Bailouts Options

[cmac]

well put.

[nickluto]

New development. Maybe this is why McCain went to Washington.

But there were fresh signs of trouble in the House Republican Caucus. A group of GOP lawmakers circulated an alternative designed to attract private capital back into the credit markets with less government intrusion.

Under the proposal, the government would provide insurance to companies that agree to buy frozen assets, rather than purchase them directly as envisioned under the administration's plan. The firms would have to pay insurance premiums to the Treasury Department for the coverage.

"The taxpayers haven't done anything wrong," said Rep Eric Cantor, R-Va., adding that rather than require them to bear the cost of the bailout, the alternative "pretty much puts the burden on Wall Street over time."

Rep. John A. Boehner, R-Ohio, the minority leader, was huddling with McCain on the rescue. Earlier, asked whether the GOP presidential nominee could corral restive Republicans to support the plan, Boehner said, "Who knows?"

And Rep. Spencer Bachus of Alabama, the only House Republican in the bargaining meeting, did not directly say he agreed with the other lawmakers who emerged describing an imminent deal.

"There was progress today," said Bachus, the senior Republican on the Financial Services panel.

http://www.breitbart.com/article.php?id=D9...;show_article=1

At least someone is trying to keep taxpayers from fitting the bill if at all possible.

[Hartmann]

New development. Maybe this is why McCain went to Washington.



http://www.breitbart.com/article.php?id=D9...;show_article=1

At least someone is trying to keep taxpayers from fitting the bill if at all possible.

I completely agree.

There are very limited options but this one is much better than $700 billion that the taxpayers have to make up for.

The interesting thing is that the bailout amount could be a good investment over a long enough period of time. I think the return is listed at around $2 trillion. But, to me, that isn't important at this time. What's important is fixing the problem without forcing taxpayers to do the leg work.


Your previous post was great.

[Oasis]

So what is Plan B, if the bailout is unsuccessful?

Another great depression?

[Hartmann]

So what is Plan B, if the bailout is unsuccessful?

Another great depression?

A massive recession, then a depression.

Lending would basically come to a screeching halt by all major investment firms, meaning people who deserve loans will not get them.

Either way, I think we are going the way of Europe, smaller homes, multiple generations in homes, etc.

[Dogmeat]

I think we need get off this fucking planet. Period.

[woody]

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...

So what is Plan B, if the bailout is unsuccessful?

Another great depression?

blaming bush

[Hartmann]

I think we should blame the people responsible for this directly.

http://online.wsj.com/article/SB122212948811465427.html
http://www.bloomberg.com/apps/news?pid=206...id=aSKSoiNbnQY0

Punish them by voting them out.

[Seeker]

the bailouts won't work

oct. is going to be monumental, the largest collapse and depression in history

prepare now

[impala454]

Eh life will go on. People will keep buying plasma TVs & iPods. Comparing this to the great depression is stupid. People aren't going to sit around without food to eat or jobless because of these companies. Just yet another case of the media "bad news is good news" beating this subject to death.

[pysex]

Right. It wont work long-term if the problem of predatory lending isn't addressed.

There needs to be reform instituted by the federal government and implemented at the state level that structures lending contracts of all types in a language that fully-discloses the expectation on both parties. Everyone knows it's the fine print that no one reads that ends up screwing them. This needs to be fixed. It might be helpful if the government were to require every bank of a certain size to have on staff a person who is purely on salary and only responsible to the state government who's job it is to explain, in laymens terms, what the terms of every lending contract or credit application entails to discourage predatory lending practices.

Also, consumers need to wise up. The common conception tends to be "well, If they offer me this line of credit, they must think that I will be able to pay it back." No. The credit card companies of old who you used to be able to trust have changed into profit-hungry mega-corps. They want your money. They WANT you to not be able to pay, because they make more money that way. Remember, they are private corporations, too and are driven by the profits to make their stockholders richer. Credit is no longer something that must be earned, like it was with your mothers and fathers. You used to be taught you need "Capital, capacity' and commitment [to repay]" -- the three C's -- to get a line of credit. Now all you need is a social security number.

Predatory lending on college campuses is legendary now. They give you a free shirt, frisbee, or pizza whatever for signing up, all for the price of putting YOUR information into MULTIPLE credit card databases. Lo and behold, a credit card comes in the mail. Kids don't think about the long-term consequences of interest payments when they buy their new PS3, Plasma screen, or Xbox360. They buy stuff, have only a part-time job and tend to get in way over their heads. Most times, their parents try and bail them out, but many many times they cant and are in debt forever.

In addition, credit card companies spend BILLIONS of dollars annually to lobby and get the bankruptcy laws changed so that you need to have a certain amount of debt to file for it. This way they can keep charging you until you die.

In a whole, society needs to return to the roots of responsibility and spending within your means. Banks need to stop pushing customers to get into adjustable rate mortgages with principal payments that are multiple times higher than the customer can afford. Consumers need to wise up and understand exactly how a loan works and what is expected of them to ensure that they can afford future payments, and the federal government needs to stop encouraging banks to make bad loans under the guise that they need to increase home ownership to satisfy their constituency.

And society needs to return to the roots of responsibility not only fiscally. It's ridiculous how much people are allowed to blame on others.

You spill hot coffee on yourself? Sue the vendor for not warning you.

You get pregnant by not using condoms or birth control? Get an abortion.

You aren't happy 100% of the time in your marriage? Just get divorced.

You cant afford your house because you are living outside your means? Just declare bankruptcy.

You want a flat screen TV but cannot afford it? Get a credit card. Everyone else is in debt up their nuts. It's cool.

Don't want to take the time to understand your mortgage contract? Oh well, these people are probably trustworthy, just sign on the X and hope it works out.

There's a quick fix for everything nowadays and many people do not want to make the realization that they acted incorrectly in the past, so they are taking with the path of least resistance and most convenience, regardless of the long-term consequences.

Im not putting any moral qualifiers or judgements on any of the above decisions, I am just positing that as a whole, when taken together, it creates a culture of wreckless irresponsibility.

/rant over.

that's america for you...

the land of irresponsible opportunity!

[Spectatrix]

Great post, nickluto.

I think I learned some valuable lessons from growing up in a house with persistent, mounting credit card debt and daily calls from collection agencies. I didn't get a credit card until I was almost 21 and even then, I used it responsibility. I did carry a balance when I got out of school and was jobless for a couple of months, but I paid it off within 2 or 3 paychecks once I got a real job. Paying off my car loan followed shortly thereafter (paid it off in 2 years when the loan term was for 4).

Nowadays, I'm debt free. No school or car loans, no mortgage (yet). I use an AmEx rewards card (no annual fee), but I've never carried a balance. Better yet, I'll have earned around $200 cash back rewards for the year.

My bf and I may be buying a house sometime next year (assuming it's not completely impossible to get a mortgage), but our goal is to have a mortgage payment that's around 10% of our gross income, largely so that it's still affordable if one of us goes back to school full time.

[blaarg]

I think we need get off this fucking planet. Period.

This is Stephen Hawkings solution.

[blaarg]

Eh life will go on. People will keep buying plasma TVs & iPods. Comparing this to the great depression is stupid. People aren't going to sit around without food to eat or jobless because of these companies. Just yet another case of the media "bad news is good news" beating this subject to death.

Agreed.

[impala454]

Great post, nickluto.

I think I learned some valuable lessons from growing up in a house with persistent, mounting credit card debt and daily calls from collection agencies. I didn't get a credit card until I was almost 21 and even then, I used it responsibility. I did carry a balance when I got out of school and was jobless for a couple of months, but I paid it off within 2 or 3 paychecks once I got a real job. Paying off my car loan followed shortly thereafter (paid it off in 2 years when the loan term was for 4).

Nowadays, I'm debt free. No school or car loans, no mortgage (yet). I use an AmEx rewards card (no annual fee), but I've never carried a balance. Better yet, I'll have earned around $200 cash back rewards for the year.

My bf and I may be buying a house sometime next year (assuming it's not completely impossible to get a mortgage), but our goal is to have a mortgage payment that's around 10% of our gross income, largely so that it's still affordable if one of us goes back to school full time.

Kudos to you for your responsibility, but in this bailout case it doesn't really matter whether the population has debt or not, just whether or not they're actually making payments on that debt.