THE GINGRICH PLAN

Newt Gingrich at Oberlin College

Newt Gingrich at Oberlin College

“This is the most amazing period I can remember in any campaign in my lifetime and I have no idea what the next act is.”  – Newt Gingrich

Stopping at Oberlin College Wednesday former House Speaker Newt Gingrich declared what the nation needs is a workout not a bailout to solve the financial crisis.

GINGRICH:

“The biggest challenge for McCain and the Congress is to recognize that we need an economic recovery act which includes a workout for the financial community.  But if all you adopt is a workout for the financial community then the economy continues to slide then you’ll never be able to pay off the bad debt.”

“Remember they started the year asking for 152-billion dollars stimulus package.  They came back in July and asked for 300-billion plus housing package.  They’re now back in September asking for a 700-billion dollar bailout package now that’s almost a trillion 200-billion dollars in one year.  And there’s no reason to believe if you can’t solve the underlying economic problems that the bailout won’t lead to another bailout. “

 He’d like a three part economic recovery package with part one being economic growth, part two solving energy problem and part three a workout and not a bailout for Wall Street.”

 On the issue of energy Gingrich pointed out that we’re sending $700-billion a year overseas for energy. That’s why he says Dubai is able to bring our money back to buy our companies.

 

1) “You replace snap shot to market which is what they currently have, which is a fairly destructive accounting rule, with a three year average mark to market. You overnight eliminate almost half the bankruptcies because this is an artificially accountant driven bankruptcy.”

2) “You change the loss – reserve provision so that it becomes counter cyclical rather than cyclical.  Right now the loss reserve provisions on top of the snapshot to market provisions are literally driving companies bankrupt that are totally healthy except they don’t fit the accountant’s rules.”

3) “The third thing I think you have to do is open a window and say look if you have bad paper and you have a liquidity crisis we will loan you money at Treasury plus 2-percent but you ultimately have to work this out. You made the deal it’s your paper you own it you fix it.  Paulsen I’m told has said well they’ll never agree to that.  Well my question is if they don’t think it’s worth working out why do you want the taxpayers to hire beurocrats to try to work it out.  And so I think you can find a way to meet the liquidity challenge without having the government set up a new beuracracy without having the government take ownership of the paper.”

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