In a word-- NO.
This is a discussion on Question about the Economy within the Off Topic & Humor Discussion forums, part of the The Back Porch category; Figure what the heck, ask some gun owners. Please don't go into politics, just talking about government bailing out companies. I've been troubled lately. A ...
Figure what the heck, ask some gun owners.
Please don't go into politics, just talking about government bailing out companies.
I've been troubled lately. A few years a go I lost my "good" job. But I figured out the good times were up a little ahead of the curve and saved a lot of money. While others were buying new SUVs and getting a new house on a flex mortage. In contrast, I passed on the new cars and refinanced only for what I owed (at a lower %). Now my neighbors are loosing their homes (effecting my property value).
I've always been against the government bailing out home owners. But now, the government is bailing out (in a not so round about way) the companies that are foreclosing on home owners.
Here is my Question:
Is it right for tax payer money to be used to support the companies that are foreclosing on tax payers.
Not a gun issue, but pro-gun people tend to think a certain way, and I would not mind hearing your thoughts.
In a word-- NO.
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No...not really, but there's nowhere else for the money to come from. Most large financial entities are in a risky business to start with. Problems now arise from them not wanting to take the risk. Just like the stock market and insurance companies. They live in a profitable economy very well in a risky business, and when the economy goes downhill, or you have an accident, all of the sudden they don't want to take the risks anymore. The government is now the major owner of some of these financial institutions and they've done so on your dime. I figure the country has been bankrupt for a long time...any time paper money is printed with nothing to back it in order to stimulate the economy we're just playing a game sort of like monopoly, and the bills these days look sort of like monopoly money to go right along with it.Is it right for tax payer money to be used to support the companies that are foreclosing on tax payers.
No, it's not right. The Constitution does not give the government authority to bail out private companies. PERIOD!
Part of the problem is that people who should not own a home, and otherwise would not get a loan, did so through "government sponsored programs." People who, don't make enough money, have terrible money management skills, bad credit, etc.
For a bank to give a loan like this requires they take on RISK. Risk is expensive, and instead of a bank taking on that risk, they sold that loan to big companies who in turn sold them in large packages as bonds ( to lower the risk). Then the government backed those bonds, and in order to keep the flow going, they kept giving loans out to people with worse and worse credentials.
And so basically now the house of cards is coming tumbling down, and it's trickled back to the government having to bail out the companies.
This in turn means having to tax the people to pay for the bail out. So...that will reduce our usable income, thus perpetuating the cycle even more.
In the end, the government needs to have less regulation, less interference, and let the free market correct itself.
Better to die on your feet, than to live on your knees.
Folks...we could all wake up tomorrow and find out that our money isn't worth a 'penny'...that time could be close.
Stay armed...buy more ammo...stay safe!
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Here is .02 Nope!!! But the goverment is never going to let a major company fail just like they bailed out chrysler years ago. Goverment will be bailing out GM and other at one point in time
The problem with the housing market was as simple as this. 1 house worth 200,000 need 20% down for mortage. Dont have 20%, so they dont buy.
Now lower the percent to 10% or 5% or 0% now you have more and more people bidding on same house, the house value shoots thru the roof. In peoples mind they figure they can afford the monthy payment.
So the neighbor sees that the 1st people sold their homes for 250,000. Hey let me sell mine for 265,000 and so on.
Well like any pyramid the bottom people fall out and the whole thing comes crashing down.
I walked into my mortage company 10 years ago and stated I want to buy a house. Do you have the credit for 20% down. I stated I want to do better. I want to put down 30% and I was approved. People will agrue you were better off putting down the 20% and invest the additional 10%. I have been paying additional money every month into my mortage looking to get down ASAP. God forbid something happens to me and I can not work. I feel comfortable knowing that the mortage would be covered by geting a part tiome job at McD.
I know what works for me.
So mush to say so Iíll just make two comments.
First, its not tax payers money that is being used Ė its 100% debt.
The assets now seized could be used as collateral.
Second, Special Prosecutors and teams of CPAs Auditors should be at all companies that are getting any of the billions of dollars. The ones that committed the fraud are still operating the companies. We canít trust their numbers or bookkeeping.
No I don't think it's right. But from what i understand, if the goevernment didn't do this the cosequences would be worse. I'm still trying to understand this.....
Here's hoping this is just a dip in the market, and not the beginning of the end.
Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.
- Margaret Mead
"Booger Hook Off the Bang Switch" - unknown
Quick thoughts: Had our government effectively monitored the corporate world in the first place, we would not now be in a position where there is no choice but to bail the crooks out. Laws were changed, regulations were eased, enforcement was nonexistent-- and there was plenty of warning with the Enron collapse that the wrong approach was being taken.
The crooks were out there (as always) doing their thing in tiny ways (like lying about income on mortgage applications) and in big ways (like selling and reselling derivatives that were little more than scams on the ultimate purchaser.
The Securities and Exchange Commission was asleep at the wheel. The bank regulators were AWOL, and the thieves gladly stole from consumer, stock holder, pension funds, and the taxpayer.
I'd like to see jail time (even just a little) for the liars who falsified mortgage applications. I'd like to see jail time (like 30 years) for the big shots who knew what was going on and passed the worthless paper on to purchasers.
I will add too that a robust energy policy which might have held gas prices down would have gone a long way to alleviate the pressure for the crunch.
Removing downward wage pressure by control of illegal immigration might have gone a long way to reduce the wage lag which contributed to the crunch.
And not having altered (as was done in recent years) the overtime rules so as to take time and a half off the table for millions who work for their wages, would also have prevented some of the downward wage pressure which kept folks from meeting their obligations.
Similarly, some sensible regulation to rein in credit card issuers might have gone a long way in preventing some of this mess.
We started down a foolish path 30 or so years ago, and watched the first series of calamities happen when "deregulation" instead of helping business, actually brought about the end of-- Braniff Airlines, Eastern Airlines, Pan Am, and several others.
Then we watched the effects of deregulation of the savings and loan business--and that debacle cost us all.
And deregulation of the telecoms (though it has benefited us in many ways) also almost destroyed those who asked for it in the first place, the large telecoms.
Now, we see a repeat of the pattern. We let the banking/ mortgage/ derivatives industry do what they would, and here we are.
There is plenty of blame to go around, but mostly it falls on several generations of Congress Critters from both parties who have had their hand in the till. They talked pro-labor and voted anti; just as they do with guns. They talked for the little guy, and shafted him after he got in office.
Enough. Rant over.
Oh, is it right? Darned if I know. "They" all say we have no choice. I'd be happy to let "they" rot in jail.
No, they shouldn't have. BUT, if they hadn't, our little "Black Monday" would have led to a "Big Black Friday". Wall Street would have been nothing but trash swirling in the wind with Zero value (or less) on every stock on the market. World economy would have collapsed & we'd all be hunkered down watching "The Big SHTF" right now.
We've been in a Depression for at least 10-20 years. Our government doesn't want to admit to this obvious fact, so they call it a Recession & keep shoring up their flawed operation with more deeply flawed plans. They can't can't keep supporting the hole that they've dug us into with soda straws, it WILL collapse. The end is near.
Either way, my answer is NO. The Govt. wouldn't bail us out if we risked everything on foolish investments and unnecessary purchases. I understand that if these companies went under that would cause a huge strain on our economy, and that it would hurt for a while. But if that is what it takes to keep people on the straight and narrow and not rip others off at the first chance they get, then that is what may have to happen.
"Don't hit a man if you can possibly avoid it; but if you do hit him, put him to sleep." - Theodore Roosevelt
My two cents. Yes, I think it was absolutely proper. The reason the mortgage companies and their insurers went down is solely due to the government mandate for these companies to provide bad loans to individuals who could not possiby afford a home. The businesses are not to blame. They correctly assess who is capable of paying loans and they provide mortgages for those who are qualified. However, the government got involved because some were screaming about racism and forced the lenders to give money to people they knew very well would never repay. The government caused the problem and the businesses should not be held accountable for what the government caused them to do.
Since we are the government it is the responsibility of the people to try to make things right.
As far as the overall economy, McCain said it best and was trashed for speaking the truth. The economy is strong. Ninety four people out of every hundred have work and those who don't are typically between jobs. We are certainly not in a recession. That economic term is well defined and simply doesn't apply.
Many people simply listen to what the media feeds them, especially if it fits their political persuasion .I suggest everyone read the columns of Dr. Sowell rather than the blathering of Greenspan and his cronies. The truth is that we are in a strong historical position of economic growth and that has no signs of ending (unless the American people continue to choose socialism over capitalism.)
I also want to add that this so called bail out is actually a loan. Most people remember the Chrysler bail out on the '80s. That, too, was a loan, which Chrysler repaid over time (well, most of it.)
A country that fails to manufacture stuff, can't meet its energy needs, doesn't produce substantial amounts of its own food, and allowed the financial services industry to grow to 20% of GDP is in big doo.
We can kiss that 800 billion good bye.
My guess, it will be taken from our pockets by continued excessive inflation and devaluation of our money.
Still, none of this present mess would have happened if it weren't for crooks. As I wrote in a post above, little crooks who misrepresented their income or the tenure at their job, and big crooks who were happy to originate loans which should never have been made, were a big part of the cause of this inevitable collapse.
If I sound "bitter" it is because I lost a bundle on CMOs I thought were backed by mortgage insurance, I thought were originated to folks who put in substantial down payments, and I thought were checked out as to credit worthiness. It simply never occurred to my naive mind that "sharpies" were gaming the system and stealing my money. (Ya all think Uncle will buy my worthless CMOs from me the way they did from Fannie and Freddie?)
A friend of mine is an appraiser. He faces constant pressure by the realtors to come up with the appraisals they want--to increase their commissions. Out there in the world are plenty who gave in to the pressure to keep business going their way.
And, this present problem is due to much larger systemic problems than the scam artists inflicted.
Congress (and our entire political system) has been in a dysfunctional state born of ideological stupor since at least the Gerald Ford administration.
Last edited by Hopyard; September 20th, 2008 at 10:14 PM. Reason: To add a thought