Bailout (politics)

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A guy walks into a party, and asks a woman "Would you have sex with me for a million dollars?" She says sure. And of course he doesn't have a million dollars. But the decision is made, they are going to get it on. Now, it's just about deciding how much is the price.
I have that sense with the bailout for Freddy and Fannie. My sense is the bailout is a done deal. The question is only the details. What's the end result? The Fed, with all the power of the government, will take large ammounts of my money, and give it to someone else. It's not roads, bridges, or even pork barrel construction projects. Just a big transfer of money.
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Christopher A. Young
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On Sep 26, 9:00 am, "Stormin Mormon"

It's not exactly giving the money away, which unfortunately is the impression most people have because the media has not done anything to explain it. Even Bush didn't do a good job of explaining it. What they are going to do is conduct a reverse auction for loans that are delinquent, but have not defaulted on. That means the govt will put up say $50 bil, and have insitutions make bids of how many of these loans they are willing to turn over for that amount.
Ultimately, the govt winds up owning the mortgages and will likely be able to restructure and eventually make good on a good portion of them. Exactly how much they will recover remains to be seen if the plan is put into effect.
If you don't like this plan. what exactly is your proposal? Do nothing and risk a depression?
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On Fri, 26 Sep 2008 06:48:47 -0700 (PDT), snipped-for-privacy@optonline.net wrote:

It has to do with banking and bankers.
There are rules and standards that have long existed for the banking industry. You can read about them, or go to college/univ., where they still teach them.
The famed investment bankers of wall st. broke virtually all the rules. Now, two of them, Paulsen and Bernanke, want the fedral gummint to purchase their bundles of broken rules and mutant loan paper.
The fedral gummint will likely do so. 'Tis an invitation for them to continue mutant practices in investment banking. And rob the public.
It's like hiring The Devil, at a ridiculously exorbitant salary, to extinguish The Devil's own fire, assuming he will never again ignite. But, of course, his very nature ...

They packaged the derivatives, etc in such a mutant manner, noone really knows what they might be worth.

Traditionally, these ("free") markets have their own ways of dealing with those that act irresponsibly. The only difference between the traditional solution and the proposed insanity is influence peddling and buddy-buddy stuff.
I've not even heard the likes of Bush, etc mention "depression": not certain why you would. Or why you'd think it would be avoidable. Recessions are part of the normal and expected business cycle.
The "bailout" violates the very free-market principles that these folks purportedly worship. If that doesn't tell you something, you sho'ly, sho'ly aren't listening.
Puddin'
"Take Yo' Hand Out My Pocket (I Ain't Got Nothing What Belongs To You)!" - Rice Miller, who probably never even _heard_ of GW Bush, John McCain.
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Do you really expect the president to use word "depression" to make things worse and start a panic? I used the word because this clearly is the worst financial mess that we've had since the Great Depression and the possibility for this to spin out of control is very real. Washington Mutual experienced a net withdrawal of $16Bil in deposit from panicked customers with money in their bank in the last 2 weeks. It's not too far fetched to imagine that spreading. With credit drying up, banks failing, it's not too far fetched to imagine a potential scenario where worldwide investors start to panic, pull all money out of US institutions, start a panic in govt bonds, etc.

It's widely recognized that the Great Depression was so severe and lasted so long because both the FED and the govt refused to take the steps as it was beginning that would have mitigated it. In fact, they what little they did was the wrong thing. Just about everyone agrees that this is no ordinary recession.

I agree it's not desirable for the govt to do this. I believe in free markets to the fullest extent possible. But when the choices are either doing something that could prevent a severe recession or worldwide depression, or just standing by and letting this spiral, I'm not going to let the country go down in flames because of principle. It's not the first time this has been done. And in the major prior cases that I can think of, ie Chrysler, Mexico, the govt wound up getting all it's money back or actually turned a profit. Also, consider that even if this just turns into a severe recession that lasts several years, the resulting loss of tax revenue to the govt could easily approach the $700Bil.
We've spent $1 trill on the war in Iraq. It seems to me, coming up with $700Bil for this, with a good chance that much of the money will be recovered, isn't unreasonable. If you're against this plan, as I asked before, what is your plan? From the above, it sounds like it's do nothing and let the chips fall where they may.

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On Sep 27, 8:20�am, snipped-for-privacy@optonline.net wrote:

well a few not nice thoughts:(
Our government is like a family living on credit cards, maxing them out, and desperate to get more to fix things.........
till they cant get any more and bankruptcy is all thats left.
congress and president have wasted our money in so many ways
this bailout will decrease the value of money, gasoline and everything else will skyrocket in a inflationary spiral just as memorable as this econoomic dump.
plus the rush to fix it is bad, rarely is a panic fix a good one.
another possiblity is raise FDIC insurance retroactively to a couple million per person, and let things sort themselves out.
with each bailout were told things will be fine, but so far all the bail outs havent helped.
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Exactly! Let the market adjust itself. But in the meantime, quit passing legislation that coerces banks to write loans to unreliable people.
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Christopher A. Young
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Stormin Mormon wrote:

yes that is one point that I see people glossing over. they blame Republicans for allowing deregulation (which is fair) but they also need to blame to some extent those on both sides of the aisle those who supported legislation that encouraged "increased homeownership" among those who wouldn't have been qualified under the "old rules" - when the "old rules" were what kept the housing market stable. So of course the financial institutions were playing hot potato with those loans, they knew that they sucked and so should we have.
nate
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If everyone at these institutions knew so much, why did they get stuck holding the sub-prime loans. For example, if they knew the loans were going to go into default, Lehman Bros and Bear Stearns could have sold them all off to less sophisticated buyers.
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snipped-for-privacy@optonline.net wrote:

I doubt that Lehman and BS were the originators of these loans. They likely ended up holding the bag after they'd been repackaged 3 or 4 times into "AAA" securities and nobody dug too deep (or else they knew what they were getting into, figured on getting out before it hit the fan, and misjudged.)
nate
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Nate Nagel wrote:

Forgot to mention, in the interest of full disclosure - I did buy a house with only 10% down, which isn't the "traditional" way to do it. Why? Because I live just outside of DC, so a 20% down wasn't happening - it could take decades to save up that much cash while still paying rent. So there are cases where "nontraditional" loans do help out responsible people. I did, however, insist on a 30 year fixed and am paying off my HELOC ahead of schedule before it blows up in my face.
nate
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I don't get it. If I won a lottery ticket for $7 million, I would take about a month to get a CFP to advise me on the money. These guys find out about this on a Thursday and need to get it solved by Monday?
Oh, sure, I know they want it done before opening markets Monday, but if they screwed up so bad on managing $700 billion previously, what makes them think I want to fork over another $$$ so quickly?
Unbelievable.
Steve
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snipped-for-privacy@optonline.net wrote:

They relied on hope. While any sane person knows that "hope" is not a strategy, sometimes it's all that's available.
Actually, they had no choice: either make the sub-prime, no money down, don't look at income, employment history, or credit rating or be sanctioned or closed by federal regulators.
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From what I'm hearing, Congress mandated they take a bunch of bad loans. And some public action groups were protesting and making their lives miserable. It's not a pretty picture.
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Christopher A. Young
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Some of that, but a large part was just the rocket scientists coming up with all these new products few (if any) understood but most used. I have always thought that our financial system would benefit from making two rules absolutely iron-clad. You couldn't sell a new "derivative" or other financial instrument unless it could be explained to, and understood by, a 10-year old in under 5 minutes and (2) anytime someone touting a new instrument says it is so brilliant that it doesn't follow the old rules, then the sale of that instrument should be immediately banned.
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The damned republicans are playing games. McCain had to rush back to DC and it did nothing, except to block the progress. He's making calls to House memebers and they don't listen to him. Looks like he's ineffective. Meanwhile, the public is getting screwed - - same old thing.
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Yeah, he should have signed the bill that would have given millions to ACORN and other Democratic political agencies. That would have showed them.
Steve
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Let's see, McCain came back to Washington and so did Obama. Seems being Senators and their parties candidates for President, that is exactly where they should be when this important debate was going on. Harry Reid even held a press conference last week and demanded that McCain go on record stating his position on the bailout, because without him, the Democrats would not act.
So, he goes to Washington, and now, according to the Dems, it's supposed to be a bad thing. Had he not returned to Washington, they'd be saying he doesn't get it and doesn't give a damn.
BTW, for a look at a real class act, take a look at the speach Speaker Pelosi gave in the House yesterday just before the vote on the bailout. After everyone from both parties tried to put together a plan that could get passed and thought they just barely had the votes, Pelosi gave a vitriolic paritsan speach on the floor of the House, blaiming the whole sub-prime situation on Bush and the Repulicans. This from the woman who proclaimed a new era of bi-partisanship when she became Speaker. Clearly she figured she would play politics and if the whole thing went down the drain and took the economy with it, she'd just blame that on the Republicans too.
If you want to see what she actually said, here it is. Ask yourself if this is the speach of a patriotic American leader in a time of crisis or a rabble rousing partisan bitch:
http://www.breitbart.tv/html/184803.html
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clipped

either way (shades of WMD) There probably aren't three people in Congress who really understand the ramifications of what they are to vote on, but the overnight markets are making it pretty clear. The idiots who spent ten years sniffing out semen stains on blue dresses are the ones who brought this mess...........I don't want a moralistic moron in the White House. Or the other house.
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So, do you think the speach Pelosi made is appropriate for a patriotic American leader in a time of national crisis? yes or no?
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On Tue, 30 Sep 2008 05:27:30 -0700 (PDT), snipped-for-privacy@optonline.net wrote:

Oh, brother!
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