How do you feel about the bailout?

[SuzySunshine]

Re: How do you feel about the bailout?

Thanks for posting that link Nellie, regardless of who she is she does a good job of explaining the situation. Yes there is some opinion there but that is going to be true with anyone trying to explain that.

I have an MBA and I still don't understand completely but I do think the bailout is the correct route. I also think Hillary Clinton's idea that has been mentioned several times in the last few days would also be helpful. She wants to establish a group to renegotiate the mortgages that are in trouble so that people still have to pay but they have to pay something they CAN pay. I'll see if I can find a link to more specifics but she talked about it on the Today show this morning and Bill talked about it on The View yesterday. Yes, they'd be helping people who may have overstepped their bounds but they're still liable for the debt as they should be.

[SuzySunshine]

Re: How do you feel about the bailout?

This article briefly touches on her plan:

http://www.reuters.com/article/vcCan...43065820080922

Sen. Clinton: Gov't should help buy back home loans
Mon Sep 22, 2008 4:12pm EDT

By Susan Heavey

WASHINGTON (Reuters) - New York Senator Hillary Clinton said the federal government should establish a special entity that would buy mortgages from Americans and later sell them just as it did during the Great Depression.

Congress set up the Home Owners' Loan Corp in 1933 to help stave off home foreclosures amid the economic downturn that followed Wall Street's crash in 1929.

That program "worked very effectively to buy up mortgages, about a million homes were saved. Over time, those mortgages were sold and, frankly, the (U.S.) Treasury made money on it," the former Democratic presidential candidate told CNBC television. "I think it's imperative that we start considering such an entity like this."

Barney Frank, chairman of the U.S. House of Representatives Financial Services Committee and a Democrat, also supports such a plan, Clinton said.

Congress should start crafting legislation now, but they also need the administration of President George W. Bush to commit to such a plan, she added.

Treasury Secretary Henry Paulson and others seeking to craft a bailout plan this week for the U.S. banking industry also need to include authority for the Treasury Department to modify home mortgages, Clinton told CNBC.

Any bailout plan should also include the framework to allow such powers and Congress could take further steps when it returns after the U.S. elections in November, she said. Congress is expected to adjourn Friday.

[Sheherezade]

Re: How do you feel about the bailout?

I heard a scary "worst case scenario" this morning on Diane Rehms. One of the economists said that if the bail out doesn't go through and the companies are allowed to fail, the resulting credit crunch could play out like this: You have good credit, pay your bill on time, but you go to use your credit card and *zap* it is denied. The reason? Your credit company can no longer borrow money from banks and they are actually the one "denied". Second example: GE can no longer borrow money to continue their day-to-day operations....and they fail to have the funds for their payroll. So, employees with no fault and no credit issues do not get a paycheck until they resolve the company financial issues.

Well...that does sound like something to avoid!

On the other hand, at the discussion of salary caps the consensus was that the firms at risk would opt to NOT take the bailout money with this stipulation. Huh? If things are so critical, they'd not take the life raft if it caps CEO bonuses? I'm wondering how critical it could be if the salary cap is a total deal breaker. If anything, it makes me feel more at ease with telling my representatives that I was in favor of them acting slowly and with much deliberation....and not giving in to a panic call for immediate action.

In other news I'm kind of proud of the wacky Kucinich from Ohio for proposing a plan to create a government based company for these poisoned mortgage securities and give the shares to the taxpayers (apparently valued at $2300 per tax payer!). Obviously, that won't happen but I love him for putting up the idea. If we've got to pay to bail the suckers out, I'd like to personally benefit from the investment. In theory.

Re: How do you feel about the bailout?

I heard a scary "worst case scenario" this morning on Diane Rehms. One of the economists said that if the bail out doesn't go through and the companies are allowed to fail, the resulting credit crunch could play out like this: You have good credit, pay your bill on time, but you go to use your credit card and *zap* it is denied. The reason? Your credit company can no longer borrow money from banks and they are actually the one "denied". Second example: GE can no longer borrow money to continue their day-to-day operations....and they fail to have the funds for their payroll. So, employees with no fault and no credit issues do not get a paycheck until they resolve the company financial issues.

That's similar to what I heard on one of the Sunday morning discussion shows - and is what I was trying to describe in my earlier post. Thanks Angie!

[Sheherezade]

Re: How do you feel about the bailout?

Yes, I'm sure you did explain it earlier....it just needed to be made graphic for me to totally understand how this would affect me directly. I'm happy now that we have cash on hand if we need it. We've become a society that "pays it forward" on credit and so many people rely on that system to make their personal budgets flow. It would be better if we didn't do so (of course) but the world has adapted to the credit system instead of cash. Heck, some places don't accept cash now. (Scary, but true. Jet Blue?) Also, I think that credit has allowed prices to inflate beyond what would have occurred if people paid in cash always. 4K plasma TVs may never have come to the market if credit didn't exist. Who would save for months to buy a TV with cash? Not as many as would sign up for zero interest plans.

Honestly, credit tightening is probably good for individuals (encourage personal savings and limited impulse purchases) but terrible for businesses that have all adapted to consumers with credit galore. It should be interesting to see how this plays out.

[Vanquisher]

Re: How do you feel about the bailout?

My head is spinning.

I tawt I taw a puddy tat.

:nothing:

[ladymoreta]

Re: How do you feel about the bailout?

She wants to establish a group to renegotiate the mortgages that are in trouble so that people still have to pay but they have to pay something they CAN pay.

I believe the problem is that there isn't a reasonable amount that a person can pay to afford these homes. For example, say a person is making $50,000 a year. A mortgage payment should be no more than 28% of your income, so the maximum recommended payment should be no more than $1,167 per month. Now, let's say our generous government is nice enough to give these people an interest rate of 6%. After a few rounds of numbers on a financial calculator (http://www.albertacreditunions.com/p...p?cid=44-46-75, found on Google, not sure how accurate it is), it appears that anyone who owes more than about $250,000 for their home can't even afford to pay the interest on the loan. I think that a lot of these loans, especially the California ones, are significantly more than that. Not to mention that many of the subprime borrowers are years behind on their 401k's, so they will most likely need the government to bail them out of that as well. If we can get them out of the homes (I know, it sounds heartless), and into something they can afford, then maybe (best case scenario) they could start putting the difference into a retirement plan. But at least they would have a chance at becoming financially independent. If our government just creates a way to keep them neck-deep in debt, how is that helping?

[PrincessFiona]

Re: How do you feel about the bailout?

My head is spinning.

I tawt I taw a puddy tat.

:nothing:

Mine too!

[PrincessFiona]

Re: How do you feel about the bailout?

I heard a scary "worst case scenario" this morning on Diane Rehms. One of the economists said that if the bail out doesn't go through and the companies are allowed to fail, the resulting credit crunch could play out like this: You have good credit, pay your bill on time, but you go to use your credit card and *zap* it is denied. The reason? Your credit company can no longer borrow money from banks and they are actually the one "denied". Second example: GE can no longer borrow money to continue their day-to-day operations....and they fail to have the funds for their payroll. So, employees with no fault and no credit issues do not get a paycheck until they resolve the company financial issues.

Well...that does sound like something to avoid!

On the other hand, at the discussion of salary caps the consensus was that the firms at risk would opt to NOT take the bailout money with this stipulation. Huh? If things are so critical, they'd not take the life raft if it caps CEO bonuses? I'm wondering how critical it could be if the salary cap is a total deal breaker. If anything, it makes me feel more at ease with telling my representatives that I was in favor of them acting slowly and with much deliberation....and not giving in to a panic call for immediate action.

In other news I'm kind of proud of the wacky Kucinich from Ohio for proposing a plan to create a government based company for these poisoned mortgage securities and give the shares to the taxpayers (apparently valued at $2300 per tax payer!). Obviously, that won't happen but I love him for putting up the idea. If we've got to pay to bail the suckers out, I'd like to personally benefit from the investment. In theory.

See..it does suck, but .... maybe people would have to go to using their bank credit card and do without citibank/chase etc. It would suck, but those with good enough credit could go to their banks...and those without just couldn't. I don't want to be a hardass, but...well...at what point do we draw a line in the sand here? Seriously, I think credit card companies are predatory anyway. We got rid of all of our credit cards one at a time and now only use our bank credit card. We can trust them...they don't count payments made on time as late because they decide to credit them the next day..hit us with a $39 fee and raise our interest to 34%. Citibank did this to me...and I have a great credit score...I fought and fought with them and so they gave me my old interest rate back on all NEW purchases...they kept the high rate for the other ones...so when I paid the card down, I flipped them off and never went back.

We actually started doing online banking BECAUSE of credit card companies saying that they got the check late, etc when we knew we had mailed it out in plenty of time. They deserve to go down. No wonder people can't pay their bills...one late payment and the interest jacks up like that...and it wasn't even a real late payment...

Some jobs would be lost...Would American ingenuity kick in and would new jobs/comapanies/businesses be created by smart people who turned this into their opportunity? Probably yes...eventually the market would recover and probably would be stronger for it. Maybe this would be THE chance for some new people to take over.

As it is, we're going to spend 1 trillion dollars to prop up a problem...without fixing it.

I'd consider lending these guys the money...with the stipulation that none of them get a single penny in bonuses until the money they were lent is paid back in full.

And...what is the Fed's responsibility in all of this? For about 2 years there have been various politicians (dem and republican) who have pointed to some instability...they were rebuked as being too negative or creating a crisis where there is none. This stuff was already known and not taken care of properly. Whose heads should roll? Is there accountability at all? If I screwed up like this, I'd be fired. Well..in theory...no one wants my job lately ...as much as I screw up, I just can't get anyone to take over this little zoo!


If there is a bailout, I want a way to do a complete backlash against these companies. They are just banking on the fact that the American people will be pissed for awhile and then we'll go back to forgetting like we always do....We won't be able to fix social security, medicare and medicaid payments will continue to go down, there will be no universal health coverage....but the ceo's will get their bonuses.

grrrrr. I'm mad again.

I think I'll go buy myself new furniture, a boat....maybe book some tickets for a cruise. Hey...it's only money...maybe someone will bail me out when I'm in up to my eyeballs. :soapbox:

[Sheherezade]

Re: How do you feel about the bailout?

Yeah.. I've been cynically thinking that the reason for "no oversight" was that Paulson wanted to handle this in back rooms and never have it hit the papers/news/Congressional floor again. We tend to have short memories. If we give him the money, we can go on and just forget this ever happened - and they won't have all us taxpayers screeching for change.

The news this morning here had some guy on talking about bonuses. Kris, your head would have exploded.



The analyst said that bonuses at Christmas 2006 were around 30 billion dollars....and at Christmas 2007 were unchanged despite all the crisis developing. The industry is NOT taking a pay cut. I really do wonder about this refusal to have caps included being a deal breaker. I can understand not wanting it, but how desperate can they be if they say no thanks right away with that inclusion? You'd think they'd negotiate a time limit or an amount. :huh: If it would inhibit their ability to recruit.....well....how about your company filing for bankruptcy? Wouldn't that inhibit your recruiting ability as well??

[PrincessFiona]

Re: How do you feel about the bailout?

Yeah.. I've been cynically thinking that the reason for "no oversight" was that Paulson wanted to handle this in back rooms and never have it hit the papers/news/Congressional floor again. We tend to have short memories. If we give him the money, we can go on and just forget this ever happened - and they won't have all us taxpayers screeching for change.

The news this morning here had some guy on talking about bonuses. Kris, your head would have exploded.



The analyst said that bonuses at Christmas 2006 were around 30 billion dollars....and at Christmas 2007 were unchanged despite all the crisis developing. The industry is NOT taking a pay cut. I really do wonder about this refusal to have caps included being a deal breaker. I can understand not wanting it, but how desperate can they be if they say no thanks right away with that inclusion? You'd think they'd negotiate a time limit or an amount. :huh: If it would inhibit their ability to recruit.....well....how about your company filing for bankruptcy? Wouldn't that inhibit your recruiting ability as well??

You have GOT to be kidding me. See, Angie...I just can not get behind the bailout when I read stuff like this...I don't care if it does inhibit their ability to recruit.

This country has become all about capitalism on the way up and socialism on the way down....

I don't care if there are no bonuses, if they have to work their butts off and fail..it's called a free market, and if you want to play with the big boys and make the money, you can't run your company into the ground.

The market has SPOKEN.

So...they need to either embrace capitalism and graciously accept they blew it, or declare this a socialist nation and nationalize the banking industry.

[poky]

Re: How do you feel about the bailout?

I believe the problem is that there isn't a reasonable amount that a person can pay to afford these homes. For example, say a person is making $50,000 a year. A mortgage payment should be no more than 28% of your income, so the maximum recommended payment should be no more than $1,167 per month...

Maybe...we're headed the way of the Japanese, who, I hear, have 100 year mortgages, that the children and grandchildren inherit? That would be one way of lowering payments. :huh:

[Sheherezade]

Re: How do you feel about the bailout?

I have heard the proposal (unofficial) that we make mortgages extendable to 40-50 years if necessary. :huh:

I wonder if the Japanese ended up at that after their real estate crisis?

[Rapunzel]

Re: How do you feel about the bailout?

I believe the problem is that there isn't a reasonable amount that a person can pay to afford these homes. For example, say a person is making $50,000 a year. A mortgage payment should be no more than 28% of your income, so the maximum recommended payment should be no more than $1,167 per month...

Maybe...we're headed the way of the Japanese, who, I hear, have 100 year mortgages, that the children and grandchildren inherit? That would be one way of lowering payments. :huh:

Holy cow!!!

[poky]

Re: How do you feel about the bailout?

I have heard the proposal (unofficial) that we make mortgages extendable to 40-50 years if necessary. :huh:

I wonder if the Japanese ended up at that after their real estate crisis?

My sources say yes, in the 80's land in Japan became so expensive that that was the only way to own a house.

And I found at least one article that claimed that 40-year loans were already common in California a couple years ago. :huh: