You don’t get it. The banks saw an easy way to get money by offering the no interest loans. The banks thought that in 5 years when the consumer has to pay not just interest but principle on their shiny new homes, the housing market would be great again. They could kick the non-paying home owners out and auction the homes off and make a profit for themselves. THE BANKS WERE GREEDY! Now the housing market sucks. When the owners default on the house it just sits. The banks plans have failed and now they want a government “get outta jail card”.

The banks used to have a dept/earnings ratio. Its pretty simple. Take your earnings and what dept you currently have. Look at the loan that the customer is asking for. Add it up see if you can afford it. If not, deny the loan. My first home I was denied until I came up with 20% down.

Yeah, I definately understand that about CNN - that one thing just made sense to me. I do try to keep my BS filter on high alert while watching.

…rename it OMG…

too f’in funny - sounds like a great idea for a comedy skit - “OMG News - OMG! this just in!….”[/quote]

hehe you’re right :) if you want a taste of good journalism, check out GNN (Guerrilla News Network) - http://www.guerrillanews.com/

Looks like my experts and I were wrong. Sorry to have created more fear. I got caught up in the emotions of the day. If we keep a level head, this shakeout could be the best thing for America to choose a new path of responsible government. Call me a dreamer.

It’s like giving a powerball winner of 300mill,who blew it all and is now broke, your life savings to invest. Though you cannot review what he is doing, nor can any police, judge or financial admin.

Sounds great to me!!

C’mon man, b.s. Dale! People are getting caught up in the ‘principle’ of bailing out these rich & greedy Wall Street fools, and the conservative ‘principle’ of “free market capitalism” and not focusing on the reality of what will happen if they don’t pass that bill.

What happened today was scary. Very scary. Biggest # drop in the DOW in history. If they don’t get a deal done there will be another drop, and over the next few months if AIG falls apart, a few more critical companies hit the crapper, and/or nobody or no businesses are able to get any loans you’re going to see the market hit the crapper circa 1929, not just a recession.

Its not like we’re giving these execs 700 billion dollars and saying “there ya go, have fun!”. The gov’t wants to buy 80% of AIG in order to save it, and the plan is hopefully as the recession turns to better economic times in a few years or several the gov’t can sell back the shares for a profit & recoup most of the taxpayer money, if not turn a profit.

I don’t want to be taught any lesson. I wasn’ responsible for any of this crap. I have zero debt and pay all my bills on time. I don’t care about teaching lessons to bad investors & greedy banks if it means I and everyone else loses many thousands of dollars, our jobs, our cars etc. Just fix the problem now, and then work on laws to prevent this from ever happening again.

This is NOT a time for “lessons” or to stick to our rigid “principles”. This is the real deal. Millions of jobs, businesses, life-savings, and all of our living conditions are at stake if something is not done. Pass a bill, soon.

Appreciated your input. Gave me a chance to really think about the situation.

We live in a society of digital money with 20th century regulations. Math/statisticians have used their alchemy to morf fix assets into digital assets. Now, the product of this alchemy is vanishing value leaving no one certain of true worth.

Today the country lost a trillion dollars of wealth and tomorrow could be even more. You can be very analytical of the what the money might do, how it could be lost, but I believe we are heading into an emotional market with fear guiding the choices of the players. It the Congress had acted with conviction, confidence would have given the world markets some time to un-leverage the mess. Without time, the cut is going to be swift and deep.

And if the markets are never going to come back, then we might as well give up.

Dangerous times, which means for those who want to make money, they can. I am betting that most of the execs on Wall Street are watching VERY carefully, waiting for the first “vote no” sign to buy, then, a vote yes will send stocks soaring, and they’ll sell and make enough money to remain rich and fat until they die.[/quote]

No this is a great time to buy in the long term too for investmenting. I wish i had some money. i wouldn’t buy RIGHT NOW, i would wait at least after a bill passes & for all this to settle down to get into the market. Stocks are low now, they will be low for likely years because of the recession. Buy now, and in 20 years you’ll be laughing to retirement. Its like all those people who bought during the Great Depression. KA-CHING!!

It depends. You have to look at what the actual financial instruments are that the government would purchase and then what the government is planning to do with the financial instruments in order to get our money back.

As you know, it is a lot safer for the government to purchase mortgages and other distressed debt which has security attached to it because if the borrower defaults, the government then gets the benefit of the security (e.g., the house). Then, whether we get our money back would depend on what we paid to buy the debts and what the security (e.g., the house) is worth in the market. My concern is that if the market never returns to “normal” or was wildly over-valuing the assets, then we might find that we paid more to buy the debt than the security is worth. I do think that is unlikely to be the case, but it’s still a risk the financial firms are effectively forcing on us as taxpayers.

So, yes, we can get some protection if the government is purchasing mortgages or other debts which have security attached.

There is a potential second problem, though. Some of the instruments the government might be buying might have been only “linked” to mortgages, which means that the government might be purchasing only a “financial position” based on a bunch of mortgages or other debts. In that case, the “financial position” might have an independent value. But, when the government buys the paper, it may turn out to be incredibly high-risk, and, on default by the borrower, it may not allow the government to seize any particular security in that “bunch”. Think of a sausage of mortgages, and then try to pick out the good bits from the bad. I admit, this is the most esoteric element of the problem we are experiencing, and I would be happy if someone with greater expertise could give me some help understanding this. The point, however, is that there is some risk that when a lot of mortgages go bad at once, the good bits in your slice of sausage might not be identifiable form the bad bits, and you might not be able to separate them out without really high costs and confusion.

The third problem I can see is what I alluded to in my previous post. There, I said that you have to do a “work-out” so that people who are defaulting on their mortgages (which we are going to buy) can get their payments down. Here is where I see the problem: If the government doesn’t want to wait until the mortgages are paid off by borrowers, it may want to sell the mortgages (or other debt) into the market before maturity. This is what the banks were doing that got us into this mess. It’s well-known that the banks basically gave mortgages to borrowers and didn’t care whether they could pay them because the banks then sold them on to other banks and investment houses as “rights to payment.” The deficiency of the plan that just got rejected in the House is that if the government wants to sell the mortgages as “rights to payment”, no one is going to buy them (and you’re not going to get your tax money back) if the borrower is in default or is going into default because the payments went from $800 per month to $1400 per month. Unless you change the terms of the contract, the borrower will still be in default and no one is going to buy the paper from the government. That basically will lock the government in to holding the mortgages long-term instead of selling them in two or five years when the market corrects. That means we’re not going to see any money returned to us until the mortgages are paid or we’ve foreclosed on everyone, held the houses until the market corrects and then re-sold them. I’d rather get people in a position to make consistent payments than pay for foreclosure proceedings on all these people and then make a quick exit by selling the paper, rather than taking the assets and tasking the government with maintaining the properties until they are re-sold.

So, yes, we could hold on to the mortgages, take the houses if the borrowers default and sell them back to the market at a profit if the housing market improves. But, if we’re taking an instrument which is little more than a fiction, we might not even get to take the houses when borrowers default. And in any case, as it stands now, if we’re not going to make sure people can actually pay the mortgages, we’re going to be stuck holding on to financial instruments with no market value, leaving the government only the option of foreclosure.

I hope this guy is right. We will know tomorrow. I see a red tsunami of financial devastation will cover the earth in the next 24hrs. The experts in my office see the first 1000 pt down day tomorrow. I sure hope this guy is right and they are wrong. Remember, most Jews will not be working tomorrow and they always seem to be the calmest in a storm. We may miss them.

How can I blame the consumer. Its the banks that let them spend beyond their means. “What do you mean you have no money to put down on a house? Its okay….buy that $450,000 home when your household income is only $75,000. We will give you a fancy smancy brand spankin new INTEREST ONLY loan. Dont worry about 3-5 years from now!!!! It will be A-OK!!!”

[/quote]

So it’s the banks fault that people can’t control themselves and live within their means?

So sorry to hear that. I do hope you will be all right, you and anyone else in your situation. I admit complete ignorance in this issue, I don’t like the idea of bailing out the banks but (more) people losing their houses? I don’t know what to do except send positive thoughts out to the world and pray.[/quote]

There are a lot of things that can be done (obviously doing nothing is not an option).

See http://ca.youtube.com/user/kdenninger for some videos that provide good examples of what can be done and why the bailout was a scam from the beginning

So sorry to hear that. I do hope you will be all right, you and anyone else in your situation. I admit complete ignorance in this issue, I don’t like the idea of bailing out the banks but (more) people losing their houses? I don’t know what to do except send positive thoughts out to the world and pray.

Have you thought about how many are going to starve as western support systems collapse when funds to purchase food dries up? Do you realize how many lower middle income people around the world are teetering on poverty? Their is a lot of blame to pass around but we live in a digital money society. Their is no real money anymore. Everything is leverage, the greatest mistake of the financial institutions.

90% of America is suffering from the lack of a sound educational system that allows people to understand finances and the lack of leadership to guide the society to follow a sound fiscal policy. The only thing that seems to have trickled down from Republican leadership through the last decade, Spend Baby Spend.

And he points out what is so obvious that the media misses it, because fear sells
http://ca.youtube.com/user/kdenninger

Remember, 1600 companies need help, with upwards of 10 trillion to fix this if you want to bailout Wall Street.

I’m glad this didnt go through. I feel the same way as the Baltimore native. Ive held the same job since 1988. I strive to pay my bills on time. I own/make payments on a home and a car. Have two children. I have never missed a payment. I do not spend beyond my means. If I cant afford it I dont buy it. Simple? Not to most Americans. I see people in my community who buy new cars every 2 years. Get a fancy “interest only” home loan so they can spend spend spend on things they cant afford. Then turn around and expect the government to bail them out of the mess they themselves have caused.

How can I blame the consumer. Its the banks that let them spend beyond their means. “What do you mean you have no money to put down on a house? Its okay….buy that $450,000 home when your household income is only $75,000. We will give you a fancy smancy brand spankin new INTEREST ONLY loan. Dont worry about 3-5 years from now!!!! It will be A-OK!!!”

Let the banks burn.

Rant Off!

Yeah, I definately understand that about CNN - that one thing just made sense to me. I do try to keep my BS filter on high alert while watching.

…rename it OMG…

too f’in funny - sounds like a great idea for a comedy skit - “OMG News - OMG! this just in!….”