US Money problems

[tonyc1]

I Just heard a bloke on our radio say that with the amount of money they want they could give every resident of the US a million dollars. That would be appreciated by some of you blokes and do you reckon it is a good idea?

Tony.

[Hilly]

I Just heard a bloke on our radio say that with the amount of money they want they could give every resident of the US a million dollars. That would be appreciated by some of you blokes and do you reckon it is a good idea?

Tony.

Nope, not a good idea at all! No bailout! If the little guy gets to suffer, then let the big guy suffer right along side of them.

Wallstreet and all it's corruption can go away as far as I'm concerned.

[$$hobby]

i dont think its a 1M per person.

the thought is nice, but unrealistic. Most likely the fat cats will get it and figure out a way to "enhance" their salaries/beneies/ect. also, there will probably be nothing in the bill to keep it from happening again or any oversight. even if there was oversight, i doubt the people policing would have any idea what was going on or have any power to do anything if there was.

[TwinOaks]

I PM'd this thought to another member:

No bailout- the whole system needs to hit a brick wall at high speed just to get a check on who's driving. Also, this type of failure needs to happen, just like wild fires burn out all the scrub vegetation so that the trees can grow stronger.

[Jordan]

On the News hour show an interview this evening with some talking head in DC let it slip that the bill was not really a bill, just a 3 page memo outlining the bush bailout. You can be garun-freakin-teed that there will be no oversight, accountability or taxpayer protection in anything that gets passed. Chalk another one up for the powers that be. I am expecting my 55 gal. barrel of KY any day now delivered COD of course.

[RandyScott]

There is a very old joke in the US, "I am from the government and I am here to help. Trust me!". Only one part of that statement is true!

The initial draft of the bailout plan, if the news media reported it correctly, called for the Secretary to have unlimited, unfettered, unreviewable control over the entire bail out plan. He instantly would become the 'CEO' of a goverment organization with greater resources than some of the oil companies with "no Congressional oversight" of his actions.

This situation, i.e., the 'credit crunch' is not new! It occurred in the mid 1970's and was referred to as "the period of dis-intermediation" if I recall correctly. The Viet Nam conflict was winding down and inflation was rising to pay for the vast sums of money expended (sound familiar?). The US Treasury raised the money by raising the interest rates paid on US Treasury Notes. This caused people to withdraw their money from (at that time the typical savings institution) the local Savings and Loan Associations to buy US Treasuries. The US Treasuries paid a lower yield because they were 'guaranteed by the faith and credit of the US Government'! This caused the lenders needing the money to compete against one another for the funds and they then paid a higher yield to compete for deposit funds. Investors demanded a higher rate of return because the S&L's could not meet the same guarantee on the investment as offered by the US Treasury. So the money flowed out of the 'tradional savings and loans assocations'. This cause the S&L's to not be able to meet the Federal Reserves mandates for capital requirements. So, the S&L's and other banks then had to reduce the funds offered to their clients or reserve the funds for their 'best' clients. The result was a 'credit' squeeze. Not precisely the same scenario as now but somewhat familiar as to the effect. Businesses were closing, layoffs were occuring, etc.. Coincidentally, the 'Oil Embargo' occured in 1974 and this 'little' shortage we have in the Southeast USA is nothing compared to the vast shortages experienced then. We don't have an oil problem now. We have a supply problem. In 1974 cities were turning off street lights, automobile dealerships were turning off the lights illuminating the cars at night, the shopping centers turned off the lights in their lots after closing hours, one could drive down the street and it was 'dark'. Go past any shopping mall at three in the morning right now and every damned light is on!

The most important question to ask about the 'bailout plan' is who will benefit? See my opening statement! The premise is that the Federal Government (backed by the ability of the US Federal Government to enact and raise taxes to be paid by the American Taxpayer and his children and grandchildren) will 'lend the money' to the 'financial institutions' to 'buy the bad debt' and it will be 'held for a few years' and when 'market has improved' the 'properties will be disposed of' and 'the goverment will make money' and the "taxpayer will not have been stuck for the check"! Refer to opening statement.

So, let's see what we have here... A system (the American mortgage correspondent banking system) that 'evolved' over a period of 15 -20 years into reduced credit requirements, also known as 'easy credit' (not only mortgages, but automobile loans, credit cards, home equity loans, etc..) that produced such mortgage products derisively referred to as Ninja (No Income, No Job, No Assets) loans within the mortage industry. As the financial industry realized the money, yes it was that old devil - Greed - that helped grease the skids on this debacle, lots of money, fortunes, that could be made. Then the modern day 'Robber Barons' of the 21st Century - banks and financial institutions - stepped in to finance the machine. Do NOT feel sorry for the institutions! The people that made the decisions were paid fortunes over the years and became enablers to perpetuate the 'business model'. Don't feel sorry for the stockholders as they benefitted from the stock dividends paid and the increase in the share value. Don't feel sorry for the homeowner that, knowing he had to 'stretch' to get in the house but was counting on the 'increase in market value' to 'bail him out' when it was time to sell. Frankly, a lot of people gambled and lost. Now, I know someone is going to flame me - I am speaking in generalities here and not into individual specifics. I was a Collection Manager for a Mortgage Company in a former life and I know for a fact that bad things happen to good people. Again - generalities.

The 'debt' of $700 Billion is NOT a specific yet. It is a generality. It is too good an opportunity for the 'Robber Barons' to pass up. Everyone will be bellying up to the bar looking for his free drink! No Congressional Oversight! My, My... the lip smacking, the $ signs dancing in their heads, the year end bonuses they thought were gone.... It will be a bloody feeding frenzy! Are the "$700 Billion in assets" at market value or or they at their "current value". An example: A loan for a single family residence of $1 Million. The original loan appraisal was for $1.25Million. The 'current market value' is $900,000. The property is expected to be held for 4 years and, since it is a luxury class residence in hurricane prone Florida, the maintenance and insurance is expected to be $100,000 per year. Would the lender take $500,000 right now and move the property and avoid the pain of preserving, securing and marketing the property for potentially the next 4 years? Or under a bail out plan would they just sit on their hands as they no longer have any money in the property and it is not their loss? If so, that loss gets eaten by the US Taxpayer, his children and his grandchildren. There is no such thing as a free lunch. Someone has to pay every time. See my opening statement.

This whole plan is based on the future being bright and rosy, all the income projections come true, the war in Iraq is over and the financial drain stops. It is really amazing in that the Bush Administration has yet to hit their income projections that were put forth in his first term to secure the tax reductions promised in his campaign 8 years ago, the Federal deficient is growing and now, as if by magic, there is another $700 Billion to be doled out!

This is a very complicated issue that has shaken the American financial markets to the core and that ripple went around the world. It should take intense soul shaking debate in the House and Senate to reach an agreement. This is not something to do ill advisedly or quickly regardless of the 'political pressure' of a 'Presidential campaign year'.

Now, let me address the comment in the original post: I heard something similiar in casual conversation but don't recall the specifics. There are approximately 300 million US citizens. Well that includes children too. I think the average family size is 2.5 people so that is 120 million households. 700B/120M = $5,833,333 per house hold. But it gets better: approx 60% (I think this is pretty close, could be wrong though!) of the households are home owners. That brings the amount to $9,722,222 per home owner! Kinda sobering isn't? Especially when the average home price in the USA is a LOT less than $9,722,222.

A lot of the debt is in construction, land acquisition and development loans. One builder locally went under with a debt load of $120 million. This type of 'asset' is the hardest to work out. The inventory of unsold building lots will take years in some localities to absorb. I heard a news cast recently that the inventory of unsold condo units in Miami constitutes a 5 year inventory.

Is this thing resolvable. Yes it is. I believe the longer it takes to come up with a 'workable plan', the better the plan will be.

One last little USA saying: The American voter often gets the goverment he wants, not the government he deserves.

Refer to my opening statement.

[wildrose]

Well thought out reply Randy!

I think the bailout is a bad idea, for what others here are saying. It's not US that will see the money, it's the bigwigs and corporation owners.

[Ian]

I Just heard a bloke on our radio say that with the amount of money they want they could give every resident of the US a million dollars. That would be appreciated by some of you blokes and do you reckon it is a good idea?

Tony.

Tony, don't be a trouble maker You'll get me all worked up again. Wouldn't be a million, more like a couple of thousand, but if everyone did get a million, either everyone would quit their jobs (we have plenty of folks here getting money for staying home as it is) or everything would go up in price a thousand times. So, no, it wouldn't be a good idea, or just give me a million as a test case, and I'll let you all know how well the plan works.

[tonyc1]

Tony, don't be a trouble maker You'll get me all worked up again. Wouldn't be a million, more like a couple of thousand, but if everyone did get a million, either everyone would quit their jobs (we have plenty of folks here getting money for staying home as it is) or everything would go up in price a thousand times. So, no, it wouldn't be a good idea, or just give me a million as a test case, and I'll let you all know how well the plan works.

You could buy a lot of new leatherworking gear with a Mill, Ian.

[hiloboy]

oh ya lets all suffer to gather.. thats sounds like a lot of fun.. hell with a no vote yesterday my IRA THAT I WORKED ALL MY LIFE FOR. Went out the door.. whating to made a point.. that we don't like fat cats make lots of money.. say maybe i can come take my retirement at your house.now that i don't have any thing left in my IRA.. Or when your company you work for can't make payroll any more..Oh ya,,then we can all get to gather and talk sh#% about our GOV.and the fat cats and how much fun were having suffering to gather.. I THINK ALL THE FAT CATS IN OUR GOV. AND WALL STREET SHOULD GO TO JAIL!!!!

Hell even it i could save whats left of my IRA (take it and run)I can't because if i do our Gov. will tax the sh#% out of whats left....

Edited October 1, 2008 by hiloboy

[celticleather]

Unfortunately many of the fat cats - both from the US and the UK - are already in the Bahamas, watching the faint glow on the horizon as the wreckage burns!

[TexasJack]

The mortgage mess is just ONE 'bailout' being proposed. There's also a $25B package for the auto industry.

I have no problems with trying to get factories working or protecting people's homes.

I have BIG problems with handing MY money over to the scum that sucked the life out of those companies and letting them p*** it away. The politicians are scrambling to help only because they were tied directly to those thieves. They can't prosecute them without indicting themselves and they SURE don't want to lose the cash they siphon off.

What's funny about the whole thing is that the news media is doing their usual bit of completely distorting the situation to favor their particular agenda. But even to the average working folks, it doesn't make any sense!

Meanwhile, the Buffalo Bills are 4-0. The universe is completely out of alignment. That explains the bailout and why I lost money in the football pool. FEMA trucked in ice (to Houston) from New Jersey and then (upon discovering that the power was back on) dumped it in a field. The Government is Here to Help you! (Much like an in-law....)

[Ian]

oh ya lets all suffer to gather.. thats sounds like a lot of fun.. hell with a no vote yesterday my IRA THAT I WORKED ALL MY LIFE FOR. Went out the door.. whating to made a point.. that we don't like fat cats make lots of money.. say maybe i can come take my retirement at your house.now that i don't have any thing left in my IRA.. Or when your company you work for can't make payroll any more..Oh ya,,then we can all get to gather and talk sh#% about our GOV.and the fat cats and how much fun were having suffering to gather.. I THINK ALL THE FAT CATS IN OUR GOV. AND WALL STREET SHOULD GO TO JAIL!!!!

Hell even it i could save whats left of my IRA (take it and run)I can't because if i do our Gov. will tax the sh#% out of whats left....

Don't panic, bro, even the very worst economic situations don't last that long. Unless you're going to retire in the next year or two, you'll be fine. The bailout will pass, and then we can all be treated to years of stories of how the dough is being looted by assorted scumbags. I bet they're salivating, as we speak, thinking about all the scams they can perpetrate to get their hands on as much of that big cash pile as they can. I want to buy stock in a Swiss bank - their business will be booming shortly.

[Jordan]

I figured the universe was still hanging in there because the Vikings are doing what they always seem to do. Seems they took lessons from the Rams when they were in LA. I'm glad I don't bet on football.

[celticleather]

If it's any comfort at all, last week I saw this very classy boat in the harbour at Puerto Pollensa in Majorca. I couldn't resist the picture! Perhaps it shows that the fat cats don't always get their own way? Or is he selling it to buy a bigger one?

Edited October 1, 2008 by celticleather

[WVTriker]

I believe the amount was $10,000 per person, not $1 million. Never the less, ash can the bail out, time for folks and business to be responsible for their own actions. But if they INSIST in the money, just send my the 40K for my family directly to me. And make it in a money order, don't want to have to worry about the check bouncing!

[GregGaub]

If you're (anyone) gonna toss out numbers, at LEAST pull out the calc and do the math. 700 billion (700,000,000,000) divided by only 120 million (120,000,000) comes to just a little over 5 thousand per household/family-unit/whatever.

There are a lot of pundits, chain e-mails and crap out there spouting numbers like "a million per household" or even "450,000 per adult" and crap. It's wishful thinking and the math is several decimal places OFF.

I realize that's neither here no there as far as the debate on the bailout goes. I just want people to stop seeing big numbers and assuming they are accurate without checking the math. It only takes a few seconds to run calc on the computer you're using now and check the math. In fact, a recent census says there are over 300 million people living in this country. Even if only half were adults, that's still more than the 120 million used in my calcs. More likely, it's closer to 200 million or more, which brings that divided number down even further.

As for my opinion, I tend to agree that those banks need to figure things out, not have the taxpayers bail them out. If anything, it should be the other way around. They all made huge profits on sub-prime mortgages. They can take the loss as well. I have no sympathy for the banks that took that risk and lost. I also have little sympathy for people who bought homes they couldn't afford by getting sub-prime variable rate loans, but at least they were only trying to provide a home for their family. If anyone should get bailed out, it should be those who are about to lose their homes, not the ones who are trying to take it from them.

[hiloboy]

Don't panic, bro, even the very worst economic situations don't last that long. Unless you're going to retire in the next year or two, you'll be fine. The bailout will pass, and then we can all be treated to years of stories of how the dough is being looted by assorted scumbags. I bet they're salivating, as we speak, thinking about all the scams they can perpetrate to get their hands on as much of that big cash pile as they can. I want to buy stock in a Swiss bank - their business will be booming shortly.

thanks Ian, as of last week.. i was out of here at the end of this year... it looks like its time for some of that welfare that everyone been getting.. to come my way.. hell, why not its my turn.. maybe they offer a training program in leather work ...

[ArtS]

A bit of economy humor ........

If you had purchased $1,000 of Delta Air Lines stock one year ago, you would have $49 left.

With Fannie Mae, you would have $2.50 left.

With AIG, you would have less than $15 left.

But, if you purchased $1,000 worth of beer a year ago, drank all of the beer, then turned in the cans for the aluminum recycling refund, you would have $214 cash.

Based on the above, the best current investment advice is to drink heavily and recycle.

Its called the 401-Keg

[WVTriker]

Very cute, Art! Nice way to lighten up the discussion. Ya gotta laugh sometimes in order not to cry (or something like that! )

Edited October 2, 2008 by WVTriker

[superchute]

frist thing on the bail out the they say the old ceo's of the bankrupt stuff geting large amouts of sevenece pay that is out you messed up. Your out on your butt no pay and for shere not in the millons of severace pay. The second thing is we need to shop spening money on dumb things like 8 mil on musem in poland and things like that. just some of my thought but im shere there not going to come ask me.

have a great day and hang on to your hats

Russ

[RandyScott]

Greg and Everyone.. my apologies on my calcs... I did use a calculator.. just a little ol' Casio 8 digit and thought I had gotten the decimal thing correct. So, after seeing your post I resorted to pen and paper and you are correct. I fall upon my sword.

[whinewine]

I THINK ALL THE FAT CATS IN OUR GOV. AND WALL STREET SHOULD GO TO JAIL!!!!

Perhaps we should follow the lead of what happens frequently in China to those who severely embarass the government:

arrest them

try them

if convicted, execute them

all within two months. No further appeals. End of a lot (not all, but a lot) of greediness by those with entitlement issues.

[Echo4V]

Well since the big issue seems to be subprime mortgages ( shame on banks and lawyers for coming up with an ARM that they knew would end with them owning houses they had to forclose on AND shame on buyers for agreeing to ARMs that they really couldn't afford thinking they could sell the house and make money before it adjusted) I say let age old system deal with the problem.

Bank forcloses on everything, then they end up bankrupt, house goes up for auction for back taxes. Million dollar houses are now worth 500 bucks. Only issue is that people like me, who bought their house recently end up upside down and no way out. I bought my house about 8 months before the bottom fell out. Unfortunately, I went against my better judgement and let myself be talked into a 10yr loan with a balloon payment. Now that I'm upside down, if I don't find a way to come up with the amount of the balloon payment I'll loose my home too. Don't worry about me, I have that worked out( I can use my VA loan for the balloon payment ) so I didn't go into this blind I was just using me as an example of what thousands of other Americans are going through.

Due to the above example, there are many many Americans who believe in the "bailout" because they are being told by Gov't and banks alike that this will free up money so the bank can make loans. If the banks can make loans again then these people have a light at the end of their tunnel so they desparately want this bill passed.

Personal Opinion, you shouldn't get into something that you can't get out of even in the worst situation. When I bought my house, even though it's not my dream home, I bought a house I could stand to live in the rest of my life, so if I can't sell it eventually then oh well. When I let myself be talked into the balloon payment I made sure I had a back up plan just in case something horrible happened. Well, something horrible happened and I may have to use my back up plan. I also don't see that banks are having that much trouble making loans as my brother in law (who's not even 21) just bought a house, with less than perfect credit and not that great a job. I see people all around me with new cars, etc. I think a lot of what's happening is just what Randy said about politicians practicing the oldest policy in the world (C>Y>A). I do see some benefits of this plan and I see some drawbacks but either way the plan has been so convoluted now that I don't even know what is written into it. I also think if this wasn't an election year, it wouldn't be nearly as big a deal. It would pass relatively unnoticed just like the bailout the gov't did for the airlines, and however many they have done for the auto industry, etc.

David

[celticleather]

I believe that the families of those who are executed in China are sent a bill for the bullet . . . no expense to the state whatever!