Economic Bailout

[vbird53]

Come on. Is anybody outside Wall Street and Washington actually for this thing?

Partisan, non-partisan, poor, rich, I don't think it matters.

Dave Ramsey (radio economist and financial strategist) listed some pretty awesome reasons why every American should call their congressmen, and explain some very simple reasons that they need to vote against this thing.

[SubGod22]

I saw a poll shown somewhere recently that only 7% of the American people support the bailouts.

LET THEM DIE!!!

[BostonWu]

I'm not going to pretend I know all the finite details behind this fiasco but I do work in the industry and the thought of market liquidity drying up is frightening. If there is no money to lend then the entire economy (on top of real estate) is FUBAR. It's a damn shame it got to where we are today because it shouldn't have happened but I'm not sure there were any other choices to be had in order to save the financial markets and US/global economies.

[RoyalShock]

All I can say is if this bailout occurs, it better come with legislation that eliminates the policies that allowed it to occur.

Hopefully, they learned that funneling cheap, no-money-down loans to poor people for over-priced homes via cheap money and a government safety net will backfire in the long run.

[RoyalShock]

http://www.gopusa.com/commentary/dpatton/2008/dp_09231.shtml

The rule in Washington seems to be this: If you squander your money and fail to provide for yourself, the government will take care of you. If you save, invest wisely and prepare for your retirement, you will be penalized in order to pay for those who did not. A perfect example was the tax increase passed by Clinton and the Democrats who still controlled Congress during the first two years of his administration. Seniors who had saved and invested for retirement, and who made more than $34,000 ($44,000 per couple) received a tax increase under that plan. (emphasis mine)

Folks, if the American people bend over and take this, we might as well stop pretending we're a free-market capitalist society. Every single congressman that actively participated in creating this situation should be exposed and run out of office by their constituents. But it won't happen.

[BenWSU]

Taxpayers stuck with $700 billion to bail out companies run by idiots that make millions a years. Excellent world we live in here.

When do the little people busting their a$$ & barely making it month to month get included in a bailout program??? :whistle:

[engrshock]

Taxpayers stuck with $700 billion to bail out companies run by idiots that make millions a years. Excellent world we live in here.

When do the little people busting their a$$ & barely making it month to month get included in a bailout program??? :whistle:

My basic belief is that we should let them die. It irks me that there are plenty of people out there that received the money that was "lost" and the rest of us are going to be responsible for what they received. No "money" is ever truly lost. Someone has it.
However, I do not know the ramifications of allowing all these companies to fold. It may be that if this were to be allowed that our economy would completely falter and everyone except those who were on the receiving end originally would be hurting.

[RoyalShock]

What I'd like to know is how purchasing debt with more debt can be a good thing? We're not talking about taking out a consolidation loan here. The interest that will accumulate on the $1 tillion is going to be astronomical.

Consider these numbers:

Current annual revenue: $2.5 trillion (3% annual increase since 2000)
Current debt: $10 trillion (6% annual increase since 2000)

Now, let's scale these down to household numbers:

Annual revenue: $50,000, growing at 3% annualy
Debt: $200,000, growing at 6% annualy

Now, what household in it's right mind would take on an additional $20,000 in debt (with who knows how much to show for it) when it can't even pay the interest on its current debt or bring its rate of increase in line with its rate of increase in revenue?

This doesn't even take into account the decline of value in the dollar we could see as a result.

:wacko:

[BostonWu]

Taxpayers stuck with $700 billion to bail out companies run by idiots that make millions a years. Excellent world we live in here.

When do the little people busting their a$$ & barely making it month to month get included in a bailout program??? :whistle:

My basic belief is that we should let them die. It irks me that there are plenty of people out there that received the money that was "lost" and the rest of us are going to be responsible for what they received. No "money" is ever truly lost. Someone has it.
However, I do not know the ramifications of allowing all these companies to fold. It may be that if this were to be allowed that our economy would completely falter and everyone except those who were on the receiving end originally would be hurting.

That’s what I’ve been trying to illustrate – the ramifications of these banks failing would equate to a complete collapse of our economy. I forget which analyst said it last night but I liked his view. He basically said the government is not bailing out these banks just to save them and keep them open…Sure the bailout is unfair on many levels as some greedy folks are sure to come out ahead. But the bottom line is that is the wrong way to look at this. If these banks were allowed to fail then credit dries up and the economy is in shambles – unemployment spikes, people lose their 401k and life savings, housing market plummets, etc. In summary you have to look at what’s best for the economy and the American people. I wish I had the audio.

[engrshock]

Taxpayers stuck with $700 billion to bail out companies run by idiots that make millions a years. Excellent world we live in here.

When do the little people busting their a$$ & barely making it month to month get included in a bailout program??? :whistle:

My basic belief is that we should let them die. It irks me that there are plenty of people out there that received the money that was "lost" and the rest of us are going to be responsible for what they received. No "money" is ever truly lost. Someone has it.
However, I do not know the ramifications of allowing all these companies to fold. It may be that if this were to be allowed that our economy would completely falter and everyone except those who were on the receiving end originally would be hurting.

That’s what I’ve been trying to illustrate – the ramifications of these banks failing would equate to a complete collapse of our economy. I forget which analyst said it last night but I liked his view. He basically said the government is not bailing out these banks just to save them and keep them open…Sure the bailout is unfair on many levels as some greedy folks are sure to come out ahead. But the bottom line is that is the wrong way to look at this. If these banks were allowed to fail then credit dries up and the economy is in shambles – unemployment spikes, people lose their 401k and life savings, housing market plummets, etc. In summary you have to look at what’s best for the economy and the American people. I wish I had the audio.

The main problem with that is that if a small bank or investment company fails the government will not help. The larger companies and banks because they are so big and unregulated will get special treatment. Yet when all is said and done the smaller banks and firms will have to jump through even more hoops and follow more regulations because of the big boys. This will increase the cost of doing business for them and those costs will also be passed onto consumers.

[Wuzee]

I'm conflicted.

Part of me says let them die, suffer through what would certainly be a deep and worldwide recession and trust the market to rebound over time. This is basically drawing a line in the sand, saying to Wall Street and the banking industry and others that the cycle of boom and bailout (http://www.propublica.org/special/government-bailouts) is now broken, so in the future you better keep your houses in order.

On the other hand. Can we afford the heightened instability that a worldwide financial crisis might spawn? I've always thought that poverty is among the greatest foundational causes of militant Islam's rise. Would such a crisis aid our current enemy? Would it create new ones -- maybe even spawning a stronger gravitation toward communism in Russia or towards fascism in other countries? Would war in Iran be more or less likely?

The only thing I'm really sure of is this: Big wheels are poised to turn, ladies and gentlemen, and turn faster than they're designed to go. Let's hope we don't get caught in the machinery.

[Maggie]

Wall Street can create great wealth but it also must allow for failure as well.

My initial reaction to all of this is as follows: When the profits are good and the bonuses are huge – they are yours; however, when you take a risk and it doesn’t pan out – the loss is mine? Pardon me – but that is a bunch of bull.

“Regulation” is the problem here but not in the way people commonly think of “regulation” – the root of the problem is our representatives in Washington did in fact “regulate” in a manner of speaking. They attempted to influence the free market for what they thought be to the “common good” and it backfired big time (as it almost always will).

Maybe BostonWu can enlighten me – but my gut tells me let them die and take the pain – the American people voted for these representatives that created the situation we find ourselves in – and those same representatives are now running around trying to justify their existence.

I believe the market, if left largely to its own devices, will survive.

[RoyalShock]

I've come to the conclusion that four things need to happen:

1. The mortage companies try, in good faith, to work out new terms with those homeowners who are at least in a reasonable position to pay for their homes. Rework the loan to the new value of the home or something.

2. Once that process is complete, an amount much lower (say less than $100 billion) about be offered to help soften the blow.

3. Clean house (and Senate).

4. The new Congress repeal any legislation that allowed this to happen.

I don't want the economy to collapse, but everyone needs to feel some pain in this, including the taxpayers, so that maybe, just maybe, they won't be so eager to keep sending their representatves back to Washington. Fat chance, I know.

[BostonWu]

Wall Street can create great wealth but it also must allow for failure as well.

My initial reaction to all of this is as follows: When the profits are good and the bonuses are huge – they are yours; however, when you take a risk and it doesn’t pan out – the loss is mine? Pardon me – but that is a bunch of bull.

“Regulation” is the problem here but not in the way people commonly think of “regulation” – the root of the problem is our representatives in Washington did in fact “regulate” in a manner of speaking. They attempted to influence the free market for what they thought be to the “common good” and it backfired big time (as it almost always will).

Maybe BostonWu can enlighten me – but my gut tells me let them die and take the pain – the American people voted for these representatives that created the situation we find ourselves in – and those same representatives are now running around trying to justify their existence.

I believe the market, if left largely to its own devices, will survive.

I'm going to assume when you say "let them die and take the pain" you are referring to investment bankers and/or politicians. Let’s all well and good but you should also include Johnny Paycheck in that pain when he loses his job, is nearing retirement as his 401k/IRA is shot, loses his house, the house isn’t worth the 2nd mortgage, can’t buy a house or let alone get a loan for anything.

Again I think you’re missing the bigger point. This is not a fairness issue towards rich Wall St/banking executives/board members. Yeah it’s not fair and it’s not right what’s going on with these greedy bastrds along with corrupt DC politicians – but life is never fair.

The point is this: What is the best course of action for Johnny Paycheck? You can draw your own conclusions about what would happen in the event of no government interaction – in effect letting the capital markets run their course. I honestly believe it would spell global economic armageddon. When regular folks can’t secure a loan or place faith in cash deposits with banking institutions or place faith in the stock market for retirement savings then that is a scenario that I think we can all agree that we want nothing to do with. Any other alternative course of action would be better than that.

This thing got too big and effed up that there will be no perfect solution. People will get hurt and the job is to minimize the impact.

[Maggie]

I've come to the conclusion that four things need to happen:

1. The mortage companies try, in good faith, to work out new terms with those homeowners who are at least in a reasonable position to pay for their homes. Rework the loan to the new value of the home or something.

2. Once that process is complete, an amount much lower (say less than $100 billion) about be offered to help soften the blow.

3. Clean house (and Senate).

4. The new Congress repeal any legislation that allowed this to happen.

I don't want the economy to collapse, but everyone needs to feel some pain in this, including the taxpayers, so that maybe, just maybe, they won't be so eager to keep sending their representatves back to Washington. Fat chance, I know.

Nice thoughts but realistic?

1. Absent fraud, etc. why should the mortgage companies work out new terms with these homeowners – who either should have never purchased a home or bought far more than they could afford? Who will come to bail me out if I can’t pay my mortgage? Sell the homes and let the bank recoup what they can….the loss is theirs and theirs alone.

2. Why should any taxpayer money be attributed toward this situation? It is true, at least in my mind, that Washington should shoulder much of the blame – and therefore, so should the people that put representatives in Washington that allowed this to happen – but should I be punished? I know there is a bit of a contradiction there but….I don’t have an answer. However, I have seen the excesses – I know people that buy 1M dollar homes on $40K salaries – I have seen their arrogance – why should I bail them out? Bitter? Maybe so….but like I said no one would come to my rescue if I made a poor decision.
3. Clean house? I wish…..

4. Repealing any particular legislation will not solve this problem – this is about political ideology and theory – when distilled to its essence.