Bailouts Options

[woody]

Since i don't see a topic for this. What do you all think of the bailouts going on right now?

[dauss]

I don't know what will work. Throwing money at this crisis won't fix it, maybe delay it. Doing nothing will be even worse. Saying that we should let these institutions fail is not an option, because it will likely cripple the entire US economy.

[nickluto]

I don't know what will work. Throwing money at this crisis won't fix it, maybe delay it. Doing nothing will be even worse. Saying that we should let these institutions fail is not an option, because it will likely cripple the entire US economy.

Well, technically speaking, it is entirely possible that in a few years after the economy starts to bounce back, they could end up selling the packaged mortgages for more than they bought them for.

Think of what they're doing in the bailouts as quarantining these terrible packaged sub-prime loans, or attempting to stop the hemorrhaging economy by isolating the bad debt. If everyone feels secure about freezing the loans and the economy recovers from its economic ills, then when everything starts looking up, it's possible for them to start selling the debt back to the investors in the free market and recoup or even make money off of the investments.

They could even make enough money to pay off some of the interest for the national debt, you never know.

Oh, and allowing them to fail is not really an option. Letting one institution go under by itself, and thats okay, but letting AIG, MLynch, Wamu, and Lehmen Brothers all go down at the same time and you are essentially losing about 20% of your financial lending business which, along with housing, is the backbone of the American Economy.

This all started happening, fwiw, when Clinton and the Dem's pandered to the poor voters by urging banks to lower their lending requirements to increase household ownership. As a result, banks started making shittier and shittier loans because they figured the government would have their backs...they were doing their will anyway. And here we are...