Mortgage-Backed Securities Bailout - Page 2

Mortgage-Backed Securities Bailout

This is a discussion on Mortgage-Backed Securities Bailout within the Off Topic & Humor Discussion forums, part of the The Back Porch category; Yes, the new Senate bill sucks, and has far too much pork. But to those who complained about the "bailout", and called their congressman, getting ...

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Thread: Mortgage-Backed Securities Bailout

  1. #16
    Distinguished Member Array Squawker's Avatar
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    Yes, the new Senate bill sucks, and has far too much pork. But to those who complained about the "bailout", and called their congressman, getting Monday's bill derailed. That was the clean bill. That's the one that should have been passed. We're facing the strong possibility of depression if something isn't done soon. And as bad as the new bill is, it needs to be passed, because if it fails, there won't be another. And a lot of people are going to be out of jobs. Those of you that think this just may cause some hard times but we'll get by, go on line and look up the great depression.


  2. #17
    VIP Member Array farronwolf's Avatar
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    Quote Originally Posted by Hopyard View Post
    The reason it has to happen so quickly is that at the moment, no one (bank) will lend money because their own money is tied up in knots. Never mind who or how the knot got formed. It needs untangling, and fast. Because, --

    Let's say I own a small SCUBA shop or a small gun store. Maybe, it has been the practice that when I order merchandise the wholesaler shipped without waiting to get paid because I had good credit. But now, he ain't so sure about me anymore, and he is tight on funds, so he says, he wants to be paid on shipment. I need a loan to pay for the merchandise which I hope I can sell. But, no one will give me a short term loan, though in the past I have always paid promptly.

    If this sort of situation gets going and growing (and it has), and it is doing that right now, commerce grinds to a halt, folks lose jobs, and credit becomes even tighter. We aren't talking here about credit card debt. We are talking about the very routine transactions that are needed for business on MAIN STREET to get done; for the grocer to stock his shelves, if you want an important example.

    Now, because business is being choked due to the lack of credit, and because folks are being fired in an accelerating fashion as things go downhill, the stock market is tanking. This means people who had money saved in pension funds, insurance contracts, retirement accounts, or were just investing for growth, have lost money. So, they feel poorer and buy less. Then the thing accelerates downhill all the faster....a spiral to the bottom.

    This bail out isn't about saving "Wall Street," or saving idiots who purchased homes they couldn't afford, or saving "the big filthy rich banker." It is about saving ordinary small business people and their employees and the entire economy.

    There is a reason our president looked scared when he made his public speech last week. He was scared. And we all should be.

    Right now stores need to be stocking for the holiday shopping season. If they can't place orders, can't get stuff shipped, can't do these things because money is not available to be loaned, they will go under. And by early next year, G-d help us all and whoever has the misfortune of being elected this November.

    That is why it has to be fixed NOW; as in YESTERDAY.
    I disagree, somewhat. If I want to go to my local credit union today, and borrow money, I am sure I can get a loan. I am a small business, but regardless if I am a business or want to buy a car or whatever, if I have good credit and a good debt ratio, there is no reason why I can't borrow money.

    How is that so you ask. Well banks and credit unions don't make money by you putting a deposit in them. When you go make a deposit that is a liability to the financial institution. They must pay you interest on that money, (assuming it is in an interest bearing account). If banks were only in the business of taking deposits, there wouldn't be any banks because it would be a no win business situation. They must make loans in order to stay in business, I repeat they must make loans in order to stay in business. The financial institutions take a percentage of the deposits and loan that money back out to people that want to borrow it. They charge the borrowers more interest than they charge the depositors, thereby making money to pay employees or light bills or building payment.

    If you don't have good credit or your a risky borrower then yes, it might make a difference to you and you might not be able to borrow money for your scuba shop or gun store. But if you have a good (as in low) debt ratio and good credit, there is absolutely no reason why you should not still be able to borrow money in the future. You might have to pay a bit higher interest rate, since if the number of people who qualify to borrow money goes down as they look at risk a bit more, then less deposits will be loaned out and they will need to get a higher rate of return on their loans to cover the smaller percentage of deposits that are working for them.

    Yes, failure to pass a bill will slow the economy and may cost some jobs, but no, it will not be the end of the world. Those with good business practices and good financial standing will still be able to do what they have done in the past.

    Oh, and don't you just love all the pork that was added. Washington never ceases to amaze me. One would think that those ticks up there would eventually blow up from all the blood sucking they have done to the American people. We can only hope.
    Just remember that shot placement is much more important with what you carry than how big a bang you get with each trigger pull.
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  3. #18
    VIP Member Array farronwolf's Avatar
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    Quote Originally Posted by QKShooter View Post
    Are there any really big old stately Oak trees remaining in Washington that would make decent Hanging Trees?
    Just curious.
    Don't know if they have any up there still, but we do down here in East Texas. Maybe we could tie each and every one of them to an Oak, or hang them from one and shoot at them with those wooden arrows that we are going to be funding.
    Just remember that shot placement is much more important with what you carry than how big a bang you get with each trigger pull.
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  4. #19
    VIP Member Array packinnova's Avatar
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    Quote Originally Posted by Hopyard View Post
    I agree with your sentiment, but as a practical matter, with this specific issue, doing nothing while waiting for a "better approach" to gain favor with law makers, will be a huge disaster.

    And, I have absolutely no faith that Congress will come up with anything better until after the elections and the start of the new session end of Jan 09. So the choice is, do something, imperfect as it is, and give the economy a chance. Or, do nothing whatsoever--- because that is the choice we are facing, doing nothing, and watch it all go to heck.

    Don't misunderstand my position here. I don't like this stuff one bit. I think it stinks. I have written that I didn't like it either when Congress was stampeded into the Iraq war or the Patriot act--both not their finest moments. Stampedes produce poor legislation.

    Unfortunately, this is one of those cases (unlike the two mentioned above) where a real gotta do it now emergency exists.

    The holiday buying season is on at the wholesale level and the retail buying season will start before we know it. If credit isn't available for both of these major economic activities, the game will be over for us, and probably for our children, and at least for a generation--and not just one 4 year business cycle.
    I didn't say do nothing... There's a difference between fixing it right and doing nothing.
    Fixing it right involves dumping the fed for starters, yanking ANY and ALL Government intervention in our economy, starting from scratch, and letting the folks that got in way over their head deal with it as they should.

    Second...kill the immoral income tax altogether and go back to the original tariff system. Is that going to hurt folks? Absolutely it will hurt everyone sucking off the government tit.

    Third, cut all that darned "foreign aid" to countries that really don't care and don't spend it on "aid". If they wanted to pull themselves up out of the muck, THEY WOULD! How many billions does it take? 1 Billion? 2? Please enlighten me to the magic number whereby someone finally decides for themselves to straighten up.

    Next, drop the standing army. Sorry folks, gotta be done. If you want to keep it up...declare war, finish off the other gimpy country by any and all means necessary and then stand down. Thems the rules.

    That's a lot more than doing nothing.
    "My God David, We're a Civilized society."

    "Sure, As long as the machines are workin' and you can call 911. But you take those things away, you throw people in the dark, and you scare the crap out of them; no more rules...You'll see how primitive they can get."
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  5. #20
    Member Array ccwchris's Avatar
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    Before we go throwing blame around I think we need to take a good long look in the mirror. Sure we can blame the political environment and people in charge for lack of regulations and not catching this before it became a crisis. We can also blame the greed of Wall Street that led to the inflated Sub-Prime loans. But what about us. Some quick stats I just looked up show that:

    * Almost half of americans live beyoned their means (spend more than they earn).
    * The average houshold credit card debt is close to $10k

    We live in a time and place where it has become acceptable for people to finance a higher standard of living than they could afford other wise. It used to be that people would look to see if they could afford a purchase, now they want to know if they can afford the minimum payment that will be charged for that purchase. That mentality is at the root of this crisis, from the dirt streets to wall street.

    Also last night during the debat Gov. Palin said
    "Darn right it was the predator lenders, who tried to talk Americans into thinking that it was smart to buy a $300,000 house if we could only afford a $100,000 house. There was deception there, and there was greed and there is corruption on Wall Street. And we need to stop that."
    Now I feel for anyone who purchased a house 2-3 years ago. I was one of them. I Feb. 2006 I bought my first home here in Fl. As my wife and I were looking for our perfect house we saw the value (prices) of homes soar. In some cases nearly $50-60k in as little as six months. That inflated surge in the houseing market lead to greed on all sides of the mortgage table. Greed from home buyers and investors wanting to make a quick buck on "other people's money", greed from mortgage lenders that went so loose on credit guidlines that anyone with a pulse could get a loan, and greed from wall street bundling and selling mortgage backed securities on the market like candy.

    Yes greed was involed but I don't think we can say that "the predator lenders" convinced us we could afford mansons on a double-wide budget. When I bought my house I was fresh out of school and only 23. I had enough sense to lock in a 30yr loan that I could afford, just incase something happened and I couldn't sell my house and move.

    Change needs to come in the financial industry, but it needs to start with the 95% of Americans that are the consumers for the top 5%. We need to accept responsibility for our actions just as much as wall street and Washington does. Then all of America can be changed by all of America. Instead of bailing people out we need to learn how to construct boats that will weather the storm.

  6. #21
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    no standing army? and for Farronwolf

    Quote Originally Posted by packinnova View Post
    Next, drop the standing army. Sorry folks, gotta be done. If you want to keep it up...declare war, finish off the other gimpy country by any and all means necessary and then stand down. Thems the rules.
    That's a lot more than doing nothing.
    While we spend a huge amount on a standing military, that is not the source of our economic problem. I know a situation in another English speaking developed country where there is also a huge housing bubble that should have collapsed several years ago. Somehow, it keeps inflated and inflating, but it will end in a similar crisis too.

    As to what Farronwolf said about banks and credit unions, yes, you are right largely about how banks must extend credit to stay in business, but that is only a part of the credit market. What is gumming up the works is the huge supply of derivatives with unknown and unknowable value. For example, you might hold CMOs which are performing, paying principal and interest as if nothing is wrong, but still be unable to turn that paper into cash because the market is gone due to a lack of trust and confidence. It it this sort of phenomenon which has got the knots tied in the credit markets and which the bailout plan can untie.

    Meanwhile, I for example, am not a rich man, but through a life time of saving and living extremely frugally (like in an apartment with only a bed and small table and no tv), I did save enough to buy CMOs, and other bonds. I have watched the value drop to 20% of what I paid (even on performing loans), and am just fortunate that I can ride out the storm and wait for the crisis to somehow come to an end. Many others can't. They will cease purchasing, and the downward spiral will go on.

    Day to day commercial transactions require credit, and when it isn't available folks go out of business or don't expand business or don't pay employees--even though illegal.

    And back to Pack and a few others, there is not way our Congress is ever going to come up with a clean bill not laden with special favors and acceptable to both sides of the aisle. In that respect our system is dysfunctional. If nothing else, at least the Senate version temporarily fixed the AMT --that is, provided a middle class tax break. (Just so you know, I'm not subject to it, but I know the problem needed solving.)

  7. #22
    Member Array albundy's Avatar
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    I can not express my disgust with the Congress of the United States and the President.

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