bailouts

[Breukelen advocaat]

I doubt that there is a single poster on this board that lived through the Great Depression. Most of them are young, and their parents are my age or younger - their grandparents may have been children when this event happened. I know, from my parents' generation's stories, that a depression is not something that you take lightly.

I do not buy things that I cannot afford to pay cash for. If I use a credit card, it is only for convenience and 99% of the time I pay the entire bill off as soon as I receive it. I've never owned a car, a house, co-op, or any type of property. That being said, I understand that many people are willing to put their ass in debt because they want to have a family or live above their means in some other way. Even though I did not have these things, I cannot come out against the bailout loans that are currently being worked out because a depression is not something that I would wish on anyone - especially myself.

My heart does not bleed for those who have to rent an apartment instead of owning a house, but it's not right for everybody to have to suffer because of bad loan practices. If we let the country's economy go under, we'll all be in very bad shape.

[dragonrider]

I doubt that there is a single poster on this board that lived through the Great Depression. Most of them are young, and their parents are my age or younger - their grandparents may have been children when this event happened. I know, from my parents' generation's stories, that a depression is not something that you take lightly.

I do not buy things that I cannot afford to pay cash for. If I use a credit card, it is only for convenience and 99% of the time I pay the entire bill off as soon as I receive it. I've never owned a car, a house, co-op, or any type of property. That being said, I understand that many people are willing to put their ass in debt because they want to have a family or live above their means in some other way. Even though I did not have these things, I cannot come out against the bailout loans that are currently being worked out because a depression is not something that I would wish on anyone - especially myself.

My heart does not bleed for those who have to rent an apartment instead of owning a house, but it's not right for everybody to have to suffer because of bad loan practices. If we let the country's economy go under, we'll all be in very bad shape.

My grandparents lived through The Depression, and yeah, it was no fun. They were just coming into adulthood when it struck and all the jobs went away. My grandmother's first husband died of tuberculosis. My grandmother could not support herself and her daughter (my aunt). And so my aunt lived with other family far away for years, while my grandmother struggled to make ends meet. She later remarried and had my dad during the War. My other grandparents got married during the Depression, but seldom lived together because my grandfather followed work where he could find it. He lived away from my grandmother in tents in work camps and worked for the CCC and on WPA projects when those programs were started. They didn't have kids until the Depression was nearly over. For that generation, delaying kids until you were 30 was not so common, but if you had to spend a whole decade living apart and not knowing where your next meal was coming from, you put a few plans on hold. I don't wish that kind of hardship on anyone.

As for the debt thing. I don't carry what you might call "consumer debt" either. I use the credit card for convenience and always pay it off each month. I paid cash for all my cars except for one, and that was an emergency situation in which I needed to replace a totalled car in order to keep a good job --- I paid it off in a year. I think I do a good job of avoiding "bad" debt.

But credit and debt do have a productive role in our society too. I am glad I was able to finance a house. I did it responsibly with 20% down and a 30-year fixed mortgage. I have a few investment projects that I am considering, and I may need to draw on an equity line in order to do them. I am also glad for the equity line in case the roof fails or the water heater blows up. It's extremely important to the economy for individuals and businesses to have access to financing, and that is exactly what was in danger of disappearing with this financial crisis.

If the banks won't do any lending at all, then our economy stops, and before we know it, none of us have jobs, homes, cars, or food.

[flyingimam]

Later he said he meant the "American Worker" is strong and workers are the fundamentals of the economy. He's a boob. That's is not what the term "fundamentals" means when you are talking about the "fundamentals of the economy." The "fundamentals of the economy" are measurable yardsticks by which you measure the economy --- things like growth in GDP, strength of the dollar versus other currencies, inflation and things that drive it like energy costs, interests rates, consumer confidence, unemployment rates, job creation rates, durable goods orders, etc. It's not some vague thing like "the American Worker."

McCain either truly has no idea at all what he is talking about, or he is lying to our faces.

did u know that we almost got no industries left in america for our workers?

we got auto and aerospace as the only major lasting industries, the rest is service section and our economy is BASED on consumer spending...

with this said, he would have been better off sayin our fundamentals are our consumers.... which i think almost everyone can agree are being screwed over by our governments decisions!

and in my believe, HE AINT GOT A CLUE WTF IS UP WITH ECONOMY...
imo he wouldnt be lying into our face like this... or he must be thinking we are all children who will buy this crap as daddy's word!

Canada any1? lol j/k

[dragonrider]

and in my believe, HE AINT GOT A CLUE WTF IS UP WITH ECONOMY...
imo he wouldnt be lying into our face like this... or he must be thinking we are all children who will buy this crap as daddy's word!

It's plain wrong, so I'm not sure if he is just clueless or if he is lying. Either way, it is very dangerous misinformation.

Bush has been leading us along with this tra-la-la everything is just fine song and look where we are at now. WE NEED TO BORRROW A TRILLION DOLLARS IN LESS THAN TWO WEEKS TO KEEP AFLOAT!!! Bush led us right up to the precipice denying anything was wrong, and it looks like McCain is singing the same song!

Do not take a chance on this guy!

[flyingimam]

It's plain wrong, so I'm not sure if he is just clueless or if he is lying. Either way, it is very dangerous misinformation.

Bush has been leading us along with this tra-la-la everything is just fine song and look where we are at now. WE NEED TO BORRROW A TRILLION DOLLARS IN LESS THAN TWO WEEKS TO KEEP AFLOAT!!! Bush led us right up to the precipice denying anything was wrong, and it looks like McCain is singing the same song!

Do not take a chance on this guy!

my friend, we must be fair... its not like its all Bush's fault despite how bad this guy has performed in certain fields imo

just take a look @ this
United States public debt - Wikipedia, the free encyclopedia

we have been doing this for over 50 years man, ITS OUR FAULT as well as our politicians fault who stayed silent and preferred the prosperity built on debt, my 2cents

[JakeMartinez]

I think it's the height of bullshit to bail out companies that ran themselves into the ground out of greed. No one's talking about holding these greedy bastards accountable for their actions. How about some hard time? Maybe these CEO's need to spend 10-20 years in a cell with a well-hung rapist to attone for their actions?

Just maybe?

And, based on what I've been hearing in the financial world (I have a good friend who works at a title company and has lots of deep connections), a bail out might not even be effective at this point. I mean, the stock market jumped nearly 1000 points after Bushie announced his stupid idea, but just today it dropped ~400 points again.

Even if it does work, though, these corrupt fuckers should definitely be held accountable for their actions. How many people are starving RIGHT NOW because of what their greed has done to the economy???

(sigh)

[Breukelen advocaat]

I think it's the height of bullshit to bail out companies that ran themselves into the ground out of greed. No one's talking about holding these greedy bastards accountable for their actions. How about some hard time? Maybe these CEO's need to spend 10-20 years in a cell with a well-hung rapist to attone for their actions?

Just maybe?

And, based on what I've been hearing in the financial world (I have a good friend who works at a title company and has lots of deep connections), a bail out might not even be effective at this point. I mean, the stock market jumped nearly 1000 points after Bushie announced his stupid idea, but just today it dropped ~400 points again.

Even if it does work, though, these corrupt fuckers should definitely be held accountable for their actions. How many people are starving RIGHT NOW because of what their greed has done to the economy???

(sigh)

Allowing the country, and most of the world, to go into a major depression by allowing a company like AIG to go under because of the acts of a few people is like letting a multi-dwelling building burn down because a firebug committed arson.

[dragonrider]

my friend, we must be fair... its not like its all Bush's fault despite how bad this guy has performed in certain fields imo

just take a look @ this
United States public debt - Wikipedia, the free encyclopedia

we have been doing this for over 50 years man, ITS OUR FAULT as well as our politicians fault who stayed silent and preferred the prosperity built on debt, my 2cents

I agree that the long-term situation is not ALL Bush's fault, but I do think he bears some significant responsibility.

What I am faulting him for and also faulting McCain for is this idea that they both have been pushing that nothing is wrong. They both have been saying the economy is fundamentally strong! It is not!

Have Paulson and Bernanke been telling Bush that the economy is fundamentally strong and then in one week make a complete reversal and decide we need a trillion dollars in order to avoid a Depression? I don't think that is true. I think that Bush has known that we are in serious trouble for a long time and has not wanted to say or do anything about it.

This is only my personal theory, but I think Bush was hoping we could push the collapse off a few more months and let the next guy clean it up. He wanted to go on saying everything was OK, and then if it all fell apart in January or sometime next year, maybe everyone would just blame the new President.

There is just absolutely no way that these economic experts in the Treasury and the Federal Reserve were completely unaware of fundamental economic problems that were very serious dangers for our economy for some time and just figured it out last week. That is impossible. If it is true, then they are incompetent.

Or perhaps it is the opposite. Maybe the economy really is strong and this trillion dollars is simply being looted from us for no good reason. Maybe the bailout is not really necessary and it is just a big money grab?

[flyingimam]

What I am faulting him for and also faulting McCain for is this idea that they both have been pushing that nothing is wrong. They both have been saying the economy is fundamentally strong! It is not!

i get it. i was just tryin to clarify things a bit to prevent attacks from your opposite point of view that would drive this thread to Bush-bashing subject and somehow eventually get it locked.

Or perhaps it is the opposite. Maybe the economy really is strong and this trillion dollars is simply being looted from us for no good reason. Maybe the bailout is not really necessary and it is just a big money grab?

i dont rule out the idea of money grab. but i certainly dont think an economy with 10 trillion dollars worth of debt is considered strong...

again our economy has long been based on consumer spending and guess what, 10 trillion dollars means some $30000 per capita worth of debt. meaning 30k for every man, woman and child in this land.

i dont know how no1 has never seen or noticed this gigantic flaw... we borrow money from foreigners and from our credit cards all the time to spend and be "capitalist" and yet we think OUR economy is str8?

we are on crash-course if we dont change our "fundamentals" of economy, that i dont doubt being in a business major.

or perhaps defaulting on foreign debt was the idea at first.... but now china is unexpectedly too strong for us to threaten?

[GoldenBoy812]

I agree that the long-term situation is not ALL Bush's fault, but I do think he bears some significant responsibility.

I do not think much of it is Bush's fault at all. Maybe you can make the argument that the federal governments dramatic increase in size caused for a debasement of the currency, but Bush really just inherrited this mess. He inherrited Greenspan who lowered interest rates to their lowest level (Keynesian measure) in decades (50's).

What I am faulting him for and also faulting McCain for is this idea that they both have been pushing that nothing is wrong. They both have been saying the economy is fundamentally strong! It is not!

It certainly does not help to have your chief economic advisor chiefly
responsible for the Gramm-Leach-Bliley Act. Of course, it should be noted that Clinton signed this into effect.

Have Paulson and Bernanke been telling Bush that the economy is fundamentally strong and then in one week make a complete reversal and decide we need a trillion dollars in order to avoid a Depression? I don't think that is true. I think that Bush has known that we are in serious trouble for a long time and has not wanted to say or do anything about it.

Paulson is former chairman of Goldman Sachs. Does anyone find it hilarious that a former Investment Bank CEO is treasury secretary, and governmental actions were more so protective of "To big to fail banks" and little more than a rebate check for taxpayers?

This is only my personal theory, but I think Bush was hoping we could push the collapse off a few more months and let the next guy clean it up. He wanted to go on saying everything was OK, and then if it all fell apart in January or sometime next year, maybe everyone would just blame the new President.

Just like it is greasy to blame Bush for the current situation, it would also be a fallacy to blame the next executive for actions beyond their control.

There is just absolutely no way that these economic experts in the Treasury and the Federal Reserve were completely unaware of fundamental economic problems that were very serious dangers for our economy for some time and just figured it out last week. That is impossible. If it is true, then they are incompetent.

Exactly!~! Has the instance of such controlling and unconstitutional financial banking policies known as the FDIC been able to sure up the problem? Financial entities of large stature seem to be failing or nearly failing every week. Has the economy become too complex to be controlled by artificial interest rates? I believe so, and will use the Japanese as an example.

Just as the boom builds outward from banks to the rest of the economy, with banks benefiting the most, the bust collapses inward to banks from the rest of the economy, with banks suffering the most. Now the balance sheets of fractional-reserve banks, swollen with loans and checkable deposits during the boom, suddenly collapse. Or rather, the value of their loans collapses initially, as the projects they lent to turn out to be unprofitable, leaving them with negative net worth and then upon bankruptcy, their checkable deposits are liquidated.

Bankruptcy is made much more likely by the policy of fractional reserves. The checkable-deposit liabilities built up during the boom no longer have assets of equal value balancing them out once the crisis hits. Customers who know this have a great incentive to demand redemption of their checking accounts in cash, an obligation which fractional-reserve banks cannot fulfill even when the value of their assets is intact let alone after their loans devalue.

Monetary deflation via bank failures is the other side of the coin of liquidation of bad loans. Liquidating the loans implies realizing the bankruptcy of the businesses that have taken out these loans. The monetary inflation and credit expansion of the boom are now reversed in the bust. The capital build-up of the boom must now be dismantled and factors reallocated into lines of activity made profitable by consumers.

It goes on to say:

From 1985-1990, the largest six banks in Japan made $215 billion worth of real-estate loans. In the six major Japanese cities, commercial real-estate values have fallen 75% since the bubble burst in 1991. Risky Japanese loans were not confined to real estate. Recently, Moody's Investors Service Inc. downgraded Toyota Motor Corp. debt from triple-A to double-A-1, leaving only nine Japanese companies with the triple-A rating and five of these are being reviewed for downgrading. Mitsubishi Electric Corp., Hitachi Ltd., Nissan Motors Co., and Mitsubishi Motor Co. all recently had their debt downgraded. Moody's is even considering downgrading Japan's triple-A, sovereign-debt rating.

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