Alternative Bailout Solution - Reader Response

This analysis was provided by a good friend and reader MKinya:

They are about to pass or look like they will probably pass a bill to pay out 700 billion dollars to bailout Wall Street. While I don’t really know how much the taxpayer should take on to pay for this ordeal, I do think that there is a solution that will work out for quite a few people.
How about after the government putting up the money - however much it is - offering the general public a piece of the action on any profit to be made by the deal. This would be in the form of raising money much like the same way campaigns raise money. Tell the American people that if they want to invest in the bailout (which there may be quite a few of us out there willing to bet that this will end up being a profitable investment like most other bailouts the government has undertaken).
The idea would be that after the government spends the 700 billion dollars then they should set up a way for Joe six pack to invest ($25 -$10000). Maybe even $25 dollar stock with a maximum of $10000 investment. The investment Joe six pack gives the government would go back to the treasury and reduce the taxpayers liability in the bailout. Just like any other investment it is voluntary and there is a possibility of losing money. What this does is that the people who are willing to put up the money can then also make money out of the deal. If the investors don’t put in the whole 700 billion dollars then whatever shares are left go back to the taxpayers (They have already put up the $700 billion)

$700 Billion - Wall Street Hits the Jackpot

Yeah Baby!!! That's what I always imagined I would scream if I hit the jackpot in Vegas or if I won the lottery and now that is what Wall Street is screaming. $700 Billion is the amount that Wall Street is looking to claim for their winnings. Now they won't call it winnings but let's try to look at how this situation looks from my perspective. I have sat back, trying to not judge how the situation is being handled and I just want to determine what this means for me as an investor.



As an investor, the first thing that I would say is that a $700B move like this tells me that the Henry Paulson, head of the Treasury department is serious about this issue. It would signal that he believes that liquidity is drying up for financial insitutions and this bailout package allows them to right their balance sheets. My next observation is that if these companies are allowed to remove these toxic assets from their balance sheets they will see a few quarters where these assets will need to be marked down...if Mark to Market Accounting still exists and then they would have sparkling balance sheets with no direction to go but up. This leads to my next conclusion that the best investment for the short term will be the Financial Sector and you will see that through an addition to my STOCK TRACKER PORTFOLIO through the exchange traded fund, UYG.

Since I wrote this post much has changed and I will write from the prespective of Main Street, however this was written from the view of what this bill means to me as an investor.