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Old 09-20-2008, 02:05 PM   #1
UMG:Chicken_Sop
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$700 BILLION???? This is ridiculous.


http://money.cnn.com/2008/09/20/news...ion=2008092009

What about all the people that were foreclosed? They didn't jump to help them. This is sickening. Bush is just moving to help big business before his term ends.

All these bailouts are really leaving a bad taste in my mouth. Anyone wanna skip a mortgage/rent payment in protest?
 
Old 09-20-2008, 05:31 PM   #2
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Why is it ridiculous? Is it because it's a number that's too large for you understand, or because you don't think it will take that much to save the economy? For reference, you might want to look at what Japan had to go through to save their economy. We're pretty much tracking along.
 
Old 09-20-2008, 06:53 PM   #3
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I think what he was meaning was that the people that lost homes and money are screwed and the guys that made the mess get to keep their money and get bailed out.
Which is pretty much the deal.
 
Old 09-20-2008, 07:38 PM   #4
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How big was Japan's bailout? It was so long ago I could only remember the news about banks closing and not what the government paid to bail out.

Well, the government will have to cut back on spending now (I wonder how they plan to do it). It's that or increase taxes again - unless of course they go for Reaganomics and say they're increasing income by dropping taxes. I think there's still a little money to pilfer from the retirement accounts - maybe the government will take it from there? Hey grandpa, I hope you don't mind being a homeless hobo, but it's for the good of the nation you know.

Oh, besides, this makes the war in Iraq look cheap - what a bargain! Of course that war already bankrupted the system, so the question remains: how does the government take on this debt without totally screwing over the economy anyway?

Last edited by pinniped; 09-20-2008 at 07:40 PM.
 
Old 09-20-2008, 07:49 PM   #5
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Quote:
Originally Posted by crashmeister View Post
I think what he was meaning was that the people that lost homes and money are screwed and the guys that made the mess get to keep their money and get bailed out.
Which is pretty much the deal.
The people that lost homes should have never been allowed to buy in the first place. Whether there is any way to get at the people that were hawking these loans is a different story. I feel sorry for them, but I've lost money on things, too. They will probably have to file bankruptcy. And before you ask, I went through bankruptcy in 1977, though it's harder to file these days than it was then.
 
Old 09-20-2008, 07:55 PM   #6
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Originally Posted by pinniped View Post
How big was Japan's bailout? It was so long ago I could only remember the news about banks closing and not what the government paid to bail out.
It was major. Japan went through what they had to in order to prevent a general breakdown in worldwide financial structure. I ran across an article today, but I can't find it now. We've pretty much been following what they went through. First you lower interest rates. Then you bail out a few key banks. Then you purchase the bad debts that are the underlying problems. Then you figure out a way to pay for it. In the meantime, the government will own these bad debts, and a number of large financial institutions. That money is not lost, as the companies are worth something and will be worth more later, and also not all of those mortgages in the bucket are going to be bad.

The bad news is that there will be inflation. The good news is that inflation hits the banks just as hard as it hits the general person. So, if you have a mortgage and you are able to keep your house, then you win one over against the banks. Hopefully your pay increases won't lag too far behind inflation.

I'm not going to get into a pissing contest with you about the Iraq war.
 
Old 09-21-2008, 05:16 AM   #7
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Originally Posted by Quakeboy02 View Post
And before you ask, I went through bankruptcy in 1977, though it's harder to file these days than it was then.
Whats that got to do with anything
 
Old 09-21-2008, 11:02 AM   #8
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Originally Posted by crashmeister View Post
Whats that got to do with anything
Many of these people should probably be allowed to go through bankruptcy to get rid of their debts. Of course, in some states, the banks get the debt if you send them the keys and walk away.
 
Old 09-21-2008, 12:44 PM   #9
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Add 700 Billion of US citizen tax dollars to bail out financial institions who already made fortunes from high interest rates and insurance from guess who? The working man/woman. Nice. Would they give the billions to those losing their homes if this would have bolstered the economy? Not a chance. Land of the rich ... always was and always will be.

Canada is just as bad although we have not seen anything on this scale. The spinoffs from this disaster are going to hit us hard. Unfortunately, the US is our largest trading partner which is very bad news when the US economy is in trouble. We do not seem to be able to develope other market places on large enough scale to relieve our dependance on our neighbours to the south.
 
Old 09-21-2008, 01:47 PM   #10
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Originally Posted by Quakeboy02 View Post
Many of these people should probably be allowed to go through bankruptcy to get rid of their debts.
How is that going to to anything?

There's an idea:

Give the 1000 gazillion US$ to the people afflicted to help pay their debts instead of trying to bolster investment banks.
 
Old 09-21-2008, 03:31 PM   #11
Quakeboy02
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Originally Posted by crashmeister View Post
Give the 1000 gazillion US$ to the people afflicted to help pay their debts instead of trying to bolster investment banks.
Here's the math: Let's assume an even $700,000,000,000 "bailout" (wrong term) and 385,000,000 people. Divide it out and you get $1,818 (yep, not even $2000) per person in the US. If we imagine that we spread it out per household (at a generous 4 per household) then that's $7,272. Still not enough to do anything useful for the economy. So, let's limit that to just the homeowners (I can already hear the poor renters screaming to their congresspeople) and that's something like $15,000 per house. Still not enough to do anything to fix the problem.

The problem with this "give money to everybody" scheme is that it doesn't target the problem. And, it's inflationary - you don't think that even WalMart will keep their prices low if you've got an extra $15,000 burning a hole in your pocket, do you? And even after Best Buy (or GM or whomever) has your money, those bad debts are still poisoning the system, because very very little of it went to actually solving the problem.

So, if giving away free money does nothing but buy an extra car or an HDTV per household, what do you do? You buy up the bad debt; and that pretty much brings us back to where we are in the crisis.
 
Old 09-21-2008, 03:43 PM   #12
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That's BS and if you can't figure out why I am sorry for you.
 
Old 09-21-2008, 04:00 PM   #13
Quakeboy02
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Originally Posted by crashmeister View Post
That's BS and if you can't figure out why I am sorry for you.
Please don't feel sorry for me; show me my error. Where exactly did I go wrong? I'm reasonably certain that my math is right. I'm fairly conversant with at least a beginners level of economic theory. I know generally what causes inflation. I also have a good basic idea of what mobs do and where poverty comes from. I also understand what is called the "moral dilemma" involved in getting us out of this mess, but if I've missed something important, please point it out in specific.
 
Old 09-21-2008, 04:32 PM   #14
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Originally Posted by Quakeboy02 View Post
Please don't feel sorry for me; show me my error. Where exactly did I go wrong? I'm reasonably certain that my math is right.
What's the current population estimate for the US? It didn't grow by over 85M in just 2 years did it?

You also didn't look into what percentage of the population bought a house they couldn't afford.

I suspect the bailout is big enough to pay off a lot of those houses. Of course everyone with a multitude of houses will also want in on the action. Good luck checking whether Joe has only one house in that state, let alone only one house in the country - so you can bet on widespread scams to steal some of that money - many scams by people who didn't even buy a house they couldn't afford. I'm with you on the inflation too - and yes, I'm sure people would rather buy a new TV than spend a handout wisely.

Since the government has already decided on the bailout all we can do is sit back and see what happens. I'd like to see more managers go to jail though; even the Enron investigation didn't get enough of them off the streets.
 
Old 09-21-2008, 04:56 PM   #15
Quakeboy02
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Originally Posted by pinniped View Post
What's the current population estimate for the US? It didn't grow by over 85M in just 2 years did it?
I just pulled a number out of the air that I knew to be reasonably close. I see that the CIA says it's closer to 304 million. Add 25% to all my figures and it doesn't change anything.

Quote:
You also didn't look into what percentage of the population bought a house they couldn't afford.
This is where the "moral dilemma" comes into play. I bought a small house at the start of this mess in 2005. Why should you be rewarded with the government paying off your ill-advised debt? Why don't I get some? Why should I be penalised for living a conservative lifestyle?

Quote:
I suspect the bailout is big enough to pay off a lot of those houses. Of course everyone with a multitude of houses will also want in on the action. Good luck checking whether Joe has only one house in that state, let alone only one house in the country - so you can bet on widespread scams to steal some of that money - many scams by people who didn't even buy a house they couldn't afford. I'm with you on the inflation too - and yes, I'm sure people would rather buy a new TV than spend a handout wisely.
So you agree that there aren't really any other options, then. There's also the issue of what money is. Without an understanding of how currency works, there can't even truly be a meaningful discussion about it.

Quote:
Since the government has already decided on the bailout all we can do is sit back and see what happens. I'd like to see more managers go to jail though; even the Enron investigation didn't get enough of them off the streets.
Another moral dilemma issue. There's been a lot of discussion over at fool.com. I haven't bothered with most of it, because those Fools (intentional cap, it's what we call ourselves) know more about it than I do. Like you, I'd love to see some of these bastards in jail. Lots of them, actually. In particular, I'd like to see something done about the loan manager who tried to change my loan terms at the time of signing in 1999 on a prior house. I wonder how many he got away with at the tune of $2000 or so a pop? Unfortunately, it's unclear that there was all that much criminal activity involved. Most of it was just taking advantage of loopholes in the law and fleecing an ignorant taxpayer. Immoral? Yes. Illegal? Not usually. Educate yourselves as best you can, otherwise the lessons are expensive.
 
  


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