly they hit the bricks to D.C. asking for help. Where are the investment banks now? Poof! Up in smoke. Seems the market is not so smart after all.

5 – wait for this to really penetrate and play out: do a Google search for : Madoff 50bn. See how some guy has defrauded BIG money from individual investors. Watch some super-wealthy people now call for government help.

Craig Matthew – go for it – you’ve hit the nail on the head.

Many Americans actually believe (BWAHAHAHAHAHAHAH) that they will soon be “somewhat or substantially wealthy” as a result of their efforts or investment (from a survey back in 2005 – sorry, cant find reference). They won’t be, and they aren’t.

Wake up and smell the coffee – I’m hosed, you’re hosed. Protecting the wealthy by telling us not to raise taxes is stupid. Protecting super-wealth of others is a GOP shill. You know nothing about super-wealthy. I know nothing too, but I know it. Y’all need to learn that too.

Errol,

have you ever been out of the US? Have you seen how cheap it is to live in some places?

Still with me? Good. Next : can an American auto-worker buy a meal for his family for 50 cents? No. With me still?

Next : how can we transport the food from Indonesia to Detroit? Don’t think we can. So, now you have it (if you can actually read, that is) : we pay them more because IT IS MORE EXPENSIVE TO LIVE HERE.

Yeah, yeah I know your response to that. “Move the auto manufacturers to Indonesia etc.”; America will be a “service economy” . . . .?

Puh.Lease. Tried that – how do you think we got into this mess? You can’t move all the “low skill” jobs offshore and keep the “smart jobs” here. A country operates on all kinds of effort. Garbage has to be collected, pipes welded, cars made, hearts transplanted, clothes made. Only idiots believe you can raise a country’s standards by cherry-picking economy sectors.

Don’t confuse your addled brain with the real thing. Your grasp of these things is limited and childish. You need to read a few books and live a little bit of life and see that just repeating what the zombies on TV say is really just silly.

Lots of diverse thoughts here, but fear not hear this:

Free markets equal freedom i.e. like in nature red in tooth and claw, but as most biologist know free nature is actuall an ever ending race between host and parasite. You can actually argue that a predator is a somewhat intelligent parasite i.e. that a parasite must not be too successful else it would run out of hosts and eliminate itself in the bargain. Like wise the financial system given its free head evolved into a host parasite system wherein the parasites were so successful they topped the host.

Regarding governmental printing of money: this has always been the case and should be e.g. back in the last century lets say 1908 USA population was much smaller than now lets say for arguments sake 150 million now its around 300 million, so there are more houses too, people own more things such as TV’s cars playstations. If no money was printed to “inflate” the economy how would prices be reflected? as there are more people and goods in circulation the intrinsic value of money would need to rise, clearly an untenable situation. Hence the absolute requirement to print more money and inflate the economy. The key point being that this inflation should keep just ahead of the pace of creation of real wealth such as houses and goods. The trouble is that the printing of money at this juncture has little to do with above rather the reverse but it should still work as long as people believe it with the cost that future generations may have to be happy for a while with reduced or non-increasing standard of living.

A small note to those that think living is cheaper in some countries rather than the USA. Aside from the fact that it is only in relation to the USA that this hold true. If you were a native denizen of those countries you would not say they are cheap, most likely you would complain like your compatriots. You must also consider the facilities there or rather more accurately the lack thereof. Could a USA citizen really banish themselves to such places. If not Bermuda would get even more expensive to such a point that the good ‘ole USA would be cheaper.

Just some thoughts from an illeterate observer of the world.

Everyone is talking about how the “anti tax drones” want to protect the wealthy. It isn’t about protecting the wealthy – it is about preventing the precedent of infringement on the free markets. It is about incentives.

And you’re right, I can play the economic lottery and my expected returns are far lower than the “super wealthy” status. But the fact of the matter is, greed won’t stop incenting me from trying to develop, innovate and entrepreneur my way to the top.

Of course there are other motivations in the world apart from greed – and they are becoming more and more apparent with the concept of things like “social enterprise.” Great – pursue that if you wish. Just don’t dare hinder the economic actions of anyone else and claim in your arrogance that you know better how to distribute economic resources in this world. Frankly, economic actors aren’t the most efficient at distributing resources either – but here is the crucial point – in the long run, they are more efficient than centralized institutions that claim omnipotence.

Sure, the some institutions with great restrictions and checks on their power might be nice to smooth out the most severe of market failures – but we see how successfully that is happening with the entire bailout debacle. Wake me up when liquidity thaws.

Great diagram,will see is this plan working