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RE: Can bailout fix US economy? - 9/23/2008 4:30:25 PM
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redeemedsaint
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Honestly no. It's the bank's fault for lending out money to people who kne they could not afford it. No credit check, no money down, that is just foolishness and an accident waiting to happen which I see it did. Why should the government bail these people out who were irresponsible in the first place?
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Get off the track cause the freight train is coming - Coach Bobby Lee Duke from Facing the Giants
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RE: Can bailout fix US economy? - 9/23/2008 4:43:29 PM
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GroupW
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One reason is that by not doing so, banks will have little to no capacity to engage in further mortgage lending. It's a question of what is right vs. what is productive.
If they do nothing, innocent people who managed their finances well will be harmed by the lack of available credit for home purchases. We're seeing this already. The jumbo market is all but shut down. I need a decent 5-1 interest only ARM but can't get it. I have to pay for a 30 year fixed rate mortgage even though I don't need it.
The lack of mortgage credit means no new home building. That means construction workers out of jobs. That means higher unemployment payouts, eventually more taxation, and increased spillover effects into other industries. Less sales at Home Depot, and layoffs there.
It's not as simple as just letting people absorb the costs of their own decisions. Sometimes those costs get spread to others that didn't deserve it.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 5:00:04 PM
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GroupW
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Hang in there.
It's probably not worse than you think, but the feeling that it is or may be is one of the big problems with the lack of transparency right now.
And that's not just the government being opaque. Noone is 'fessing up to what their losses are or might turn out to be. To use a former pastor's somewhat vulgar language, "everyone is playing 'hide the stink'"
When people do that, we all tend to assume the worst. Usually the story isn't as bad as what we fear.
BT
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 5:10:47 PM
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tracydolls
Posts: 1839
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quote:
Wow. This is a real misunderstanding of what's happening, I think.
They aren't GIVING those companies $700 billion. They're buying $700B in debt from them. The debt is, for the most part, in the form of real mortgages, to real people, on real houses.
I understand.
We are bailing our rich bankers and their greed. Because their greed affects us.
I know about mortages. I live in a house also. I also know my house was never worth the money it was apprasied for when the housing market was booming.
The prices became tooooooooooo inflated.
Speculators ran rampart. Borrow against money you don't have, with a bank that does not have it, from a government that doenst have it.
I understand. We the average everyday people are gonna be hurt anyways. WE cannot avoid it. the very rich will not be hurt by this.
Rev 6:5 And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand.
Rev 6:6 And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.
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RE: Can bailout fix US economy? - 9/23/2008 5:11:14 PM
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deliveredarling
Posts: 1983
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NO it won't! McCain came on CNN a little while ago claiming that it will cost every taxpayer at least $10,000 a year! Yeah, that will help the economy. I have an extra ten grand a year, don't you?
Edited to make correction of broadcast"
It was Fox news, not CNN
< Message edited by deliveredarling -- 9/23/2008 5:37:53 PM >
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RE: Can bailout fix US economy? - 9/23/2008 5:27:18 PM
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GroupW
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I'd like to see how he comes up with $10k per year. I think he pretty much took $700 billion and divided it by the number of tax payers.
For my opinion of that method of costing, see the quote from H.L. Mencken in my sig line.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 5:53:36 PM
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Zhi
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Again, tracy, they're buying the mortgages. They aren't giving anyone money at random.
Is there language in the act that's a bit worrisome? Well, sure, but the core of it is still that the government is wholesale investing into the mortgage market, in hopes that the banks will subsequently have more capital to give more loans to people, which will in theory stabilize both the mortgage industry AND the housing market. This is not for the bankers really, it's for anyone who owns a house and is now in danger of owing more on their house than their house is worth. It's for anyone who needs a loan to buy a house. It's for anyone who needs a buyer to sell their house to. It's for us little homeowners.
Will it work? I guess time will tell.
Personally I would have been happier if it had been done by the private sector, but that's just me.
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The optimist says the glass is half full. The pessimist says the glass is half empty. The engineer says the glass is twice as large as it needs to be.
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RE: Can bailout fix US economy? - 9/23/2008 6:04:59 PM
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deliveredarling
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What McCain presented maybe the wrong figure (theoretically the amount per year can go up, (we don't have a final grand total for the tax bill yet), imagine if they pass this and let's say it is ten grand per taxpayer per year. That's twenty grand per a year per married couple. Americans can't afford that. This is an extra amount on the taxes we already pay, not to mention the proposed tax increase either candidate will have to increase as president. Americans income will be taxed at more than 50%. How will house payments be made? Car payments, credit cards, not to mention how will Americans pay for groceries and other necessities?
This is serious people. This platitude attitude is not being truthful. We as a country are in real trouble. If they pass this legislation as it now stands, the president won't have control, the Fed will! That is the scariest thing. We won't be a democracy any longer, we will be under a dictatorship!
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"Now no one after lighting a lamp covers it over with a container, or puts it under a bed: but he puts it on a lampstand, in order that those who come in may see the light."
Luke 8:16
http://www.myspace.com/egaip
Come visit
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RE: Can bailout fix US economy? - 9/23/2008 6:18:57 PM
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GroupW
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Keep in mind that the $700 billion isn't buying air. It's buying hard assets - either distressed securities or mortgages. The underlying assets still have SOME value.
Depending on where the feds choose to focus, they could actually not only recoup the $700 billion, but actually make a profit. After all, there's a reason the private equity funds were thinking about doing the exact same thing, and it wasn't just to be charitable.
The net cost is likely way, way less than $700 billion.
BT
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 6:20:25 PM
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Dancre
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I was watching Suzy Oric (I think that's her last name. The financial lady who is always on Oprah and PBS). said we will eventually go into a cash based society and it will be very hard to get loans now. She also said we live in a society of lies. We use credit cards to buy everything when we have no cash. it really made me think about how I live and how I always want 'more' of everything. makes me want to streamline my life. She also said we got in this mess b/c of greed. People wanted more, more, more. She also said what has happened to the economy is about as bad as the great crash in the '30's.
kim
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RE: Can bailout fix US economy? - 9/23/2008 6:21:26 PM
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GroupW
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quote:
ORIGINAL: tracydolls
I understand. We the average everyday people are gonna be hurt anyways. WE cannot avoid it. the very rich will not be hurt by this.
The very rich have already been hurt. The government is trying to find a way to avoid the non-rich to get hurt even worse.
I'm not sure I agree with how they're going about it, but some sort of governmental effort might be required.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 6:42:04 PM
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GregandJenny
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GW,
If we let this run it's course what would happen?
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RE: Can bailout fix US economy? - 9/23/2008 6:54:11 PM
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GroupW
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That's the $64 question. I don't think anyone really knows. Part of the problem is that we don't really know who's been trading with whom and how much. There's an incredible tangle of derivatives agreements between all the various financial institutions, noone really knows who owns what bonds, and how much credit risk exposure everyone's been taking.
I think that's why the Fed's stepped into AIG's offices and said "YIKES!" and hit the panic button.
My best guess is that a fair number of banks could have failed, including a couple of big ones like WaMu or Wachovia. You would have likely seen a run on the last remaining investment banks with the potential of one or both of those falling to the same fate as Lehman. What would happen after that would depend on:
a) how much private equity has actually been raised - we don't know for certain.
b) how much longer the private equity would have waited before investing. There has been a sense of "Why invest today when it's going to be cheaper tomorrow."
c) could the major banks have weathered the price declines until the private equity firms decided to start spending their bundle.
d) what impacts would the tangle of defaulted derivatives have had
There's the potential for complete lending gridlock in the nations financial system. Just last week, the inter-bank lending market all but dried up as bankers let fear ovverrule reason. If that had happened, we would have seen a potentially deep and painful recession.
Or maybe not. Noone really knows. The key takeaway point is that this would certainly be a possibility. Given that risk, what is the right thing to do? I'm glad I'm not the one who has to decide.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 6:56:35 PM
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GregandJenny
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thanks!
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It does not have to be well with my circumstance to be well with my soul!
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RE: Can bailout fix US economy? - 9/23/2008 7:52:37 PM
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rlj
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If there is any value in these potential US government investments why doesn't someone else besides the government do it?
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This is who I'm voting for. He is from the same party I voted for last time. This is consistent with my belief in the failure of the two party system and my disgust with it.
http://www.baldwin08.com/#
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RE: Can bailout fix US economy? - 9/23/2008 7:53:17 PM
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AdrianaS
Posts: 1224
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quote:
ORIGINAL: GroupW
Hang in there.
It's probably not worse than you think, but the feeling that it is or may be is one of the big problems with the lack of transparency right now.
And that's not just the government being opaque. Noone is 'fessing up to what their losses are or might turn out to be. To use a former pastor's somewhat vulgar language, "everyone is playing 'hide the stink'"
When people do that, we all tend to assume the worst. Usually the story isn't as bad as what we fear.
BT
I am sure digesting everything from the other posts...
I have to confess that growing up a Brazilian I do have experience reggarding the worse in the economy, high inflation, recessions, the money changing names or even gov taking money from our bank accounts and freezing it etc not forgeting the dealings with IMF and etc.
Sure cannot compare a developing country with USA, still my question for now is: if we are broken or not, are we broken in debt or not?
Thanks again.
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RE: Can bailout fix US economy? - 9/23/2008 9:19:01 PM
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relady
Posts: 1287
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quote:
Exactly. (Oh fiddle. I'm about to agree with a conservative. What is this thread coming to?) Me too. Armageddon surely approaches, LOL.
quote:
It's not as simple as just letting people absorb the costs of their own decisions. Sometimes those costs get spread to others that didn't deserve it. thank you! Couldn't agree more.
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RE: Can bailout fix US economy? - 9/23/2008 9:23:24 PM
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GroupW
Posts: 2911
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From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: rlj
If there is any value in these potential US government investments why doesn't someone else besides the government do it?
That was one of my earlier points. In fact, private equity funds were amassing like the Visigoths at Rome to do just exactly that.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 9:25:20 PM
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GroupW
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quote:
ORIGINAL: AdrianaS
quote:
ORIGINAL: GroupW
Hang in there.
It's probably not worse than you think, but the feeling that it is or may be is one of the big problems with the lack of transparency right now.
And that's not just the government being opaque. Noone is 'fessing up to what their losses are or might turn out to be. To use a former pastor's somewhat vulgar language, "everyone is playing 'hide the stink'"
When people do that, we all tend to assume the worst. Usually the story isn't as bad as what we fear.
BT
I am sure digesting everything from the other posts...
I have to confess that growing up a Brazilian I do have experience reggarding the worse in the economy, high inflation, recessions, the money changing names or even gov taking money from our bank accounts and freezing it etc not forgeting the dealings with IMF and etc.
Sure cannot compare a developing country with USA, still my question for now is: if we are broken or not, are we broken in debt or not?
Thanks again.
Yes, I suppose that would give you a much different perspective on all this. To answer your question, no we are not broken. We're not firing on all cylinders at the moment but we're not broken. The financial regulatory system needs to change, and some industry consolidation needs to happen but we're going to be ok.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/23/2008 10:20:23 PM
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tracydolls
Posts: 1839
Joined: 3/30/2008
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quote:
I was watching Suzy Oric (I think that's her last name. The financial lady who is always on Oprah and PBS). said we will eventually go into a cash based society and it will be very hard to get loans now. She also said we live in a society of lies. We use credit cards to buy everything when we have no cash. it really made me think about how I live and how I always want 'more' of everything. makes me want to streamline my life. She also said we got in this mess b/c of greed. People wanted more, more, more. She also said what has happened to the economy is about as bad as the great crash in the '30's.
kim
After reading this I thought about the movie Scarface.
remember when Tony Montana is sitting in bar with his boss Frank
Frank told him the number one rule is:
NEVER underestimate the other guys greed.
quote:
Personally I would have been happier if it had been done by the private sector, but that's just me.
What company could have bought all this mess, what company is not tied into it?
quote:
The very rich have already been hurt. The government is trying to find a way to avoid the non-rich to get hurt even worse.
I'm not sure I agree with how they're going about it, but some sort of governmental effort might be required.
GW, can I ask how have the very rich been hurt?
They gave up a mansion or 2? They're bank accounts shrunk from 50 billion to 5 billion.
When the family that owned the Dow Jone sold it last month, I knew then if the rich are running we are in trouble.
quote:
Or maybe not. Noone really knows.
that's the crux of it all
only the Good Lord knows.
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RE: Can bailout fix US economy? - 9/23/2008 10:57:52 PM
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blessedinnyc
Posts: 1966
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quote:
ORIGINAL: tracydolls
Rev 6:5 And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand.
Rev 6:6 And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.
Don't worry, Tracy. :) First off, that stuff happened in the third, fourth, and fifth centuries. The seals were a judgement on the Western Roman Empire. Have doubts? Take a look at the sixth seal and think "Pompeii/Vesuvius." Yup, John is the only person in human history who correctly predicted a volcanic eruption years in advance.
Second off, there have been much more severe market dislocations in US history. I wasn't around then, but can anyone affirmatively say that this has gotten worse than the Penn Central default?
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RE: Can bailout fix US economy? - 9/23/2008 11:59:22 PM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: tracydolls
GW, can I ask how have the very rich been hurt?
You can ask what ever your heart desires. I always have an answer. It's not always a good answer, but it's an answer.
First off, it depends how you define "hurt". Are they now destitute like a lot of other folks? Heck no.
Have they seen a material decline in their wealth? Absolutely. At one point, the CEO of Washington Mutual had some $50 million in stock back when the stock was in the mid-40's. He's watched the value of those holdings evaporate. More than that, he lost a million dollar a year job that he could have held onto for another 10 years. It's likely he'll never work again (IMO, not altogether a bad thing having worked there once.)
Many of the folks that I knew at one investment bank had much of their bonus dollars tied up in Bear Stearns stock. Not by choice mind you - it was how their bonuses were paid, at least in part. They watched that money go poof. It amounted to several million dollars for some of the guys.
The trading desk at one large firm now has only 20% of the seats occupied. The other 80% of the highly paid traders have lost jobs.
Last year, I was probably in the top 3-4% of all wage earners. This year, I'm unemployed with minimal prospects to get a job that pays even half of what I used to earn.
A number of smaller mortgage firms were closely held by a few people. Many of those have gone bankrupt.
Those are a couple of examples of how some of the rich folks have already been nailed in the current crisis. Noone has received a "get out of jail free" card.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Can bailout fix US economy? - 9/24/2008 12:28:33 AM
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AdrianaS
Posts: 1224
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quote:
ORIGINAL: GroupW
Yes, I suppose that would give you a much different perspective on all this. To answer your question, no we are not broken. We're not firing on all cylinders at the moment but we're not broken. The financial regulatory system needs to change, and some industry consolidation needs to happen but we're going to be ok.
Good!
Another good news going on also..:FBI probing Fannie, Fred, Lehman, AIG.. I think we may get to know something, hopefuly.
I was reading about US public debt etc it seems that: "The national debt equates to $30,400 per person U.S. population, or $60,100 per head of the U.S. working population,[42] as of February 2008." Its from wikipedia don't know if it is accurate. Plus I heard somewhere that this new debt will cost + $10,000...Than as I am single and the head of my household of 1, my debt is for now: $70,100. The numbers amount are something close to that?
I was thinking that the Gov could do a deal with us..for exemple if we come up with this debt money up front and lend to them to put in a fund or I dont know what and we end up having the interests on it somehow if they decide to give the 700billions bit by bit... we end up not losing all the debt $ took under our names and even making someprofits with thw bad paper we are going to buy etc. Plus everybody who paid their debts in advance would belong to a group that the Gov could not include as part of any new crazy debt for at least "x" long years etc.
I have issue having debts big time even the debts I did not created myself! I have no problem paying taxes and etc but no way will accumulating Gov and others messes debts.
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RE: Can bailout fix US economy? - 9/24/2008 12:56:03 AM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: AdrianaS
I was thinking that the Gov could do a deal with us..for exemple if we come up with this debt money up front and lend to them to put in a fund or I dont know what and we end up having the interests on it somehow if they decide to give the 700billions bit by bit... we end up not losing all the debt $ took under our names and even making someprofits with thw bad paper we are going to buy etc. Plus everybody who paid their debts in advance would belong to a group that the Gov could not include as part of any new crazy debt for at least "x" long years etc.
Actually, that's quite an excellent idea. At least if the government DOES end up making a buck or two we'll actually know what happened.
As far as the $30k per person debt number goes, it's about right. Adding the $10k per tax paying head number onto that gives you something like $90k per taxpayer.
Before you freak out, there's something wierd about government accounting. To the government, everything is an expense. When it builds a bridge, that's an expense. When it builds a toll road, that's an expense.
In reality, these infrastructure things are also assets. A private company would show the outlay as the creation of an asset with an offsetting liability.
What the government debt numbers don't show are the value of the things we spend the money on. Somethings, like welfare, don't have much of a financial value. There's no asset that was created. Other things, like a road or a building, have significant value.
What the $90k number doesn't include is the value of the assets being purchased. Whether that's the $700 billion of bad debt (which will have some value something around $700 billion but probably a bit less) or the value of the roads, buildings, battleships, etc being purchased, the value of those things should be considered as well. What's important isn't just the overall dollars per head number but also what's the value of the assets that were purchased.
BT
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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