Give the money to the ” PEOPLE ” don’t we remember ? ” FOR THE PEOPLE ” …..Its time the Government takes care of the ” PEOPLE ” NOW !!!..Mr Government arn’t you hearing the ” PEOPLE CRYING OUT ” or are you all still to busy counting the money you are still stealing to cover up the ones you all were in bed with…Like the Angelo Mozelo’s from Countrywide and the big three auto and the Banks such as Bank Of America and the Investment Bankers and Big Oil etc. the list is a Trillion long…and to your own special retirement and health benefit programs !!!! To The People because its for the People and not you swindlers…This is all very Foolish and Disgusting…Down Right Criminal…You all should be ashamed of yourselves…
don’t use it. period.
1. the housing market will not stabilize until potential buyers can realistically afford to buy. As I’ve been saying for months now, housing prices need to fall further to accomplish this.
The way the market stabilizes is for foreclosures and thus supply of available houses to increase while zero new houses are built.
My estimate is that prices need to go back to at least the January 2002 level. If the recession proves to be as deep as feared, prices need to go back even farther.
Yes, home buyers have already “lost” $5 trillion of paper value. That still doesn’t balance workers’ incomes with the cost of houses in many areas.
2. $350 billion isn’t enough to fix all the bad loans anyway. After houses finish falling to affordable levels, I expect that existing at that time loans will be at least $2 trillion under water, possibly much more. [About $12 trillion is owed on just homeowner occupied properties, so $2 trillion under water is about a 17% deficit.]
3. Commercial and construction real estate loans are becoming increasingly risky and more losses must be expected.
4. Industrial loans are in the same boat [you have to figure that whoever agreed to lend to Ford last spring is very, very sorry indeed these days -- that loan looks very risky indeed].
5. What the lending industry as whole must do is pretty much what they are doing — lend only to economically viable projects given the expected recession and those people who will continue to make their payments.
Trying to legislate lenders into increasing lending flies in the face of making only good loans — which is exactly how we got into this mess in the first place.
6. given all of the above, the highest leverage the Treasury can get on the matter is to increase the capital of the banking industry — which is exactly what they are doing.
***
Btw, you should expect that some of the existing banks, including some the Treasury has lent to, will fail and end up being nationalized.
A decade’s credit bingeing will not be repaired in short order. Deleveraging is under way and must continue until the majority of households and businesses are once again credit worthy.
It may be better not to spend more at this time.
We need to understand the cause of the collapse before we can know how to fix it. And we need to know if it can even be “fixed”.
IMHO we should know WHY the financial system “melted down” before we move forward any further with these so-called ’solutions’.
Was the meltdown caused by greedy bankers, by poor oversight by regulators, by bad management from auto executives, by poor laws made by your fix-it-minded politicians in Congress, by repeal of legislation like the Glass-Steagall Act, by lax guidance from rating agencies, by lazy union workers or their featherbedding rules, by offshore competition from China and by free trade and by Globalization, by crazed real estate speculators, by manic hedge funds, or by the FED overly-stimulating the economy by goosing the money supply or by keeping interest rates too low for too long? Or was it caused by a witches’ brew of all of these things?
Or was it due to an act of God or to some sudden psychological shift in all consumers around the world due to a catastrophic loss of “animal spirits” Ã la Keynes, caused by a virus brought to Earth by an asteroid or by an alien?
Or was it something else?
Everyone is blaming everyone else.
But IMO while human psychology always plays a part, since human nature doesn’t change, it cannot explain why greed now, all of a sudden, can cause problems, and before it did not. Also, why is there a ‘loss of confidence’ now and not before. These are not ‘explanations’ — they are crutches.
http://www.counterpunch.org/kaufman09192008.html
Sometimes analogies are useful. Sometimes they are not.
When I was young, I received an electric toy train as a gift. I enjoyed playing with it. One day a part of the set, a small metal crossing sign, fell on to the electric tracks. It got very hot as the electricity flowed from one track to the other. Finally a fuse blew in our fuse box, saving the wiring in the house from melting and perhaps thereby saving us from a catastrophic house-destroying fire.
There is similar wiring in the financial system. It is made up of the conduits for the flow of money. But there are no effective circuit breakers. The system only melts when it gets too hot. It has a recession. In some cases it has a calamitous depression. We were not smart enough to put in the right circuit-breakers.
The economic system has a very serious recession, because like the toy train incident, there have been huge imbalances created. The system has been running at unsustainably hot levels. Anything unsustainable will, at some point, stop being sustained.
IMHO the primary reason for our current financial calamity is not something caused by the United States, as Vladimir Putin might have you believe. It is also not something caused by greed or malfeasance, as Congressional politicians sitting in committees that ‘roast’ their witness-guests, might have you believe (often for their own self-serving reasons).
The mechanics of the meltdown are IMO based on the way we operate our worldwide money system. In the West we send our money to Asia and to the oil exporting nations. Those countries often don’t like to see their currencies appreciate in value relative to the Western money, nor against each other. So those countries just print additional new money in their own currency to exchange against surpluses earned from the West.
This is like leaving your metal crossing sign on the toy train tracks. It makes the current flow a lot more quickly. Demand for everything goes up. Money moves more quickly. Shortages develop. Bottlenecks are created. Uneconomic investments are made.
The “frames of reference” for decision-making are so distorted, that we buy house after house, without seeing the danger. In those distorted frames of reference, our distorted reality suggests that such ‘investments’ make sense. We begin to think that they will economically reward us.
This movement of money is artificially induced. This is because in any other rules-based system, individual countries would not have the leeway to manipulate their currencies in such a manner.
This leads to a Glut of Debt in the West, as the offshore converted surpluses are used to buy Treasury Bonds. It makes the Eastern countries artificially boom.
But all of this money-flow will eventually collapse, just like the wiring in the house would have melted if the fuse had not melted first. This process is all temporary. It is all an illusion. Well not all of it, but a lot of it. Some investments will pay off. But the odds are against any specific investment being a prudent one.
It may seem like the merry-go-round ride can last forever. It will not. Just because it can continue for a decade or two, does not mean it will go on for 5 decades.
Now we are at the point where the process can no longer continue. The funds injected to keep it going cannot fulfill their intended purpose. It is like pushing electricity through the wiring in our house when the fuse has blown. No amount of money can make the power move.
This is because the problem is in the wiring, not in the amount of power. It is also in the way we have used the money, to heat that little metal crossing sign — the train stopped moving a long time ago.
Our process is broken. It will not be quickly revived. And it certainly won’t be revived just with money.
Our practice of consuming in the West based purely on Debt is over. We will save. We have no choice. The boomers are near retirement. They are going to go to Term Deposits and Money Markets.
If the FED uses the money injections as a ’solution’ they will just hurt savers. Lower interest rates make already scared, retired people spend even less. They won’t make insolvent business models work.
Saving bank depositors is good. It was a mistake in the 1930-s to allow banks and the money supply to collapse. But a lot of what was done in the 1930-s was wrong. We are going to repeat the same mistakes, because IMO we think we know the problem we are addressing. But we do not.
Deflation is a symptom of fear. Fear is when you don’t know where your next dollar is coming from. If your perceived future earnings are in jeopardy, you will spend less. That part of human psychology is clearly understood by all of us.
It is not because next year you will get a better bargain (during Deflation) that makes you not spend now. The FED needs to get its thinking in logical order. Forcing prices up, will not lead to more aggregate spending.
So unless you want to inject so much money into the system that you actually create hyperinflation, which would naturally cause everyone to spend, spend, and spend — but not on the things that will save the overall economy — printing money will not help. Nor will creating more Debt help.
So if money injections won’t help, what will?
Time is one thing. Repairing our broken Balance Sheets is another. Moving from a Debt-based consumer society to a Savings-based consumer society is yet one more.
Addressing the fault lines in our worldwide money system is another.
No more should we allow other countries to artificially keep their exchange rates FIXED to the American Greenback. That is the broken policy from Bretton Woods. Most especially this cannot be expected to work, if we in the West do not keep our own currency values fixed to some arbitrary “stellae fixae’. http://en.wikipedia.org/wiki/Fixed_star
But please, let’s ANALYZE the problem before we “fix” it. No more of the stupid things said when the first bailout package (sorry, Recovery or Stimulus Package) was created.
Remember when they said things like “It doesn’t matter that it isn’t perfect or pretty, WE NEED TO get moving!”
OR
“Do something, ANYTHING, rather than NOTHING! Time is of the essence!”
Please, no more. We have good people. Let’s use them for the gifts they have to give us.
“Gimme gimme gimme gimme!!!”
It sounds like greedy children in kindergarden around here. “Buy me a new car”, “pay off my house”, “give me 100,000$”, “reduce my loan to 3%”, “reduce my loan to 90% of the value of my house”, and ih yeah, “give me 100,000$”.
“Gimme gimme gimme gimme”
Get a clue. There is not a “gimme” that is going to solve this. Not “gimme” to banks, not “gimme” to companies, not “gimme” to home owners.
Because, guess what? All that “gimme” requires a “Take-y” somewhere else.
Nothing. I didn’t agree with the first $350 billion we handed out. The dilution of the dollar (and subsequent inflation) isn’t apparent yet because everyone else is in trouble, too. Eventually, though, reality will set in, and we’ll think the exchange rates of this past summer made the dollar look like platinum.
I’ve said it many times here, and I’ll say it again: unless something drastically changes for the better in the employment/wage picture, there will be no true recovery. We can throw as many dollars (yuan?) at our problems as we like, but until the fundamentals are addressed (and we stop pretending like we don’t need to produce anything in this country), the current state of affairs will continue to snowball.
It should be used to finance oversight on finance, investigations into associated fraud and for building prisons to house the executives and sales and marketing types who pushed these schemes.
Let’s not spend the $350 billion, since the first $350 billion hasn’t done much of anything to fix things.
Let those that made poor choices suffer the consequences and then we can all move on. I fail to see why I should have any sympathy for someone losing a home that they had no business buying in the first place and can’t afford to continue owning.
Do not spend anymore money for bailout. The banks are already flooded with cash. And definitely do not use any of those money to relieve foreclosure. Foreclosure is a very important process to flush out excess and bring the housing prices back in line with the fundamentals.
What is wrong with affordable housing? Government has spend so much (freddie, fannie…). And now you have a natural process to make housing affordable again, they are fighting it with tax money.
Banks do not have to honor their CDS agreement with investors who do not hold the underlying bonds.
The gov does not have 350B to spend. They will borrow it from somewhere and we’ll have to pay it back with interest. This out of control bailout spree cannot be stopped and it will ruin the US. Unfortunately there’s nothing we can do about it. Remember the “original” bailout (TARP)? There was a massive email campaign but did our “elected representatives” listen? Nope. They ain’t gonna listen now either.
Give it to me so I can get the hell out of here before the whole country goes up in flames! Or down the toilet, which ever you prefer.
I think President Bush and his administration, especially Henry Paulsen should get a nice cut of it for doing such a dynamite job leading our country for the last eight years. They’ve saved our country from the terrorist. They’ve been helping businesses become more efficient due to more free trade. In turn allowing them to tap into vast amounts of productive, cost effective overseas labor while shedding so much of their lazy unappreciative U.S. work force. Of course this is very instrumental in increasing ones stock value. By initiating this financial band aid they’ve shored up our economy. They deserve something for all their fine work.
“Unemployment Cash Shortage”
The title of the article listed right under Paul’s article. And that is where the $350B can go for this looooong term recession.
If a viable “bailout” is really what is desired, not just padding the pockets of the high income “suits” try this:
Freeze ALL forcosures. Assemble a review team (creates jobs…imagine that) to review each pending forclosure. If (and only if) the home owner can reasonibly be expected to make payments after restructuring, their home is saved. Restructuring would mean, the lender eats all fees and fines associated with the loan and resets the interest to a rate between 5 and 7.5%. The Government reimburses the lender for the amount of back payments and provides additional funding if necessary to reduce the amount of the loan to 90% of the home’s assessed value. The home-owner agrees (under penilty of forclosure) never to re-finance that loan to take additional cash out.
While we are fixing that problem, let’s help the auto makers also. Every tax payer who grosses less than $30,000 can go to one of the big three’s car lots and select any vehicle with an MSRP sticker of $14,500 or less. The government will pay for the car (and receive ALL rebates). If the person wants a $20,000 car, they can finance or pay cash for any over the $14,500.
There, we fixed the mortgage, banking, and auto industries problems and not only saved thousands of jobs but created more! AND we made life a bit better for those at the lower end of the earning charts.
I’d like to weigh in this extremely asinine question. “How should the government spend the remaining $350B of the bank bailout money?” You make it sound like it is some Swiss bank account sitting somewhere that we have as a reserve account. WAKE UP! It does not exist. It is borrowed money heaped upon the existing borrowed money that our elected imbeciles in Congress and the Executive branch seem to think is bottomless. The only way to undo what Alan Greespan and the Fed (largely) did to the economy is to let the free market purge the excess and rot. Get a grip folks, there ain’t no panacea for this.
We should put it in a pile in a warehouse and light it on fire ala the Joker in the Dark Night. Lighting it on fire would have just about the same effect as giving it to either the automakers or the banks.
The government does not have $350 billion. The question you are asking assumes that the government has money. The government has no money. Understanding this is essential. The government has no money. They didn’t have the authority to spend the first non-existent $350 bilion.
Who’s asking the question ? Certainly not our Congressmen that are lording it over the rest of us. The rest of us need to watch our money, but rest assured the pigs at the top of the ladder are well taken care of, courtesy of …. oh yeah, the rest of us supporting them with our taxes. Why cant we collectively ask of Congress as a country, “What have YOU done for ME lately ?? ” Do they not think that all of us out there spending our “bailout money” would not stimulate the economy ? Here is the answer: You will get money from this huge scam being shoved at us if you are one of their buddies. The average working guy? They dont give a rats rear end about them. Just like poker, if you look around the table, and can’t see the patsy, it’s you. In Congress’ eyes, we’re all the patsies. The lobbyists and the bankers will get the money.
Lord you people who want the government to hand you 100,000$ make me ill. For crissake why do you think that moving money from your right hand to your left hand (dropping some along the way) is a good idea? Why do you think you deserve that money? Who do you think is going to pay that money?
I’ll tell you who. Everyone who actually produces something. The more people did things right, the more they will pay. The more people were greedy and stupid, the more they will get.
Congress should not have given away the first 700 billion. Or all the other money they and the feds have handed out. And they shouldn’t keep deciding to give away more. We are powering into the ground.
Pull up all ready.
I think I have the solution:
If every mortgage for every person in America was modified to a 3% interest rate over 40 years, I think it would resovle the financial crisis we are in. I think the government should step in and make all banks modify every mortgage to these terms, and then guarantee the mortgages just like the FHA does. In return for this, we as tax paying americans will sacrifice the ability to write our mortgage interest off each year. For most this would not hurt, because the reduction in our taxes that we lose, would be offset by the payment saving everyone would realize instantly. If we do this, then the inventory of for sale homes would be reduced. A lot of people in their homes would find it cheaper to pay their mortgage then sell for a loss and rent. Reducing the inventory will help stabilize the real estate market. Lowering the payments woul also put a huge stop in foreclosures. I do not believe it would eliminate it, but hey we always had foreclosures, we just need to get them back to normal levels. Doing this should also win over the approval of every american, because rather than being upset at those that get modified loans who don’t deserve, everyone does. We could use the remaining Tarp funds to pay yields to banks who do this so that the banks are not taking the full hit, but rather sharing the hit. I think this is the solution. The FDIC chair person has already said doing a mass modfied loan program may cost 25 billion for Fannie and Freddie loans. Even if it cost 10 times as much to do them all, that is still $250 billion. Plus the added payment savings will lead to consumer confidence and inspire more spending which is what runs our economy.
Well as we can see the first $350 billion is with the bank, and of course as expected not used for the purpose that it was intended for. So I think the next $350 billion should go right to the people of this country, it is our tax money anyhow, correct? This should be doled out in a fashion of a credit voucher, just like cash but only to be used to pay down debt. I also believe that the first $350 billion which the banks lined up and took the check, needs to be credited back to the american public, lets say like a 20 – 25% reduction of credit obligation due these institutions? Let face it one bought another so it down to a few major players now, and this would also help two way, it would reduce the credit obligations of the American people and open up that view of transparentcy too, LOL
I feal they the remaining money ought to go to every home owner. Give each home owner $100,000.00 and make it mandatory to pay on their homes. this would create a trickle up situation; by helping the banks and freeing up money for the home owner to spend on other necisitys
ZERO. And while your at it — hire a Wall Street Czar like you did for the auto companies. Anybody out there — wouldn’t you agree for $700B a Czar is needed? If your going to hire one for $25B I would think one is neccessary for $700B
Not a penny more for Mr. Paulson or Sheila Bair. They completely lost their credibility. All they were doing: either giving money to the old Wall Street friends or to the crooked mortgage bankers and reckless borrowers. Instead of giving them money Congress must open full investigation what happened with first 350 billion and prosecute any fraud. Also about new planned huge infrastructure spending. We need to be sure that it will not be a huge 500 billion “bridge to nowhere”, because it seems, that Congress and Media are much more interested in rhetoric than doing tough investigating job.
Yah, I have a plan…How about rescind the TARP and quit spending money that we do not have. I don’t care what anyone says about the current deflationary climate, the dollar is going to fall like a rock if we keep spending and spending.
They should use the second half of the money to payoff 10-15% of every single homeowners mortgage AND drop the value of each home by that amount as well. (All homeowers – those in default as well as those who are current) This way you’ll help homeowners by reducing their payments by that much at the same time reducing home values bringing them closer to where they should be. These two moves will help stable our economy more than throwing the money anywhere else.
I AGREE HELP THE PUBLIC , MY HUSBANDS JOB IS GOING TO MEXICO , AFTER 24 YEARS WITH THE KENWORTH TRUCK COMPANY. 9000 PEOPLE A DAY ARE LOOSING HOMES . CARS , GOING HUNGRY , HELP US , NOT THE RICH , WHO GET THE BIG YEARLY BONUS,NO ONE IS WORKING ,SO WHO CAN BUY A CAR ANYONE ,NO MATTER HOW MUCH MONEY WE GIVE THE BIG 3 , HELP US WHO AREN’T WORKING….
the banks should not get another penny. they took the money to eliminate competition instead of helping the economy. no money for the big three either. The union and leadership destroyed the business and they both need to go. file BK to get rid of the union, restructure to emerge competitive and build efficient car not gas gussling SUV’s
That’s easy. Since the Federal govt doesn’t have ANY money – remember IT is in hock up to OUR ears – it doesn’t have $359B to spend.
Please don’t throw anymore borrowed or “newly printed” money down the rat holes of bad mortgages, bad debt, and bad companies.
Yes, do help anyone and everyone out of work. But don’t promote the bad decisions people have made about credit – from home owners and house flippers to the purveyors of “cheap” credit.
As I’ve said, many times before in this comment section, the bailout is a horrible idea. The biggest reason is that it doesn’t address the crux of the issue, which is the average person who can’t pay their loan.
I knew, from the beginning, that the banks would just hoard the money and make the same bad decisions. Now, they are overcompensating for risk and driving good businesses and homeowners into foreclosure. This kills their profit in the long term by killing asset values and turning away profitable business. This short term thinking is exactly what caused them to get into trouble in the first place. The banks are continuing to shoot themselves in the foot.
Just look at the story regarding banks evicting good tenets. Why would you ever evict good tenets from a foreclosed house? Does that make any good business sense? I would go out of my way to keep the foreclosed home rented and keep the income flow. Even if it doesn’t cover the mortgage, it keeps cash flowing into the bank.
The remaining bailout money needs to be used to help homeowners refinance their mortgages. There needs to be a change from a “trickle down” mentality to a “trickle up” mentality.
I bought my house in Las Vegas, NV about 1/3rd of the way down from its peak value. My house is not an investment; it is a place to live and work. I bought a very middle class 2100 sq.ft house, which is also my consulting office, and put about 30% down. Even with that, I’m now $120K underwater in my mortgage. I’m not terribly worried about being underwater because I intend to live in it for a very long time; the prices will eventually rebound. My mortgage is a 30 year fixed at 7% with a very reputable bank.
I’ve made all of my payments on time and fully intend to continue making those payment. However, there’s no way for me to refinance or renegotiate because my house value is underwater *AND* my payments are current. The extra interest cost greatly increases my default risk should something go wrong because, like many other people, my income has gone down during this depression/recession. I’m surviving, but I’m living month to month without much left after business and personal expenses.
There are a lot of homeowners out there in the same predicament. We are watching irresponsible people get bailed out. In the end, those irresponsible people are being rewarded for their irresponsibility by getting to keep more valuable assets. The taxpayer assumes all of the risk and they get to keep the asset.
A smarter way is to evaluate the interest rate spread on loans and allow those homeowners with good credit, but underwater assets, to refinance at a lower rate to get the cash out there into the economy.
For example, my bank probably floated 4% mortgage securities to finance my loan, giving them a 3% interest spread. If the bank can borrow from the government at 1.5% right now, they can refinance my mortgage at 4.5% and still make the same spread. That would free up several hundred dollars in monthly mortgage payments for me to apply to my savings, which is at that same bank. That savings would provide more capital to the system and give me more of a cushion to pay my mortgage should something really go wrong.
Is there anyone in government and in banking thinking out there?
I could never understand the popularity of Bonnie & Clyde in the 1930’s until watching the banks conduct their business over the past several months. They are ruthlessly killing their own asset portfolios without any thought of profitability. I can’t help but think that if the government had said “No” to the bailout in the beginning, they would’ve found ways to make their asset portfolios profitable. However, that would’ve required work.
may as well throw one last really big party for all of America as next year no one is going to want to buy the 2 trillion dollar deficit we are running up and it’s bye-bye America then. We are going to fall just like the Roman Empire it’s not going to be the Great Depression all over again it’s going to be worse the fall of the Roman Empire only this time there are rogue states out there with weapons of mass destruction.
If you think the dark ages were bad just wait until the pirates off the HORN of AFRICA blow a couple of super tankers of oil.
Why should those that have acted responsible by saving and planning for their future pay for those living beyond their means by buying houses and luxery cars they couldn’t afford?
Restore Americans retirements (IRA’s and 401K’s) to pre sub-prime mess conditions. It’ll work its way into the economy.
why does CNN think it’s a foregone conclusion that we release the remainder of the bailout money? Let’s cut them off, these fools can’t be trusted with taxpayer dollars!
I would agree that there’s been no clear benefit from the first $335b in expenditures other than to forestall the complete and inevitable collapse of banks and financial firms that are for all intents and purposes insolvent.
We cannot continue to do this under the guise that it will help. It’s been nothing more than a socialization of losses onto the backs of an already overburdened taxpaying populace.
If those in power would have listened to the people who predicted this failure at least two years ago the severity of this mess could have been lessened extensively, yet they dug their heels in and wouldn’t budge.
There’s no rationale for throwing good money (we don’t have) after bad money (we didn’t have) so I believe that access to the balance of the $700b should be denied no matter what case is made.
We should have learned by now that a managed economy under the guise of “free markets” does not work. Let the carnage begin so we can get it over with.
Two major changes in TARP are needed. 1. Treasury should be authorized to invest at favorable rates in debt issued by state and local housing finance agencies who make low interest rate 30 year fixed rate mortgages available to moderate income (a) initial buyers and (b) existing homebuyers with subprime adjustable rate loans and, 2) invest funds directly with mortgage servicers to be used to fund the cost of certain mortgage modifications to stem preventable foreclosures. The first step will stimulate additional home buying, ultimately reducing housing inventory and add to the statilzation of housing values. The second step will enable families to stay in existing housing where feasible rather than result in more costly displacement and additions to the foreclosed inventory.
In addition, Congress needs to pass the jobs stimulus bill similar to that proposed by President Elect Obama. If the tide of joblessness is not stopped soon, the US and potential the world will move into the worst recession in our history possibly ending in a full fledged recession.
Return MY tax dollars to ME so I can spend it as required. Force ALL banks that received as little as $1 from the first $350B to renegotiate the rates and lengthen the terms on their mortgage/home equity/car loans in default. Let those people who took loans they couldn’t afford pay them off with THEIR money – not mine. The second $350B should only be given out with tight controls and terms as Congress is contemplating with the auto industry. I emailed both my Senators before they voted on the $700B package asking they add a provision that says ANY company receiving money can NOT pay out bonuses. PERIOD. It would be tough on the secretary, the bank branch manager, etc. but if there’s enough money for bonuses. There’s enough money.
The money flow must be extended to the consumer. Banks continue to hoard cash regardless of what’s going on or what “they’re told to do.” No one can get a loan regardless of their credit rating and if a bank does provide lending, they request 20+% down. Those in trouble need to “requalify” for their same note as they probably overextended themself in the first place. I can’t tell you how many people are sick of the “no common sense” people “trying” to run things. When lending money to anyone or bank there needs to be stipulations and guidelines one must follow if not you s/b left to sink. The financal market is not designed to always go “up” downtrends are a way of “weeding” out those not smart enough to continue, so quit trying to always force the market up and it gives those wiser an opportunity in the future. Rant off, have a good day.
Yes GIVE IT TO US WE WILL SPEND IT ON THINGS THAT WE NEED TO MAKE IT OUT HERE.I WILL PAY OFF MY MORTGAGE & MY 2 CARS THAT IS WHAT WILL HELP NOT GIVEING TO SOMEONE THATS NOT HELPING ALL OF THESE BIG BANK BAILOUTS. I NEED A BAILOUT TO BUT NOONE IS THERE TO BAIL ME OUT IT IS ARE MONEY WHY NOT GIVE IT TO US IN A TIME LIKE THIS.IF THEY GAVE US 200,000 TO EVERONE IN THE US THEY WOULD STILL HAVE SOME FOR THEM TO KEEP THAT IS WHAT THEY ARE DOING ANYWAY.JUST GIVE THE MONEY TO THE AMERICAN PEOPLE
It’s being suggested that the banks should be ordered by the government to get out there and lend, but at the same time to de-leverage; and not to lend to uncreditworthy customers like they did in the past. But how is this possible when so many individuals and businesses, (and the US government itself) are in debt up to their eyeballs? The banks themselves are still being allowed to keep all sorts of their liabilities “off the books” because everyone seems to be afraid to turn over certain stones and look underneath. US consumers and businesses need access to credit to enable the economy to recover but allowing the the credit bubble to grow is what caused this crisis in the first place. The average real income of of the average US consumer has declined over the past decade while accesses to credit has expanded enormously. Until recently. It was inevitable that the slightest contraction in the real estate market or greater economy would engender the collapse of this house of cards. We now know how leveraged the system had become so I won’t go into that here.
So has the system finished de-leveraging? Will re-inflating the credit system begin to solve the problems? Would pumping more flammable hydrogen into the burning Hindenberg have helped to re-inflate it?
Shortly after 1929 selloff the market enjoyed a considerable bounce before it really crashed. I guess a lot of people figured that the first drop was just part of another normal economic cycle. I have heard a lot of people say that the situation in 2008 is not anything like that in 1929. I agree. In some ways it is much worse now. The great depression was also precipitated in large part by excessive credit, but the money the US owed then was owed to itself; so the economic collapse was largely caused by factors that could have been greatly mitigated by central bank and government intervention. This time though the US owes trillions of dollars to foreigners, much of it to China. These are debts that must be repaid and they will ballon larger and larger as a proportion of GDP as the economy continues to shrink and the US government borrows more and more from foreigners to try and re-inflate it.
I don’t know what the solution this could be now; perhaps a decade or two of hard work, high taxes and less consumption so at least this mess won’t be passed on to the next generation. I have looked and looked out there and I have not found a single cogent argument for another realistic solution. There is still a lot of blind faith out there in the voodoo of normal market cycles though. But to believe that this is a normal market cycle at this point requires a total suspension of reason; even Mr. Paulson has warned you over and over again that it isn’t.
One of the stones that no one seems to want to look under right now would require a peek at the number of ARMS that will come up for reset beginning six months from now and going on for the next couple of years. It seems to indicate that the first wave of foreclosures was just that; a wave. The next will be a tsunami.
Treasury should not buy actual mortgages but rather pass along a rate credit of 3% to all borrowers taking out a mortgage. This way investors and banks can stabalize the market at say 6% but borrowers would end up paying 3%. Given that the money is taxpayers anyway this would effectively be a tax swap for Treasury. Homeowners would have immediate lower payments but would also have a lower tax deduction at year end.
Regarding the first $350 billion, the results are sketchy at best. We don’t see any progress for the economy. Call the banks before Congress. Housing prices are still too high. Encourage lots of short sales to clear the mortgage and housing markets with no new taxpayer money. Force them to lower interest rates on residential loans, especially HARMs, with no new taxpayer money. We already gave them money: no more. If they can’t show results achieved or imminent, the executives should get the boot and be replaced with new ones chosen by Congress. We saved them, now they have to do what we want. If necessary, we should take the money back and start over.
Regarding the second $350 billion, it should be kept away from Bush and Paulson. Save it for Obama and Geithner. Then, Geithner should take at least $100 billion off the top, set up a new bank with at least $1 trillion of lending authority (standard 10% reserve ratio). This bank should make responsible loans to thoroughly qualified borrowers in the commercial sector, which is still hurting. Let Fannie and Freddie start lending directly to residential borrowers. As other banks fail, either our new bank or the FDIC can eat them and digest the assets for later use.
There is no shortage of banks (8000+). If a few fail, we can clean them up, let other banks step in to take over the business, and keep going.
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Look like the banks are trying another way to get bailed out. I just tried to withdraw $300.00 from my account at a ATM and it only gave me $260.00 back.