yuo know all that money they want to use to bail out the shitty US economy...?

catefrances wrote:

hmm you know what? if you choose(and have no doubt that it is YOUR choice) to take up a mortgage or invest in the stock amrket you must enter into such transactions with your eyes wide open in full acknowlegdement that what you are doing is basically gambling. when i go to the track theres no fallback for my lack of skill, knowledge or expertise. and when my horse comes in stone motherless last, then stiff shit, i lose. and hopefully i learn something. this is the price you pay for living in a capitalist society. you want to reap the rewards then you have to be prepared to suffer the consequences of bad decisions.

You're missing the point of my question... I'm not talking about people who got into mortgages that they can't afford, or people who made investments and got burned, etc. I'm talking about if we let this whole thing go with doing nothing, and credit freezes, innocent people won't be able to get car loans, school loans, business loans or basically any other form of credit.

I guess it's all moot anyway, the bill passed both the house and senate.

mammasan wrote:

I will say it again, I DID NOT SAY THAT THE BAIL OUT WAS A GOOD IDEA!!! I was responding to a post that stated that we should just let the shit hit the fan. That, in my opinion, is not an option because inaction is 100x worse than the bail out.

i never suggested you did....and the post you quoted WAS MINE, thus my response. you asked me if i was aware of the ramifications of doing nothing....and i answered. no, i don't. and i then went on saying it does not seem to me that there is a concensus amongst economists on that question either.

so if you are against bailout and against doing nothing...what are you suggesting be done? that's my question....b/c while i am not saying either option is the absolute best choice, it just seems to me no one knows what is the 'best' idea.....so i just can't see throwing $700 billion dollars at a problem, $$$ we don't have....and don't even know if it's the best choice. so sure, i am totally open to hearing other options besides bailout or doing nothing.

decides2dream wrote:

i never suggested you did....and the post you quoted WAS MINE, thus my response. you asked me if i was aware of the ramifications of doing nothing....and i answered. no, i don't. and i then went on saying it does not seem to me that there is a concensus amongst economists on that question either.

so if you are against bailout and against doing nothing...what are you suggesting be done? that's my question....b/c while i am not saying either option is the absolute best choice, it just seems to me no one knows what is the 'best' idea.....so i just can't see throwing $700 billion dollars at a problem, $$$ we don't have....and don't even know if it's the best choice. so sure, i am totally open to hearing other options besides bailout or doing nothing.

My suggestion would be to A) put a 2 year freeze on all foreeclosures and allow those individuals the opportunity to apply for government loans to pay off their current mortgage. these new government backed mortgages will be for the original amount of the loans but with lower monthly payments so the owners can retain their home and the banks can recoup any losses. I would infuse a large portion of that $700 billion dollars into the Small Business Administration. This way small to medium sized business can have a place to go to for the loans and credit they need to keep their companies running and people employed. This will also help spur true capitalism as smaller or medium sized companies will now have to opportunity to take over the void left by larger bankrupt corporations. C) and probably the most important would be to invest in a new economic infrastructure. Every since the US' manufactoring sector started to disappear our economy has been supported by debt. The American consumers ability to live beyond their means has been the saving grace for the US economy. As we have seen recently we cannot sustain a viable economy much longer this way. We need a new base to support our economy. I believe that a "green" industry, like the one mentioned by Obama, is a good idea. Not only will it help solve our dependency on foreign oil but it would create a whole new business sector to help support and grow our economy.

I liken our economy to that movie that was released some years back and has become somewhat of a metaphor for keeping up a facade...."Weekend At Bernie's."

Our economy is basically this affluent middle-aged party animal who one day just croaked. And our government is trying to fool Americans and the rest of the world into thinking that it's still breathing.

The trouble with this $700 billion bill is that all it really does in the grand scheme of things is wave Bernie's arm in the air so that passerby can say "Hello" back and think everything is hunky dorey.

BTW, the reason why prime borrowers are defaulting on their loans is because they are sick of making payments on a debt that is significantly larger than the value of their homes.

And the reason why their debt is significantly larger than the value of their home is because subprime borrowers, unconventional loans, and low, low interest rates inflated home values into the stratosphere, which is inherently dangerous -- and any kind of government intervention to maintain that level of inflation is just a really bad idea to put it plainly.

catefrances wrote:

you tell me ohno dont be silly the abnks arent getting any money, the government is going to purchase securities(from?) and sell them at a later date. and then you say these securities area fucked up investment. kinda makes them an oxymoron then doesnt it?

Catefrances, I am thoroughly impressed by your analysis. You have demonstrated a fundamental understanding of a free market economy -an understanding that might very well escape even those who have formally studied in the field of finance/economics.

Yes, it is an oxymoron. That is, if these securities were truly worth the $700 billion that the government is handing over for them, then the banks would have no problem selling them on the market.

And therein lies the problem. What exactly is market value in this instance? It goes without saying that the government is going to pay above market value. Otherwise, it wouldn't make sense for the banks to rely on the government to bail them out.

So, in essence, a great deal of money is actually being simply "handed over" to the banks. Exactly what that amount really amounts to is definitely going to be difficult to determine.

But, I think Drifting's point is that real estate isn't exactly a fleet of Ford Pintos. Real estate will always carry some measurable worth no matter how sluggish the economic environment. And that real estate will be at the government's disposal to do with as it pleases, which does detract from the notion that the whole $700 Billion is a hand out.

catefrances wrote:

well my point was why bail out a group that will in all likelihood just piss it all up against the preverbial wall. at least my way some definite good will come out of it. plus, just imagine how much money joe average can sink into the capitalist consumer system when hes not got a mortgage to worry about.

The assumption is that the banks will use that cash to unfreeze the credit lines upon which many small businesses rely in order to make payroll among other crucial expenses that are involved with running a business.

I heard an opinion like yours earlier today. Someone said, "What did the banks do with all those profits?"

The answer is that the profits immediately went to shareholders and executive salaries. The rest was leveraged into more lending arrangements.

And that is a typical thing for corporations to do. That is, any funds left over after shareholder obligations and salaries is usually invested in the company's operations. A bank's main operation is to lend money.

And that's why those billions would actually do more for the economy in the hands of bankers than in the hands of the average Joe at this point in time.

When there isn't a credit freeze, then, yes, the average joe would certainly do a better job of stimulating economic growth through good old consumer spending. That is, after all, what we're put on this earth to do --spend.

As for relieving average joe of his mortgage woes...well, do you believe that it is fair for people who did not over-extend themselves to purchase a home?

Please keep in mind that the housing industry was inflated to insane levels. People were paying upwards of a half million bucks for crappy shitty old ass houses that shouldn't have sold for more than a quarter million.

If you suddenly pay off all of those inflated mortgages with government hand out money, you essentially make it all the more impossible for other average joes to reasonably afford a home of his own someday.

First of all, I just want to say it isn't just the US economy that's going to suffer. The whole fucking world invested their TRILLIONS of dollars in our stupid housing market.

And the whole fucking world LOST trillions of dollars. As of right now, no one really knows how bad the damage is, but one thing is for sure, and that's that the damage is going to be really bad for everyone.

So, in summation, I wouldn't say "the shitty US economy." A more correct term is the soon-to-be-fucked world economy.