Financial bailout .

[bad rider]

Today the US rejected bailing out wall street, upon hearing this news i got highly frustrated and punched a wall. While I'm aware recessions don't end overnight i was aware that this would slow/stop the US recession at a loss of value to the dollar, and it would give banks in England a new source of loans and take pressure off them because of foreign investors. So why did they not pass this bill.....

Note: i have drawn these conclusions on my own so feel free to scrutinize.

http://news.bostonherald.com/business/general/view/2008_09_29_House_rejects_financial_bailout_bill/

Edit: If there is currently a thread about this say i only did a quick forum check for financial bailout.

 

[Jak The Great]

The problem was accountability. These guys took huge risks, and now they're paying for it. but no, we can't let them face the consequences we have to bail them out; these people who have enjoyed being in the elite classes of society while the average American is the one who has to pay for it.

Tell me, would you want your taxes to bail out companies that have been taking excessive risks, or would you rather have your tax bucks go to education, military, social issues. or even better, would you want to keep more of your net income? That's why this bill has not been popular.

As for the recession stopping, there's no guarantee one way or the other that this would affect anything.

 

[AmericanWarMachine]

Instead of giving 800 BILLION dollars to companies that give away money to people who obviously can't pay it back, they can just give every American over 18 150 THOUSAND dollars. That's right. I did the math and every legal American above the age of 18 could get a shiny check for 150 THOUSAND DOLLARS. How could this help the economy?
-Pay off your mortgage (solves the problem right there by giving money to the banks that need it)
-Buy a new car.
-Buy your way thru the rest of college or your kid's college.
-Pay off your student loans.
-Pay off all your taxes and bills you couldn't pay before.
-Anything else you could want to do.

I agree that they should reject bailing them out. They would never do this for the little guy and therefore shouldn't do it for the big companies that don't realize that "C-Dog" and Mr. Hobo can't pay back a 15 thousand dollar loan. It's their fault.

 

[BallPtPenTheif]

If you want a broad scope... read rush limbaugh and michael moore's take on this. they both don't want the bailout...

probably the only time in history those two agree.

the truth is probably a combination or mixture of both of their reasonings.

 

[Slycne]

The problem was accountability. These guys took huge risks, and now they're paying for it. but no, we can't let them face the consequences we have to bail them out; these people who have enjoyed being in the elite classes of society while the average American is the one who has to pay for it.

Tell me, would you want your taxes to bail out companies that have been taking excessive risks, or would you rather have your tax bucks go to education, military, social issues. or even better, would you want to keep more of your net income? That's why this bill has not been popular.

As for the recession stopping, there's no guarantee one way or the other that this would affect anything.

This is however an extremely narrow perspective on this matter. The people themselves who were foolish with their money and bought houses greater then they were capable of supporting are just as much at fault. Greed on every level caused this from the buyers, the realtor who showed them homes outside their means and the banks who approved people for loans they never should have gotten.

My gut instinct is to let them crash and let the free market deal with it. However even some of the most libertarian economist are reluctant to say this is necessary. As flawed as politicians are most of the time, this is a prime example as to why we have them. I am man enough to say that I don't understand this issue in all it's complexities. I can't see every angle of effects.

So I am still up in the air about this issue. I have been very interested in the topic and have been daily reading and listening to a number of sources. Just in an effort to get my head around it.

 

[meatloaf231]

Instead of giving 800 BILLION dollars to companies that give away money to people who obviously can't pay it back, they can just give every American over 18 150 THOUSAND dollars. That's right. I did the math and every legal American above the age of 18 could get a shiny check for 150 THOUSAND DOLLARS. How could this help the economy?
-Pay off your mortgage (solves the problem right there by giving money to the banks that need it)
-Buy a new car.
-Buy your way thru the rest of college or your kid's college.
-Pay off your student loans.
-Pay off all your taxes and bills you couldn't pay before.
-Anything else you could want to do.

I agree that they should reject bailing them out. They would never do this for the little guy and therefore shouldn't do it for the big companies that don't realize that "C-Dog" and Mr. Hobo can't pay back a 15 thousand dollar loan. It's their fault.

Nope. Not true. We have about 305 million people in the USofA. If you gave every family (read: families are about 4, approx. 75 million way split) it would still be about 10,000 dollars.

Very rough math: 770,000,000,000 divided by 75,000,000 = 10266.6
That could be more precise, factoring in the homeless, illegal immigrants, etc. but you get the idea.

 

[Zombie_King]

WOW! I was shocked anyone on the Escapist was into U.S. politics.

Instead of giving 800 BILLION dollars to companies that give away money to people who obviously can't pay it back, they can just give every American over 18 150 THOUSAND dollars. That's right. I did the math and every legal American above the age of 18 could get a shiny check for 150 THOUSAND DOLLARS. How could this help the economy?
-Pay off your mortgage (solves the problem right there by giving money to the banks that need it)
-Buy a new car.
-Buy your way thru the rest of college or your kid's college.
-Pay off your student loans.
-Pay off all your taxes and bills you couldn't pay before.
-Anything else you could want to do.

I agree that they should reject bailing them out. They would never do this for the little guy and therefore shouldn't do it for the big companies that don't realize that "C-Dog" and Mr. Hobo can't pay back a 15 thousand dollar loan. It's their fault.

You brought a smile to my face. The rich bank tycoons saw the crash coming, and what did they do? Nothing, nada, zip. Instead, the CEO's of the failed companies are living in expensive apartments, while the employees of the banks lose their jobs. Why give $700 billion to these banks who are commiting questionable acts? It was your own damn fault, you suffer the consequences.

 

[Slycne]

Instead of giving 800 BILLION dollars to companies that give away money to people who obviously can't pay it back, they can just give every American over 18 150 THOUSAND dollars. That's right. I did the math and every legal American above the age of 18 could get a shiny check for 150 THOUSAND DOLLARS. How could this help the economy?
-Pay off your mortgage (solves the problem right there by giving money to the banks that need it)
-Buy a new car.
-Buy your way thru the rest of college or your kid's college.
-Pay off your student loans.
-Pay off all your taxes and bills you couldn't pay before.
-Anything else you could want to do.

I agree that they should reject bailing them out. They would never do this for the little guy and therefore shouldn't do it for the big companies that don't realize that "C-Dog" and Mr. Hobo can't pay back a 15 thousand dollar loan. It's their fault.

The loans themselves are not what this bail out is about though. Right now we have a credit freeze the banks simply won't lend to each other any more because they are afraid. They have peices of paper which are all together worthless. Simply giving wads of cash to each and every person will not solve this problem.

The decision is to either let these lending companies fail and take the economic hit or bail them out in hopes it stabilizes the market. Unfortunately there is no other middle ground, as much as I would love a big fat check.

This is at least the understanding I have gleaned from some places.

 

[AmericanWarMachine]

The people themselves who were foolish with their money and bought houses greater then they were capable of supporting are just as much at fault. Greed on every level caused this from the buyers, the realtor who showed them homes outside their means and the banks who approved people for loans they never should have gotten.

My gut instinct is to let them crash and let the free market deal with it. However even some of the most libertarian economist are reluctant to say this is necessary. As flawed as politicians are most of the time, this is a prime example as to why we have them. I am man enough to say that I don't understand this issue in all it's complexities. I can't see every angle of effects.

So I am still up in the air about this issue. I have been very interested in the topic and have been daily reading and listening to a number of sources. Just in an effort to get my head around it.

You say that the buyers are just as at fault. Well, this is only partly true. The buyers are going to look for houses they LIKE, not for ones they can AFFORD, sadly. And because of this the "greedy" realators are going to show them those houses. Now, this would be all fine and dandy because the way its SUPPOSED to go is that the banks have to allow them to have all this money to be able to afford these nice houses, except they didn't. They let them have; 400,000 - 700,000 dollars to purchase these nice homes,which they (the buyers) KNOW they can't pay back. So the bank takes back the property and is left with an overpriced house that still has a mortgage on it that needs to be payed off, and if it gets sold, those people will ALSO need money. So then they get 400,000 - 700,000 for the house, and even if they DO pay it ALL back, the bank is still 400,00 - 700,000 dollars in the hole from the first people who bought the home.

 

[Slycne]

...

You say that the buyers are just as at fault. Well, this is only partly true. The buyers are going to look for houses they LIKE, not for ones they can AFFORD, sadly. And because of this the "greedy" realators are going to show them those houses. Now, this would be all fine and dandy because the way its SUPPOSED to go is that the banks have to allow them to have all this money to be able to afford these nice houses, except they didn't. They let them have; 400,000 - 700,000 dollars to purchase these nice homes,which they (the buyers) KNOW they can't pay back. So the bank takes back the property and is left with an overpriced house that still has a mortgage on it that needs to be payed off, and if it gets sold, those people will ALSO need money. So then they get 400,000 - 700,000 for the house, and even if they DO pay it ALL back, the bank is still 400,00 - 700,000 dollars in the hole from the first people who bought the home.

Which is exactly what I said. I was simply stating that the cause of this extends beyond just the "Wall Street fat cats".

 

[Dr Spaceman]

I'm actually excited that the House rejected the bailout. First of all, the bailout would directly reward high-powered and wealthy executives for (excuse my language) fucking up the economy. From my perusal of the news lately, it appears that these gigantic investment and insurance companies swallowed up a lot of debt from people who have absolutely no way to pay it back.

Now, a little bit of debt like this can be good for a company of this sort. They can charge higher interest, and when the person paying this interest defaults they could stand to gather a large payout. However, if large numbers of people began defaulting at once then things begin to fall apart. Compare the situation to a Jenga game. If only a few of these high-risk loans default, it's like we're pulling out one piece at a time and making the tower taller. However when a lot of the loans default it's almost like trying to pull out three or four pieces, it's possible but probably going to make everything fall apart.

My second big problem is the fact that largely rich people will benefit. This bailout is being framed as a savior of the economy, for the common man, but that is almost patently untrue. While one could argue that the benefits would trickle down, but I think it's clear that the companies that need to be bailed out do not have the best interest of the general public at heart.

What a lot of this comes down to is that I am very upset that a lot of politicians in Washington would never support $7 billion for the poor, much less $700 billion. If these people truly supported the free market, they would let these companies die. In truth, this is what they rightly deserve. A company that makes bad investments, poor business decisions, etc. should go out of business. That's largely what our economy bases itself on.

Lastly, anyone under the age of 30 should be hugely distrustful of this bill. The amount of debt that the Bush Administration has tacked onto our country, which this bailout will only inflate to an unbelievably unprecedented level, hazards to put the country in the poor house when we hit middle age. Eventually we're going to have to start paying off this massive debt we've accumulated.

It's hard to believe that it was only a decade ago that we had a balanced budget which was actually beginning to pay off our national debt. If you ask most economists, Bill Clinton (who led our economy through the best economic decade in our history) is actually one of the most fiscally conservative Presidents our country has ever had. Much more so than George Bush, Sr. or Ronald Reagan or especially George W. Bush.

This bailout will require a lot more tinkering and assurances of oversight done by the government over these companies if we are to give them so much money. We are betting at least $700 billion, probably more than $1 trillion, of our money that these companies will succeed. Based on their recent track record, it seems like a bad bet.

 

[Fineldar]

Instead of giving 800 BILLION dollars to companies that give away money to people who obviously can't pay it back, they can just give every American over 18 150 THOUSAND dollars. That's right. I did the math and every legal American above the age of 18 could get a shiny check for 150 THOUSAND DOLLARS. How could this help the economy?

Because people are already responsible with their money already. That's why our economy is so awesome and everyone can afford the big houses and nice cars they all drove.

It's not only the bank's fault. It's the dumbfuck who took out a huge loan to buy a nice house when he couldn't pay off the loan, which is why the banks are failing. Bail out isn't really the right word. The government is buying up the mortgages, to sell later because the government is the only thing with enough patience and capital to hold it that long. The money isn't going to the CEO's so they can buy more solid gold ferrarri's and diamond planes., they actually have to take reduced salaries, and be wiser with their lending, though they aren't directly in charge of that. That way they can give loans for all that stuff you listed, while not causing rampit inflation, crime, and doubling Porsche's stock value.

I'm actually excited that the House rejected the bailout. First of all, the bailout would directly reward high-powered and wealthy executives for (excuse my language) fucking up the economy.
...

My second big problem is the fact that largely rich people will benefit. This bailout is being framed as a savior of the economy, for the common man, but that is almost patently untrue. While one could argue that the benefits would trickle down, but I think it's clear that the companies that need to be bailed out do not have the best interest of the general public at heart.

It's not! The 700B doesn't go to zombie Mr. Morgan Chase, it goes to the company JP Morgan Chase to help it continue doing it's job. Maybe dying is what they "rightly deserve". The President even said that when he gave his speech before the bill went into voting. The problem is what they deserve isn't always the best option. At least they're being punished some. It's not really trickle-down effect if they're giving money to a company who's job is to give money to the common man so he can put his kids through college/ keep his money safe. The world needs banks, if you let them all die, shit's gonna happen. And do those people who defaulted on their loans, which is a cause of this. deserve to keep all that money they got from the bank before it died?

It's not exactly $700Billion of your money. The government isn't going to break into your house, steal that spare 5M you have under your mattress, you've already given them the money.

 

[AmericanWarMachine]

(read: families are about 4, approx. 75 million way split) it would still be about 10,000 dollars.

Math: 770,000,000,000 divided by 75,000,000 = 10266.6

In a family of four, assuming all the children don't become fat nerds who live in their parents basement (not an insult of anyone), There are the two parents (over 18) and the two kids (under 18).

To make the math simple, let's assume there are 200,000,000 bonafide
U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man,
woman and child. So 200,000,000 might be a fair stab at adults 18 and up.. So
divide 200 million adults 18+ into $85 billion that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a "We Deserve It
Dividend". Of course, it would NOT be tax free. So let's assume a tax rate of
30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends
$25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket. A
husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?
* Pay off your mortgage - housing crisis solved.
* Repay college loans - what a great boost to new grads
* Put away money for college - it'll be there
* Save in a bank - create money to loan to entrepreneurs.
* Buy a new car - create jobs
* Invest in the market - capital drives growth
* Pay for your parent's medical insurance - health care improves
* Enable Deadbeat Dads to come clean - or else

 

[AmericanWarMachine]

Because people are already responsible with their money already. That's why our economy is so awesome and everyone can afford the big houses and nice cars they all drove.

It's not only the bank's fault. It's the dumbfuck who took out a huge loan to buy a nice house when he couldn't pay off the loan, which is why the banks are failing.

If the bank ALLOWS these people to have these large amounts of money, then it IS their fault. Thru, it can be said that these people should have never applied, but it is still 95% the banks fault.

 

[meatloaf231]

(read: families are about 4, approx. 75 million way split) it would still be about 10,000 dollars.

Math: 770,000,000,000 divided by 75,000,000 = 10266.6

In a family of four, assuming all the children don't become fat nerds who live in their parents basement (not an insult of anyone), There are the two parents (over 18) and the two kids (under 18).

To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.. So divide 200 million adults 18+ into $85 billion that equals $425,000.00.

No. It. Doesn't. You lost a few zeros and added a few more.

Let's take your best case scenario of $850 billion.
850,000,000,000/200,000,000 = 4250. I have no idea where you are getting those two extra zeros afterwards, and I don't mean the cent signs. Even with $850 billion and 200 million people to give it to, you still only get $4250.

 

[AmericanWarMachine]

Yea, I did 800,000,000 instead of 800,000,000,000. My bad. But still, even if I am wrong, its still 4,250 bucks to the hard-working middle-man rather than the money-grubbing oblivious CEO.

 

[Pipotchi]

I am loving this financial market crash, I have been waiting to get on the property ladder for three years. I have been saving for so long all i need is another 15% dip in the market and I can buy a sweet apartment overlooking Hampstead

I am as insured as can be, all money in safe investments, Public sector job, unionised though and through. Finiancial prudence is finally paying off!

 

[meatloaf231]

Yea, I did 800,000,000 instead of 800,000,000,000. My bad. But still, even if I am wrong, its still 4,250 bucks to the hard-working middle-man rather than the money-grubbing oblivious CEO.

That's true, but $4,250 is really not a lot for some people. It could pay a few bills, help pay off the house, get out of a bit of debt, etc. It just wouldn't do that much.

Then again, it's $4,250 in everyone's hands, and every little boost to the economy would really help. Plus, the CEOs don't need it at all.

 

[Fineldar]

Guess what... The Oil industry has caused more inflation than the fucking second world war. If someone could pull the reigns on these shitwit twatknocking greedy corporate rectal belches than maybe things would level out. EVERYTHING is tied to oil prices, so long as Imperial Oil and Texaco can charge $1.50+/L, the cost of everything else will rise.

The second world war saved the American and German Economy, which then helped many other places economy by allowing the U.S. to give shit tons of money through the Marshall Plan to all these other countries, making Japan a powerhouse and rebuilding France, GB, and whatnot.

What's with everyone thinking the heads of big company's are greedy pricks who control they're entire company? They're too rich to decide to give the loan the the guy who wants a 2 story house, they have people to do that. They're businessmen who are good at what they do, worked hard, got to the top, and reap the benefits. They didn't get it buy stealing from the poor and raping the natives land. Yes, they have more money then they need. Yes, many of them even have more money than they know what to do with. Yes, this thing is partially their fault. But they aren't evil gluttons who are asking the government for money so they can have a complete formation of F-14's out of diamonds

 

[Portkins]

Honestly, this thread is clearly just 'The Blame Game'. So i'll take a whack at it.

IT'S AMERICA'S FAULT AMERICA IS IN DEBT & HAS A HOUSING CRISIS.

It's not the fault of the individual man, woman, CEO, nor child, it's everyone collaborative failing in investments, wasting their money, and loaning money to people who can't repay it.

There's a big fun cycle I call the economy that works like...

- The working man works his job, and makes money.
- He deposits it into a bank/uses it in an investment/essentials.
- The money in the bank goes out to be loaned, borrowed, etc.
- The people who can't afford thier houses, or some other investment, take out this money.
- The bank recollects the money, with interest. (High rates, lately. Phew.)
- The money that the bank recollects is returned to the depositor, with interest.
- Rinse and repeat.

The thing is, it's not just one big error, it's everyone's error. The banks are giving out loans to people who can't make end's meet, let alone repay an ginourmous loan of random dollars. In turn, they run bankrupt, and they lose money in the process, although this did 'bolster' the economy in the fact that someone benefitted from the investment.
(If they're building a house, the supplier and the contractors made a profit, who would end up being the 'Working Man' from earlier.)Now if everyone starts doing this, especially with mortgages, no one benefits from the bantruptcy, except the person who reclaims the property, in this case, when a home is repossessed and auctioned on the cheap.

Now, a little bit of debt like this can be good for a company of this sort. They can charge higher interest, and when the person paying this interest defaults they could stand to gather a large payout. However, if large numbers of people began defaulting at once then things begin to fall apart. Compare the situation to a Jenga game. If only a few of these high-risk loans default, it's like we're pulling out one piece at a time and making the tower taller. However when a lot of the loans default it's almost like trying to pull out three or four pieces, it's possible but probably going to make everything fall apart.

The US economy is a bucket with a hole in it, you cannot fix a bucket by pouring more water into it.

If the US wants to fix their economy, fire/arrest/shoot the CEOs and managers of all the major corporations that are fucking things up.

Guess what... Japan makes a better car than the US does. Constantly bailing out GM/Chrysler/Ford isn't going to change that their cars are shit and nobody wants to buy domestic.

Guess what... Mortgages, like any other loan, involve risk. Sometimes you win, sometimes you fail, but you don't fucking lure in half the gods damned population to sell them on mortgages they can't afford, then cry when they default and the bank ends up (for once) holding the short stick.

Guess what... The Oil industry has caused more inflation than the fucking second world war. If someone could pull the reigns on these shitwit twatknocking greedy corporate rectal belches than maybe things would level out. EVERYTHING is tied to oil prices, so long as Imperial Oil and Texaco can charge $1.50+/L, the cost of everything else will rise.

(Just some supplements to my point)