MichaelMoore.com : Here's How to Fix the Wall Street Mess ...from Michael Moore
I figured this might get some good comments in the finance section. Here are my comments (from
this thread):
I think Michael Moore is a socialist headcase and have for many years. But I tried to read over this objectively. Here are my thoughts.
1. APPOINT A SPECIAL PROSECUTOR TO CRIMINALLY INDICT ANYONE ON WALL STREET WHO KNOWINGLY CONTRIBUTED TO THIS COLLAPSE. -- this is a nice idea, but in practice I think it would be impossible to execute; too many levels, too many shades of grey, too many different layers of culpability and accountability
2. THE RICH MUST PAY FOR THEIR OWN BAILOUT. -- this part shows, I think, that Mr. Moore doesn't understand the particular problems being faced now and doesn't understand the bill going before the House on Friday
a) 10% ad-hoc tax -- I'm not entirely sure what this has to do with getting credit flowing again
b) .25% tax on stock trades -- $25 per $10,000 traded on both the buy and the sale, in other words; currently, $42 per $10,000 is charged as an exchange fee on every round trip, or the equivalent of a .21% fee on all stock trades; so Moore's idea would more than double the total fees (aside from brokerage fees and of course capital gains taxes of course) paid, but it would certainly be a progressive tax; I'm not sure what, if any, chilling effect on trade this would have or how accurate Moore's estimate is
c) cut/tax annual dividends by one fourth -- I don't think this would work, at least for listed equity dividends (for those securities that even pay them in the first place!); dividend payments on common stock shares are generally decided upon by the board of directors -- I just see a great potential for a conflict of interests here and an administrative nightmare; for pass-through entities such as mutual funds the problems would be different but maybe no less complicated; also, what's to stop a shareholder from selling just prior to ex-dividend date to avoid the drop in value since there's no benefit to holding? securities that pay no dividends would become more valuable...
d) vastly increase corporate tax rates -- this is a clumsy blunt force idea that we can ill afford at this particular point in time; also, I would dearly love it if Moore had footnoted this particular passage with his reference material
3. BAIL OUT THE PEOPLE LOSING THEIR HOMES, NOT THE PEOPLE WHO WILL BUILD AN EIGHTH HOME. -- this is insane, insulting, and embarrassing for Moore, that is all
4. IF YOUR BANK OR COMPANY GETS ANY OF OUR MONEY IN A "BAILOUT," THEN WE OWN YOU. -- more lack of understanding of what the bill is about, but in a way, this is going to happen anyway; the Federal Government will own these investment derivatives and is free to profit from them (but don't hold your breath); however, I suspect Moore would really like to see socialization of large swaths of the financial industry, because, you know, government is so benevolent and efficient and would never screw up
5. ALL REGULATIONS MUST BE RESTORED. THE REAGAN REVOLUTION IS DEAD. -- first, 1999 did not "remove all the regulations that governed Wall Street and our banking system;" but I would definitely favor well-written and implemented reregulation; unfortunately, whatever we get is likely to resemble Sarbanes-Oxley, which has been a regulatory money pit and another drag on the economy
6. IF IT'S TOO BIG TO FAIL, THEN THAT MEANS IT'S TOO BIG TO EXIST. -- Moore has a great point on this one and though I do not like his strident and metaphor-laden writing style, he actually shows good sense here
7. NO EXECUTIVE SHOULD BE PAID MORE THAN 40 TIMES THEIR AVERAGE EMPLOYEE, AND NO EXECUTIVE SHOULD RECEIVE ANY KIND OF "PARACHUTE" OTHER THAN THE VERY GENEROUS SALARY HE OR SHE MADE WHILE WORKING FOR THE COMPANY. -- I'm not sure about legislating to an arbitrary multiplier limit, but I would agree with this in principle; I'm not sure how the accounting would be done, when I think of the 45,000 or so employees in dozens of different countries and in hundreds of different professions and lines of business who make up the company I work for
8. STRENGTHEN THE FDIC AND MAKE IT A MODEL FOR PROTECTING NOT ONLY PEOPLE'S SAVINGS, BUT ALSO THEIR PENSIONS AND THEIR HOMES. -- defined benefit plans are going away -- a lot of them that still exist will be rolled into a 401(k) or similar defined contribution plan; the idea of protecting pension money sounds good, but I have no idea if it's feasible; I disagree that retirement investing should avoid the stock market -- I think undiversified investment in individual securities in a 401(k) is a bad idea, but I think the responsibility for retirement savings should lie with the individual, and holding a well-diversified portfolio in the stock market has proven to be a winning way to realize solid returns over time for those who begin investing early in life; responsibility again lies with the individual for making choices later in life to move toward less risk (fixed income, for example); on the FDIC, I believe the $250K limit in the bill is temporary, but I do think it's natural the limit should move upward (it's been $100K for a long time); Moore doesn't extrapolate on "protecting people's homes" so I won't either
9. EVERYBODY NEEDS TO TAKE A DEEP BREATH, CALM DOWN, AND NOT LET FEAR RULE THE DAY. -- can't disagree with anything here! I would mention that we need to understand the gravity of the credit situation but not make kneejerk proclamations of doom and Depression
10. CREATE A NATIONAL BANK, A "PEOPLE'S BANK." -- well, this one is cute; hmm, low-interest loans for all sorts of people, eh? oh, and healthcare for everyone, that sounds like a winner and it won't cost too much either; this one is just a
from Moore to his fans so I won't really comment
All in all, not a very strong plan or one that has much basis in reality or one that shows much understanding of the current situation or the way the economy works, but I don't disagree with every point.