Bailout Will Fail, This Is Why!

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    Oct 04, 2008 4:58 PM GMT
    First of all I can't believe we, the American people, have stood by and allowed this to happen. Just because the banks are getting money which will allow them to invest again does not mean the economy will be saved. Until the average American is able to have the buying power back then Wall Street will simply be Fall Street again in no time. They need to figure out a way to get the money back into the hands of the working class and heck even consider creating some jobs in America once again. If predictions are correct and the big auto makers ask for another bailout then I think some protesting should be going down lol. OK I just wanted to vent, you may ignore this tehehe!
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    Oct 04, 2008 7:35 PM GMT
    I don't think that a majority of us did stand by and allow this to happen. Even after the stock market crash, last Tues, public sentiment was still opposed to a bailout that didn't address the root causes of the credit crunch. Congressional phone lines and Web sites were crippled by the volume of calls in opposition to this flawed "rescue" plan.

    As I posted in another thread, Congress needs to take some of that bailout money and create a relief fund for mortgagees facing foreclosure. This fund would provide a stop-gap measure for mortgagees to stay in their homes while renegotiating terms or refinancing into fixed-rate mortgages. In addition, Congress should put pressure on Fannie, Freddie and the big mortgage lenders to refinance "predatory" loans without penalty to the consumer.

    Otherwise, Congress needs to immediately address the following:

    * Reform Bankruptcy Laws
    * Provide a Stimulus for Main Street -Aid to the Real Economy
    * Make Wall Street Speculators Pay for the Bailout - No more debt

    My $0.02.
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    Oct 04, 2008 7:53 PM GMT
    Yeah, the devil was in the details. I am not convinced the bailout included the things it should have, but apparently nobody could agree so a whole bunch of unnecessary stuff was thrown in so we end up with something like a Frankenstein monster. By the way, I think the auto manufacturers already had been promised their own bailout http://money.cnn.com/2008/09/29/autos/federal_loans/index.htm for 25 billion
  • SkyMiles

    Posts: 963

    Oct 04, 2008 7:54 PM GMT
    I'm with ruck_us. Our government CAN make this bailout work and prevent the next one(s) if they have the will to. The current crisis is just like the S&L bailout from the 1980s. Thing is, nobody was ever punished in a meaningful, message-sending way for that and no reforms were enacted. In fact, Phil Gramm and others stripped reglation of the financial industry AWAY! So it can't really be a surprise that the same kind of think would happen again.
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    Oct 04, 2008 8:02 PM GMT
    Chizzad saidFirst of all I can't believe we, the American people, have stood by and allowed this to happen.


    "The American people" didn't stand by, and in fact tried to convince their reps to vote NO in the house, which is what happened first time around. Anyway, the dollar is weaker now and I fucking hate Bush and his pelican face.

    FYI see me in my bed Chizzad. Thanks.icon_eek.gificon_biggrin.gificon_razz.gificon_twisted.gif
  • GQjock

    Posts: 11649

    Oct 04, 2008 8:28 PM GMT
    I am not very optimistic about this "Bailout" scheme the Fed has hatched

    Mainly because it does nothing about the Deficit Swap trades and the leveraged Hedge Funds that have paralyzed the money markets

    This house of cards is ready to fall and throwing money at it the way they are doing it will only prolong the inevitable

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    Oct 04, 2008 9:13 PM GMT
    Prolong? or Postpone? Maybe not by much. This morning's news said that AIG has already burned through most of their $85G.
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    Oct 04, 2008 10:38 PM GMT
    Scary times ahead I think. Once people lose confidence in the banks then the whole economy will grind to a halt.
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    Oct 04, 2008 11:42 PM GMT
    The sub-prime loans aren't just bad because they gave money to people who have incomes and assets that are not stable enough or substantial enough to support a long term commitment.

    Sub-prime loans have the characteristic of being high-interest. Which means expensive. Basically approving banks to get into the business of loaning out expensive credit causes INFLATION. Not of consumer goods, but of credit. It's inflation none the less.

    The other part of this bailout that needs to be addressed is the consumer credit lending laws. If the government does not crack down on banks and limit the amount of interest they can charge - then financial institutions will happily jack up the cost of money - INFLATION. For a lot of people the inflation in gas prices is really nothing compared to the inflation in cost of credit. And almost all of the credit lending comes at a bait-n-switch pricing. "Hey how about 3.9% interest for 6 months... oops you had a late payment - of course we sent you the bill 5 days before it was due - now you have that balance at 24.9%. Pleasure doing business with you! "

    Caping rates, fees, administrative charges and whatever other name they give add-on costs is paramount to protecting consumers and giving them more control so they can make financial plans without creditors pig-piling on them with flexible interest rates. i.e. 5 credit cards with $6000 balance might be manageble when the rates are 8%, but have a bad month and have those 5 cards jack their rates to $29.9 and you could move from managing your debt to being in spiraling out-of-control debt. It's totally predatory.

    And the economic engineers who allow that come from the top. Elections matter.


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    Oct 04, 2008 11:47 PM GMT
    ruck_us saidAs I posted in another thread, Congress needs to take some of that bailout money and create a relief fund for mortgagees facing foreclosure.
    I agree with you ruck_us. I think if some of the mortgages were renegotiable so that owners could afford to pay, SOME of the foreclosures could have been stopped. I think the republicans however were opposed to it .. it looks like way back in February the democrats tried to do this but republicans blocked it ..

    http://www.housingwire.com/2008/02/29/republican-senators-block-housing-bill-democrats-vow-fight/February 29, 2008
    Senate GOP members blocked a proposal on Thursday by Democratic leaders to introduce a second economic relief bill focused on housing reform. The proposal, led by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Majority Leader Harry Reid (D-Nev.), would seek to allow bankruptcy judges to modify the principal amount of a borrower’s mortgage during bankruptcy and would appropriate Federal funds to be used to buy bad mortgage debt.
    [ ...]
    CNN reported late Thursday that the Democrats fell 12 votes shy of the needed 60, an outcome that Sen. Reid painted as a win for Capitol Hill’s newest enemy:

    “The people on Wall Street are high-fiving. They just won again,” Senate Majority Leader Harry Reid, D-Nevada, said after the vote.

    “The big banks just won again. The mortgage bankers won again. Oh, there are a few losers out there, like millions of consumers — millions of people who are going into foreclosure or are about to go into foreclosure. They lost.”


    I don't know what the current status of this is.
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    Oct 05, 2008 12:42 AM GMT
    it doesn't matter if it works or not for the American people...it has been orchestrated and designed to make a few people very rich. but of course, you won't hear about that part in the news.
  • HndsmKansan

    Posts: 16311

    Oct 05, 2008 1:56 AM GMT
    Well let me say I have to partially disagree with the lot of you here. While I'm not using my taxpayer money to "bailout" a bunch of sharksters in those banks... just know the banks are not the entities they once were.

    What I worry about is the average "Joe" and his perception of this mess. I see my clients every day and can see the concern.. .the worry and the fear, even some of those that haven't questioned me about my perceptions. What is worrysome is the CONFIDENCE in whats going here and perception is everything. If this "bailout" or "infusion" adds to the confidence that the average American has in his government and certainly to save money via the markets, I'm for it. There should be accounting and I find the additions (the "sweeteners") to convince republicans to vote for it makes me sick.
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    Oct 05, 2008 2:03 AM GMT
    Chizzad saidFirst of all I can't believe we, the American people, have stood by and allowed this to happen. Just because the banks are getting money which will allow them to invest again does not mean the economy will be saved. Until the average American is able to have the buying power back then Wall Street will simply be Fall Street again in no time. They need to figure out a way to get the money back into the hands of the working class and heck even consider creating some jobs in America once again. If predictions are correct and the big auto makers ask for another bailout then I think some protesting should be going down lol. OK I just wanted to vent, you may ignore this tehehe!


    If banks can't loan money to small and/or large businesses, then they will be unable to pay their employees, initiate new projects, and essentially function to churn the Capitalistic society we've espoused. The engine of our economy is fundamentally contingent on the loans banks provide us and our employers.

    ...In other words. No lubrication for banks=no money for us.
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    Oct 05, 2008 2:40 AM GMT
    I was against it....still am against it....and now lets have the most massive Socialist Government in US history. We the stupid ass people sit here and let them get away with it. What is wrong with Amerika? I am so baffled. The very best way to stimulate the economy would be to have CONTROL of our own spending and our own destiny. The moment we give up control...we have messes like the one we have. I have read over and over how this bail out spells F A I L!!

    I do think there was a much simpler and easy way. I just don't feel like getting into to it all because I got a date.
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    Oct 05, 2008 2:59 AM GMT
    What a mess we may be in.

    The bailout plan helps the bank, and if we are lucky in four to six months, it will trickle down to small business. In the meantime, consumers will have no access to loans. Meaning less student loans available too (could create a dumber society).

    The focus of the bail out should have been on create jobs and boost confidence. People can feel somewhat better about their banks (even though they already had federal insurance on it to protect it).

    The other problem is that this bailout put a bandage on a mess which will cost people to cover it (though may do little to truly affect the tax payer).

    The former CEO's whose businesses are not dead should be not paid monsterous bonuses for thei mistakes.

    And the bailout for automakers to create more efficent cars is crap. A smart bussiness will react to the consumer and not tell the consumer what they want. They should not be paid billions to create efficient cars when that is the current demand. Did the people making these choices every study the basics of economics - supply and demand?

    This bailout may or may not help depending on the housing market - should we have rode the wave a little while and take the pain now or only prolong its coming with extra costs to the american people and their next of kin?
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    Oct 05, 2008 4:16 AM GMT
    DenverClimber3 said
    Chizzad saidFirst of all I can't believe we, the American people, have stood by and allowed this to happen. Just because the banks are getting money which will allow them to invest again does not mean the economy will be saved. Until the average American is able to have the buying power back then Wall Street will simply be Fall Street again in no time. They need to figure out a way to get the money back into the hands of the working class and heck even consider creating some jobs in America once again. If predictions are correct and the big auto makers ask for another bailout then I think some protesting should be going down lol. OK I just wanted to vent, you may ignore this tehehe!


    If banks can't loan money to small and/or large businesses, then they will be unable to pay their employees, initiate new projects, and essentially function to churn the Capitalistic society we've espoused. The engine of our economy is fundamentally contingent on the loans banks provide us and our employers.

    ...In other words. No lubrication for banks=no money for us.


    So no business is proftiable? You mean to tell me that the only way a payroll can be met is on borrowed money? What is the purpose then? I would rather have seen the government spread 700 Billion throughout the tax paying citizens, I think that might boost the economy!
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    Oct 05, 2008 4:50 AM GMT
    Once the flood of foreclosures reduces to a trickle and the real estate values stop the downward descent, then, and only then will the banks open up the purse strings again. Most "experts" don't see this happening until late '09 or into '10. I'm not confident the bailout will provide answers the brain surgeons in Washington think it will, and if it does it is not in the immediate future.
    My job at a bank is to value assets (properties we presently own or will likely own). The loss of real estate values (especially in CA and FL, which were once tremendous hotbeds) are staggering at 25-30% in the past year alone in some areas. It's a great buyer's market, if you can obtain financing. I'm not surprised the banks are Scrooges with the money they have to lend. This isn't likely to change any time soon, and the hundreds of billions of dollars in losses has the fingerprints of everyone from the borrower to Wall Street all over it.
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    Oct 05, 2008 4:55 AM GMT
    Chizzad saidSo no business is proftiable?
    I think the porn business is doing well. Maybe we can switch to a porn economy icon_lol.gif