[tony]

I need some financial minds here to help me through this, but I don't understand the need for the bailout. I need Bailout Explanation 101.

• Why wouldn't we let the capitalist system work here?
• Why not let those who did business wrong fall by the wayside?
• Why not let market forces take their course?
• Why does an officer of a failed or failing company get a bonus or severance of any kind?

I swear, though, I don't want a politically partisan explanation. I'm looking for answers on why we have to bail them out for, I betcha, more than a trillion dollars when its all done. I really don't understand this.

[Rokinronda]

Inquiring minds need to know. ANYONE?

[Boomer]

I would like to know, too. It should never have happened like this in the first place. That I do know. But what now? And why? Will the pigs take us all down if nothing is done? Will a bailout be another waste to be measured in epic proportions?

Will a bailout swing the pendulum so far that we will be taxed into complete oblivion. I am just a little guy. But that lower capital gains tax has helped me enough to be able to employ a few people right now on a project here at my house. It's little. But I am providing work for some people. I am using money that I did not have to pay in taxes. And I am not rich. And I am not a pig. I am here in a microcosm. And something tells me that I am about to be had. It is all so fast. So much.

I really would like to see an interpretation here. We have people on board who I hope will write about it. If I see their names pop up, I will definitely read what they have to say. Because I sure do not know how to even begin to process all this. Can somebody on here make me feel better?

Cliff's Notes? Please.

Boomer

[Boomer]

Oshun, yesterday, I went to have my roots touched up. And there in the chair, among all those other women, the talk turned to this.

And I was told a story by a woman there whose father-in-law, at age 84, was taken in by one of these mortgages. His payment just shot way up. He cannot afford it. His children did not know this had happened. His brain did not work like it used to. And they took him. Yep, they took him good. This kind of thing going on while the CEO was selling his stock all along on those perfectly legal programmed sales. And nobody was watching. And the lobbyists just kept slopping the hogs in DC.

This man is 84. He is a WWII hero. He has many medals. He would have given his life for our freedom. And now, here he is, nearing the end of his life, and here at the last, he finds himself betrayed by his country.

But this thread is turning. I know it started with a question in search of an answer. And that is what I want to see, too. And we have people who will be able to help us to understand, a little maybe, about where we are headed, with it, and where we are headed without it.

This mess was not all about "Let Freedom Ring." But I will not enter that debate. There is no point. There has been pure evil in this one. And the hair on the back of my neck has been standing up all along. And it still is.

There is some decent knowledge on this board. I hope we get to read an explanation or at least an interpretation. Not finger pointing. Just tell us where we are and where we could be. Somebody please.

And now, back to you, Chet.

Boomer

[retiredguy]

Originally Posted by tony

I need some financial minds here to help me through this, but I don't understand the need for the bailout. I need Bailout Explanation 101.

• Why wouldn't we let the capitalist system work here?
• Why not let those who did business wrong fall by the wayside?
• Why not let market forces take their course?
• Why does an officer of a failed or failing company get a bonus or severance of any kind?

I swear, though, I don't want a politically partisan explanation. I'm looking for answers on why we have to bail them out for, I betcha, more than a trillion dollars when its all done. I really don't understand this.

This is absolutely the WRONG thing to do for America. Yes, there will be some who have tragic situations for whatever reason. However, let the free market work and get government out of there. We will not have a crash, but it will get bumpy as the markets right themselves. What these politicians should be doing is retracting some of the deals signed by past presidents.

You know, think about it -- these folks who are not economists are telling us we need this. No THEY need this. And why does this have to be done under cover of night so to speak. Nobody will be about to read what exactly this bailout is covering (not even them) and the American people once again are bamboozled. Even now coming out are leaks as to Laraza and ACORN getting money. There are even illegal aliens being bailed out through sub prime loans with names on the deeds that are not even their own. Is your head spinning!!! Mine is. I'm frustrated at this bunch of fools we have running our precious government who now are quashing free markets, and taking away our liberties. Aside from everything, anything done this fast should be suspicious to all of us.

God help those now that are working to prevent this bailout from happening.

[JohnN]

Boomer, you sure know how to ring my bell, but not in a good way.
"Will a bailout be another waste to be measured in epic proportions?"
------------------------------------------------------------------------
Short Answer: Unfortunately yes, absolutely


Just saw Barry Goldwater Jr (ex-senator) and I liked his quote:
"Having Congress watch over your money is like having your dog watch over your food"

When has any government regulation worked effectively? (and I suppose there are examples out there..somewhere).
SEC?, well no, that's why we're in this mess
FDA? hmmmm,
Border Security? please
How about Health Care, International Relations, Govt. Ethics,
Jobs creations? Deficit, Trade Balance, ?
How about the big one biting us in the rear, Energy?
could we not have managed to become more conservative and creative starting way back in the '70?

Now Congress is going to come up with a bill of biblical proportions -
in 3 days?? LOLOL.. .spare me.


Oh, they did initiate the proceedings and are tightening up on steroid use in baseball and they'll nail Barry Bonds, that's a comfort.

We're in this mess because the government didn't do their job and allowed banks/investment companies/etc to regulate themselves.
Are we surprised that didn't work? That the CEO's took huge risks and raped for mega-millions of $$$?
That high risk bad loans were made to people who (whether they understood or not) really shouldn't have had them?

This continues to be, and will continue, to be painful for years.
Tis why my little bit of cash is stuffed in the mattress.

I'm admittedly a cynic. The feds have learned the rules so well, they manipulate them to create a career, whether anything gets done or not.

-------------------------------------------------------------

My singular prayer for this country is that the people revolt, and somehow a miracle occurs, and someone (or many) with real integrity step forward and change the government machinery so it works for the people, not individuals and special interests.

I know this is a downer (at least to me, as I reread it), I'm really sorry.

[JohnN]

And for tony, so I get away from politics, I'll take it from a business perspective.

I used to work for a fortune 500 company as the assistant manager of a manufacturing plant (when America still had manufacturing).

Each December, if it was a "good" (ie: year profitable) year, we'd be "encouraged" to clean out all the old obsolte crap and junk it and take the loss.
This is the same old crap that in "bad" years, we were told to keep on the books because we couldn't afford the financial hit.

What congress is saying to the banks, as I see it, is... it's going to be a good year, we (congress, not the people) are encouraging you to not manage your business but to just clean out all of your old crap and we'll take it off your hands. The companies will love it, stocks will soar, America is saved, the Feds take credit.

Oops.. the Feds spend another trillion-plus (you know the initial estimate is too low LOLOL) which runs to the deficit, which goes to the deficit, which puts pressure on the dollar and interest rates and... well..
Damn, there is no good answer here, is there?

[Boomer]

Oh JohnN,

I know. And pretend I am holding up a whole bunch of those little "I agree" signs here.

I like your quote about the dog.

Warren Buffett once said, "You never know who's been swimming au naturel until the tide goes out." That was the lead into the Kiplinger article I was reading about banks this morning. (But I kind of knew how they were swimming. I guess nobody really wanted to look though. Bloated mess that it all was.)

I just wish somebody could convince me that this bailout is going to be OK. You know they are going to do it.

Seeya at the mattress store, JonhN.

Boomer

[JohnN]

After getting rid of my excess adrenalin, now I'll do my best to post a serious, calm reply, as I see it, as tony asked for - non-political.
I'll reverse the question - instead of "why the bail-out?" and make it,
"what if we don't do the bailout?"
--------------------------------------------------------------------

The economy is like your home hot water system. Your diswasher and shower and washing machine and faucets all need hot water and the businesses in America (and the world) need hot water "(money, cash) to operate.

The banks are the hot water heater. They don't need hot water so much as they regulate the usage and flow - water comes in, water goes out, really doesn't matter but there needs to be some level water in the tank.
If the tank (banks) run out of money, the other appliances cease to function.

The banks are obliged by law to keep reserves for bad debts (let's call 'em "leaks"), it's actually a minimal amount but that's to assure water is kept in the tank.

Well, the tank is about empty and if not filled with the bailout, we're going to run out of money. Yes, the banks who made the bad loans and had CEO's stealing millions deserve it. But then all loans (including good ones) would be recalled by creditors in liquidation/foreclosure (which is ugly and costly in itself). Many of thet good creditworthy loans (perhaps you, if you've a mortgage or car loan) pay your payments, but can't readily come up with a total payoff.

If this happens in a domino style (ie: run on the bank), everything locks up and goes under. Nobody has any water for any purpose, not even the useful applicances. We make the "leaks" pay, but at the cost of the rest of the house.

Somehow, the economy has to be maintained...

[graciegirl]

Boomer. As usual, when I am worried about something I scan and partially get it and then jump to some not logical conclusion. I got as far as some 84 year old man signed for an A.R.M.

Too damn bad. He signed.

When we were just married, we had stayed home and saved before our marriage to buy our first house at 20 percent down. It was drilled into our heads. Get a house. Be practical. Live within your means. Even as poor as I am in economics, I had fear 101. Who would do something as risky as using a flexible rate mortage??

Now everyone jump on me. I feel hateful today.

[Boomer]

Originally Posted by graciegirl

Boomer. As usual, when I am worried about something I scan and partially get it and then jump to some not logical conclusion. I got as far as some 84 year old man signed for an A.R.M.

Too damn bad. He signed.

When we were just married, we had stayed home and saved before our marriage to buy our first house at 20 percent down. It was drilled into our heads. Get a house. Be practical. Live within your means. Even as poor as I am in economics, I had fear 101. Who would do something as risky as using a flexible rate mortage??

Now everyone jump on me. I feel hateful today.

Oh GG,

You could never be hateful. Well, not without good reason, anyway. The system failure in this is what makes me hateful. Really hateful. This poor man was not the man he once was. His thought processes just were not there as they once had been. There is so much of that kind of thing that happened, too, in all this.

Then there were the Barbie and Ken couples who thought it would never run out, not the jobs, not the equity. They were clueless and shallow and nobody had every taught them like we were taught. They should have known better. I am really feeling hateful toward Barbie and Ken. And the houses they are walking away from are taking out their neighbors' investments.

Remember when you used to have to qualify for a mortgage. Well, they did something in this one called "stated assets" -- in other words, just tell us whatever so we can charge you some enormous fees and send you on your way and repackage that mortgage and sell it out the back door to investors. And we have made our money and who cares? They did it because they could. All the way around.

And you know what else is making me feel pretty hateful, too? Those golden parachutes. How about absolutely no parachute. (Wow! I am getting more hateful by the minute here.)

And the hatefulness, as you and I both know, is because we did it right but that does not count anymore.

Boomer the Hateful, Oh my!

And I still cannot figure out the (little red censored sign thing) spellcheck on here. But that does not make me nearly as hateful as being awash in all this slop that I had nothing to do with.

[JohnN]

decent thread explaining the bail-out on one page:
http://hubpages.com/hub/financialcrisisexplained

quotes:
Bankers got into the same state of mind as American homeowners: they assumed that housing prices couldn't fall as much as they did. Reveling in the boom, they borrowed billions of dollars to increase their stakes in mortgage based holdings. This is what brought Lehman Brothers down: according to some estimates they had 1 dollar in cash for every 32 dollars in assets they owned.

Fact 1: There's going to be some kind of bailout. If the credit markets seize up entirely there will be panic, banks will fail, and we could see financial hardship at levels greater than at any point since the Great Depression. This might end up happening anyway, but its probably a good idea for the government to try and avoid this worst case scenario.

Fact 2: The bailout is going to make some people who don't deserve to make money rich. Its impossible for the government to do anything without winners and losers

How you can help yourself?
spend less and get a 2nd job
----------------------------

[Boomer]

Originally Posted by JohnN

decent thread explaining the bail-out on one page:
http://hubpages.com/hub/financialcrisisexplained

quotes:
Bankers got into the same state of mind as American homeowners: they assumed that housing prices couldn't fall as much as they did. Reveling in the boom, they borrowed billions of dollars to increase their stakes in mortgage based holdings. This is what brought Lehman Brothers down: according to some estimates they had 1 dollar in cash for every 32 dollars in assets they owned.

Fact 1: There's going to be some kind of bailout. If the credit markets seize up entirely there will be panic, banks will fail, and we could see financial hardship at levels greater than at any point since the Great Depression. This might end up happening anyway, but its probably a good idea for the government to try and avoid this worst case scenario.

Fact 2: The bailout is going to make some people who don't deserve to make money rich. Its impossible for the government to do anything without winners and losers

How you can help yourself?
spend less and get a 2nd job
----------------------------

And JohnN,

I do not think for a minute that we are the people that we were during The Great Depression. Not enough of us anyway. We have done too much of a disconnect as a society overall. It would be hellish. And poverty breeds violence like nothing else can. Something has to give. And give we will. I guess there is no real choice. I just hope whatever it is works.

Boomer (Wow. That was a cheerful comment I just made. I think I liked my hateful self better.)