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.
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?
On Fri, 26 Sep 2008 06:48:47 -0700 (PDT), firstname.lastname@example.org 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
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.
"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.
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.
On Sep 27, 8:20ï¿½am, email@example.com 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
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.
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.
replace "roosters" with "cox" to reply.
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.
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.)
replace "roosters" with "cox" to reply.
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.
replace "roosters" with "cox" to reply.
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?
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.
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
The damned republicans are playing games.
McCain had to rush back to DC and it did nothing, except to block the
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.
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:
Blaming Pelosi is idiotic ... neither party wants "blame" for voting
either way (shades of WMD)
There probably aren't three people in Congress who really understand the
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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