Bailout

[kenshinsbabe]

[FONT="Georgia"][SIZE="2"][B]I've been watching CNN pretty much all day and my head is full of bailout plan fluff. For those of you who don't know, the $700 billion bailout plan didn't pass. Dow points subsequently dropped 777 points, sending Wall Street into a panic. More info here: [U][url=http://www.cnn.com/2008/POLITICS/09/29/bailout.fallout/index.html?iref=mpstoryview]Link[/url][/U]

As a senior in high school trying to get her college stuff in order, this worries me. What are your thoughts on this whole bailout mess? What can we do so that we're not left in the street with no money?


Who thinks we should just go back to trading and bartering?[/B][/SIZE][/FONT]

[The13thMan]

[FONT="Trebuchet MS"]I don't know a lot about economics or politics. My general impression from other people is that the 700 billion plan was a bad idea - a bandaid for a bullet wound.

I'm not too worried, either. Hopefully people are smart enough to not repeat history's mistakes. Of course, i could be wrong and we could be on our way to another great depression. If that's the case then i guess i'll finally have a reason to go on a diet. Aha! Nah, i don't think there's much of a chance of anything like that. [/FONT]

[eleanor]

[font=trebuchet ms] It makes me glad that I will living in a college bubble for the next four years. One that loves me and gives me lots of financial aid.[/font]

[Allamorph]

[FONT=Arial]First, I think it's depressing that our economy is half-run by people gambling on companies' futures with money that doesn't exist. I would love to drag every speculator in the US out into the streets and shoot them, one by one.

Second, if a company is going bankrupt, let it go bankrupt. Chances are the other competing companies will swoop in and vie for the leftovers, and that'll be good for competition [I]and[/I] provide job opportunities for those ousted by the dead company.

And besides, we don't need a nation-wide mortgage company owing the Federal sector any favors.[/FONT]

[ChibiHorsewoman]

[color=#9933ff]I'm suddenly very [I]very[/I] grateful to have a career in medical and not only in medical but in geriatric care because it's a growing field. I'm also grateful that my parents are in food service and so is my brother. I'm also glad that my boyfriend is a Canadian citizen because anything else starts going wrong I'm heading up there.

As for the bail out- I'm glad that congress vetoed it today. I don't see why the general public should have to pay for something that these companies knew was going to happen years ago. The banks don't pay you off for forgetting to keep up with your payments, so why should we have to pay for their screw ups?

The other sad thing is that the US is clearly heading for a depression and the government is still trying to deny it. What is it going to take for them to open their eyes? The dow already sank over 777 points today which is the lowest since the crash of 87. This does have me worried, job security aside.[/color]

[Lunar]

[COLOR="Indigo"]I'm agreeing with everyone here, although I don't know much about politics and I hate the news.:animeswea Hopefully, we're not totally screwed if there's one person with alot of sense. But other than that, most likely another depression. Glad I'm getting a secure job when I get older.:catgirl:[/COLOR]

[Drizzt Do'urden]

The only probelm with allowing companies to go bankrupt is the size of them. For years anti-trust laws should have prevented companies, in particular the larger mortage companies, to grow so large and have such an impact on our economy.

Basically what the problem with not doing anything is, if these companies start to go bankrupt the panic will grow tremendously. Making it impossible for ANYONE to get credit, thus money won't be put back into the economy as much. Things like New cars, and homes will be cash or check only.

Right there you're talking about a ripple effect that is going to cause more plants to shut down. Less new car sales=less new cars=less demand for jobs=plants shutting down, as one example. Next you have homes, less home sales=less demand for homes=even less jobs. Now you're talking about contractors, siding companies, home companies that deal in premanufactured homes, all those jobs wiped out.

That's just one end of the spectrum, for anyone wanting to go to college. It won't happen if things keep going, those of us finishing college, say good-bye to the job market in several fields.

I'm actually appalled that this has been going on for 10years now. No that's not a shot a democrats saying that this is all clinton's fault. It's been a process that was caused by a joint effort from the consumer and big business. If nothings done we're screwed, if the government bails the business' out then its up to them if they "unfreeze" credit or not. My guess is the bulk of them will take their money and run.

Just my little rant, (As a worried consumer preparing to start his life)

[Shy]

[size=1]Without going into a lot of specifics, my basic belief is that the economic system [i]does[/i] work. It is the responsibility of the private sector to account for these bad loans, and expecting the federal government to solve any problem in a satisfactory way is unrealistic.

I'm very relieved that this proposed bailout failed. We are definitely in for some rough times ahead, but no lessons can be learned if big business and the US government don't suffer from the situation they had a hand in creating. Adding more bad debt to an incredibly bloated spending defecit was not a step in the right direction.

- Shy[/size]

[Horendithas]

[COLOR="Indigo"]I'm actually pleased the bailout was not approved. Mainly because the US as a nation doesn't need to be paying for bad loans. Or bailing out companies that seem to be unwilling to fix the mess themselves. They've known for sometime that it was a disaster and yet held back to wait on a handout to save their butts.

Instead of you know, helping borrowers by restructuring the loans and extending the time to repay. In other words, I see it as a self-inflicted problem that our tax money doesn't need to be fixing. Yes it's going to have an impact on the economy, but a better one that simply adding to the mess by putting the expense on us instead. [/COLOR]

[Raiha]

[quote name='Shy'][size=1]Without going into a lot of specifics, my basic belief is that the economic system [i]does[/i] work. [/size][/QUOTE]

[COLOR="DarkOrchid"][FONT="Times New Roman"]But remember kids, you have to specify that it's the 'free market' system that does work. When it's meddled with, and regulated and taxed and worried into the ground by nitpickery and bothering in the government things go badly.

And now we pay for it. Sarbanes Oxley.

Go find out for yourself what the government ordered the U.S.'s companies to do. And remember that economic problems can not be laid solely at the feet of the people who happen to be there right when things appear to be bad. That's right. I said appear. I think this situation isn't as bad as it's being portrayed. And that the media is trying to pull a fast on us. We'll see. Now won't we?[/FONT][/COLOR]

[ChibiHorsewoman]

[color=#9933ff]The local news has been saying that we (upstate New York) will face the brunt of this crisis because New York State gets a lot of its revenue from Wall Street and that system's been screwed up. So a lot of projects including ones in upstate New York are slated to either be scrapped or will be delayed. This includes the expansion on a nursing home at one of the local hospitals.

I don't know why this has been going on for the past ten years unchecked, in the local paper on Saturday or Sunday- I think it was Sunday- they had a graph and charts about what lead to this crisis. The housing market and loans were going great until the early part of 2002 or so. Everything started to slump after 9/11 and then the wars in Afghanistan and Iraq. Oddly enough this is one of the few times in history when a war hasn't lead to an economic boom or gotten us a better economy. Instead it lead to a recession that the government won't even acknowledge.[/color]

[Guest Crimson Spider]

I'm not so sure that Iraq has lead to a recession. The spending on the war has only been 0.76 trillion, which is a fraction of what the government has been spending on local affairs.

Now, the crash in the housing market is very similar to what caused the original depression: Americans were spending more money than they made. People were buying up plans that offered balloon payments; pay low now, and then pay high later. When they did this, the market for houses became accustomed to that system, causing an inflation that was ridiculous.

But, the piper had to be paid. With the SUV more popular than ever, Gas prices skyrocketing, and loans needing to be called, the American people realized that no, you can't have your cake and eat it with imaginary money. So, everyone became bankrupt, and the Banks are being hit.


Now, I am very indifferent on this issue. I just cannot decide where to go. I mean, sure, you can adhere to the political idealism of absolute capitalism, and just let the people, the nation, and the whole world suffer under the collapse of the U.S. economy (not a literally collapse). Or you can try to fix some of the problems that are causing a massive amount of debt in companies, and have the economy bounce back. I heard somewhere that the buyout of .7 tril from the government would be less than the losses sustained from an economic collapse, so it seemed like a good idea.

The greatest problem that I have is that these are not "solutions" to what originally caused the problems. They are temporary fixes, and these fixes do not guarantee that the problem will be resolved. The entire thing is uncertain.

Frankly, I'll go for any solution, but I was hoping for a solution. Just letting things run by themselves, while ideal in the eyes of capitalism, doesn't seem like the best choice.

[ChibiHorsewoman]

[quote name='Crimson Spider']I'm not so sure that Iraq has lead to a recession. The spending on the war has only been 0.76 trillion, which is a fraction of what the government has been spending on local affairs.[/QUOTE]

[color=#9933ff]I wasn't saying that the two wars we're involved in right now are the sole cause of this recession- although they may be considered a contributing factor- I'm saying that if you look through history many wars- at least in the States have contributed to the economy- especially in World War two when it helped finish getting us out of the Depression.

I don't think that the American people as a whole should be expected to bail out the bankers who make more in one month than many of us make in a year. I am glad that the executve's pay is being cut by fifty percent or above- or maybe that's bonuses (forgive me, I usually watch the news while watching the residents where I work :animeblus) because they can afford it plus it's a way for them to be held accountable.

And now... I think I'll go read some stuff so I can comment better.[/color]

[Gelgoog Pilot]

There have been a lot of good points made so far. Very hard for me to add anything fresh, but I too am glad that this was battered down. For one, the system would work if it were a free market, but I don't think we will ever see a truly free market in our life-times. There will always be money and favors being passed back and forth between politics and business. Not only that, we would then need to elect politicians that do not own stock in companies, or have any personal interests in them, this is virtually impossible.

Chibi, I think you are pretty much correct, I don't find it as baffling though that our current 'war' isn't producing positive results economically. This is an unpopular war, even more so than Vietnam. There is no vast patriotic urge to buy and produce to help support our government and economy which in turn helps our troops.

I'm very glad that we are not spending over half a trillion dollars on something that will only fester or return upon us. Currently we are treating this as a poor doctor treats a patient. We are trying to treat the symptom and not the infection. Once we can find the root of the problem and expel it, the economy will be far better off.

[James]

[font=franklin gothic medium]The problem here isn't the free market system, it's simply that America made a big mistake by deregulating its banking system to the extent that it has.

Also the percentage of sub-prime loans in the U.S. is far too high.

And on top of that, the U.S. banking system is about as clear as mud - each State has its own regulatory system and there is no clear Federal context for that.

The availability of easy/cheap credit is also a big problem. The United States is [i]far[/i] too credit dependent and not nearly focused enough on liquidity.

This situation will obviously affect other economies, but in Australia, we are well-placed. Why? Because Australia has the most-effectively regulated banking system in the world. There are several independent Federal bodies that regulate the industry while also providing substantial free market access.

I think (from a lay point of view) that America needs to a) create stringent Federal regulation to ensure greater transparency and back-up for bad loans and b) it needs to unify the banking system under a set of Federal regulations that override the State system.

As far as the bail out goes... I think it's probably necessary unfortunately. It's easy to say "don't do it", but people don't realize that a bail out doesn't save the executives of these banks - it protects the mass market (i.e. ordinary people). Unfortunately many of these people should not have gotten credit in the first place [i]or[/i] should have only been approved for lesser amounts that they could manage.

Also much of that credit, from what I understand, is largely unsecured. That's pure madness. Onselling a mortgage to another business is ridiculous - if someone can't pay their mortgage, the bank needs to have security so that it can recover its debt as much as possible.

But a bail out [i]without[/i] substantial regulatory reforms will not work longterm. The two must be tied together, otherwise this will just happen again.[/font]

[Raiha]

[quote name='James'][font=franklin gothic medium]But a bail out [i]without[/i] substantial regulatory reforms will not work longterm. The two must be tied together, otherwise this will just happen again.[/font][/QUOTE]

[COLOR="DarkOrchid"][FONT="Times New Roman"]Alas, the bailout went down in a furious ball of flame and rhetorical childishness. The Republicans are furious with the Democrats, the Democrats are trying to make Republicans look racist, I am not worried in the least about the future since my money is all in one place-

And in other news the market will bounce back. And the bailout that just failed just now was the worst I've ever seen. It was so vague, so full of potential fine print, and for the record, right in its preamble, it stomped all over the U.S. Constitution. Go see for yourself. It was appalling.[/FONT][/COLOR]

[James]

[font=franklin gothic medium]I haven't seen the detail of it (in all honesty, I'm not [i]that[/i] interested, haha), but my understanding was that the Republicans were the ones who blocked it. Maybe that's just second-hand reporting coming in (it's likely an over-simplification too, since it's hard to capture this complex issue in a three second soundbyte).[/font]

[ChibiHorsewoman]

[quote name='James'][font=franklin gothic medium]I haven't seen the detail of it (in all honesty, I'm not [i]that[/i] interested, haha), but my understanding was that the Republicans were the ones who blocked it. Maybe that's just second-hand reporting coming in (it's likely an over-simplification too, since it's hard to capture this complex issue in a three second soundbyte).[/font][/QUOTE]

[color=#9933ff]According to the papers here the majority of Republicans did try to block it and the majority of Democrats tried to pass it. Which is very odd considering that the president who is a Republican was pushing for the bail out to pass.

But I'm glad it was blocked and turned down. They need a solution down on Wall St (which for everyone's information is twenty percent of New York State's Tax revenue) and a solution for the American economy as a whole not just a band aid. It's a gaping wound not a paper cut.[/color]

[James]

[font=franklin gothic medium]I agree that a longterm solution is needed. My only concern is that if you [i]only[/i] apply longterm changes now, there may be nothing left to save (not to mention that millions of people, in the U.S. and globally, could suffer unnecessarily).

Bailouts are always extremely difficult and controversial, but if a bailout is done, it does need to be accompanied by strong longterm legislation.[/font]

[Allamorph]

[quote name='ChibiHorsewoman][color=#9933ff']But I'm glad it was blocked and turned down. They need a solution down on Wall St (which for everyone's information is twenty percent of New York State's Tax revenue) and a solution for the American economy as a whole not just a band aid. It's a gaping wound not a paper cut.[/color][/quote]
[FONT=Arial]Yeah. And the other side of this, and the part that bothers me the most, is that the bailout money simply [I][U]does[/U] [U]not[/U] [U]exist[/U][/I]. So effectively this bailout would not have done anything except keep [I]someone[/I] in the hole.

And let's face it. Our Feds do not need to be any more in the hole.[/FONT]

[Guest Crimson Spider]

I did read about another solution somewhere that would require substantially less money. Here is how it goes:

The Government will open up a loaning system that has about 40 billion invested in it, more if need be. Banks can take loans from this stockpile in order to pay their workers and maintain business, giving them time to resolve their own solutions. So, instead of selling the bad mortgages, the banks would fix them on their own while taking a temporary loan from the government.


This idea seems to be much cheaper, but I get the feeling that it will not work, because it assumes that the banks can actually fix the problems on their own. If they can't, then we'll be back here in about a year.

[ChibiHorsewoman]

[color=#9933ff]The problem is as a lot of people in this thread have been saying is that there was no central control on the banks it was just every state for themselves and now New York State (along with the rest of the country) is royally screwed because of a few corperate fat cats (sorry watched Ellen on Friday- she's how I get most of my political info :animeswea) and no regulation.

As Allamorph pointed out earlier there is no bail out money- I mean where the heck do they expect to get 700 billion dollars? Okay yes I do know, make more and stick it in the banks. But that's just a quick fix, not a permanent solution and that's what this country needs. Right now Japan and Australia are confident that this new bill will pass in Senate today (I woke up and turned on the news while getting ready for the day and I still have it on now) so their stocks are up, so as James said this isn't just a national problem it has the potential to be a global one (I've heard Canada is beginning to suffer in the economy because of the US economic crisis)

I'm now waiting for the vice presidential debate tonight to see what they'll say about the economy, because this is getting crazy.[/color]

[Sabrina]

[FONT="Tahoma"]There were a number of problems with the original bailout bill that was turned down. One, as Sir Allamorph already pointed out, the money doesn?t exist. Two, it would benefit those responsible for the financial disaster in the first place. And three, the one that bugs me the most, they want to use the tax money of citizens like myself who were not irresponsible, to fix the mess of those who were.

I just don?t agree with that kind of solution if there isn?t going to be some change in the regulations to keep it from happening again. The regular American doesn't need to be bailing out people who were financially irresponsible in the first place. The way I see it, if we bail them out, sure it might give the illusion of security, but it would also be setting us up for further hardships down the road. Because the original problem would still exist.[/FONT]

[Guest Crimson Spider]

Certain laws will need to be passed with any bill. That is a given. Time and again the people have demonstrated their irresponsibility towards the market, and toward themselves. It is at the point where the responsible people need to have their freedoms limited, because the harm the irresponsible people would do is going to be greater than the harm caused by limiting freedoms.


There was one thing that I could compliment the original plan on, and that it was safer in regards to the actions of the banks and the people. By buying the loans, you take the weight off of the bank, which allows them to act normally. With the other idea I mentioned, you alleviate some of the weight, but the problem is still on the bank to solve.

Though it was "safer", the original problem isn't fixed. The problem is the number of risky loans that were given out, the amount of credit that was given out, and the inability of the people to restrain themselves. We can give loans to banks to hope they fix their own loans, and we can buy out the loans and hope the banks/people learned their lesson...

If they don't learn their lesson, then almost no plan will work. We will charge head-long into a depression, or we will remove rights, and fix the problem.

Hence, the real dilemma. Whatever rights we remove, and whatever amount they are removed in, we are stuck with the current situation. So, we "rescue" now, and then work out the finer details of liberty later.

[Aaryanna]

[COLOR="DarkGreen"][FONT="Book Antiqua"]If I understand this correctly, these guys have been engaging in reckless financial endeavors all in the name of profit and now the government is trying to fix their stupidity. Uh... if I do understand this correctly, then it's something we shouldn't be doing, paying for people making really stupid mistakes. So no thanks.

I would only be in favor of a bail out if strict regulation was also introduced instead of a quick fix that wouldn't stop it from happening again. Of course this makes me worry about the economy, but at the same time, I don't want to see us simply holding off a greater disaster by not fixing what allowed it to happen in the first place.[/FONT][/COLOR]