Large Scale Central

700 billion dollar bailout

General Discussion
#81

So how did we get where we are now? What was the real true cause of the current subprime real estate debacle that endangered not only our entire financial system, but put so many lower income people out of their homes and forced the government to an emergency rescue package?

Every American should know the truth about who engineered the rules for this extraordinary mess so that we all learn a valuable lesson. We need to be much smarter the next time around.

In 1977, President Carter and a Democrat Congress created the Community Reinvestment Act mandating that banks must meet the credit needs of everyone in the banks’ community, including uncreditworthy borrowers. It was done for a good social purpose and had the greatest intentions — expanding home ownership. And, through the 1980s and into the 1990s at least, it seemed to work.

However in 1995, President Bill Clinton imposed more and stronger regulations and performance tests. These coerced banks into significantly increasing their loans to low-income borrowers in economically-troubled communities, or face possible fines and expansion restrictions.

These new rules encouraged banks to bundle their risky subprime loans together with prime loans and re-sell them in packages to other financial institutions, thereby freeing the original lenders from any further risk. Thanks to the new rules and oversight from the CRA, Fannie Mae and Freddie Mac got involved in a big way, buying literally trillions of dollars of the questionable loans from banks and feeding the dangerous cycle that had begun.

Eventually, it turned into a kind of pyramid scheme that overwhelmed some lending organizations when housing prices softened in late 2006 and 2007.

So what’s the big lesson to be learned here by the public? That this financial crisis was the result of yet another Big Government program that had great intentions but created devastating unintended consequences that hurt millions of people.

It was not the fault of African American groups, which naturally want to help their people. Nor was it the fault of America’s free enterprise system, or a lack of enough regulation. No, it was Big Government once again trying to run a private industry.

You can’t take one dollar and loan it 50 times. Watch out when Big Government spenders tell you they can run our entire medical industry, give you far better care and save you lots of money.

http://www.ibdeditorials.com/IBDArticles.aspx?id=307927474219610

and the so called “bail-out”

http://www.ibdeditorials.com/IBDArticles.aspx?id=307927852621346

#82

Ken and others,
Don’t buy into the PR spin from the Republicans and Wall Street. The numbers are so large a standard calculator is useless. They like to blame this on the Democrats and government intrusion. Of course, blame someone else.

These derivatives weighing down the economy are comprised of various debt, not just mortgages. Remember the story I posted about the investment group that borrowed 7.5 billion dollars to speculate on oil and went bankrupt? These are the type of deals that went down and we are bailing out.

We have somewhere around one hundred million households in the USA. Let us assume 50% of these are home owners(I believe the figure is lower). That gives us 50 million homeowners. How many of these 50 million own their home outright with no mortgage? No idea, and I can’t find a reliable statistic. But I know many people who’s homes are paid for.
But let us assume we have 50 million home owners with mortgages. Percentages being thrown around by the fear mongers say 10% are in default. That would be 5 million mortgages in default. The 700 billion would completely pay off $140,000 for each of those 5 million mortgages.
This is assuming 50% of the population is a homeowner. This is assuming nobody has their home paid for. So the real figure in dollars is likely much higher for a much smaller number of mortgages.

Now, what else is the government not telling you?
For instance:
HOME BUYERS WHO PUT LESS THAN 20% DOWN ON A HOME LOAN ARE REQUIRED TO BUY MORTGAGE INSURANCE. THIS INSURANCE IS DESIGNED TO PROTECT LENDERS IN CASE OF DEFAULT.

SO, THESE LOANS THE REPUBLICANS AND WALL STREET ARE BLAMING THE MORTGAGE CRISIS ON ARE INSURED!

Quit believing the lies. This is not about loans forced on Wall Street for poor people by the government. We are bailing out the speculators and insurance companies. Most of the 700 billion dollars will go to foreign investors who took our “paper” as payment for our trade and budget deficits.
Ralph

#83

Ralph, your too focused on the home buyer market.

That article doesn’t blame anybody, but Big Government. Republicans, Democrats and Independents alike. You’re right, speculators have a hand in this too. Not to mention developers and businesses expanding. What I will blame is government interferance in the free market and their lack of accountability. That’s the root cause of it. Good intentions gone bad and along with it, the un-intended consequences.

I don’t believe much of what the government tells me anyway. And I sure as hell don’t believe the Congress is smart enough to fix it!

You have a thing about speculators, Ralph. When it comes right down to it, anybody who has money invested in the stock market is a speculator.

"HOME BUYERS WHO PUT LESS THAN 20% DOWN ON A HOME LOAN ARE REQUIRED TO BUY MORTGAGE INSURANCE. THIS INSURANCE IS DESIGNED TO PROTECT LENDERS IN CASE OF DEFAULT.

SO, THESE LOANS THE REPUBLICANS AND WALL STREET ARE BLAMING THE MORTGAGE CRISIS ON ARE INSURED!"

And what was that insurance company’s name that the bailout is all about? AIG?

#84

I guess I’m one of those greedy speculators. I am debt free, I bought the smallest house I could fit in, I drive an 18 year old Jeep, and I saved my money for a rainy day and/or retirement. In the last couple of weeks, 10% of my savings have evaporated.

While I feel sorry for some of the people who have lost their homes (and not so sorry for others), I also feel sorry for people like myself. We have done everything right and yet we are also suffering.

#85
Ken Brunt said:
Ralph, your too focused on the home buyer market.

That article doesn’t blame anybody, but Big Government. Republicans, Democrats and Independents alike. You’re right, speculators have a hand in this too. Not to mention developers and businesses expanding. What I will blame is government interferance in the free market and their lack of accountability. That’s the root cause of it. Good intentions gone bad and along with it, the un-intended consequences.

I don’t believe much of what the government tells me anyway. And I sure as hell don’t believe the Congress is smart enough to fix it!

You have a thing about speculators, Ralph. When it comes right down to it, anybody who has money invested in the stock market is a speculator.

"HOME BUYERS WHO PUT LESS THAN 20% DOWN ON A HOME LOAN ARE REQUIRED TO BUY MORTGAGE INSURANCE. THIS INSURANCE IS DESIGNED TO PROTECT LENDERS IN CASE OF DEFAULT.

SO, THESE LOANS THE REPUBLICANS AND WALL STREET ARE BLAMING THE MORTGAGE CRISIS ON ARE INSURED!"

And what was that insurance company’s name that the bailout is all about? AIG?


OK,
The no/low down payment mortgages being “forced” on the lenders is being blamed for the credit crisis. These loans require mortgage insurance.
We have already bailed out AIG to the tune of 85 billion dollars.
We have taken over Fannie Mae and Freddie Mac.
We have already covered the mortgage losses as Fannie Mae and Freddie Mac guarantee the loans. We are already holding their paper.
So what is left?
Here is a link to the nations largest provider of Private Mortgage Insurance.

http://www.mgic.com/aboutus/corporateprofile.html

Note the very good financial ratings.
How can this be if we are in the midst of a mortgage crisis requiring a 700 billion dollar cash infusion?
This 700 billion is going to be used to pay a lot of debt that has nothing to do with mortgages.
Ralph

As for my “thing” about speculators…very true.
Commodity and real estate speculation affect the prices of consumer goods.
Stock Market speculation has little affect on consumer prices, unless a company is buying another company.

#86
Ken Brunt said:
Watch out when Big Government spenders tell you they can run our entire medical industry, give you far better care and save you lots of money.
I work in the Canadian Health Care system, which is run by the government. I've seen some of the results from the U.S. private system and have colleagues who have worked in your country. Almost all of us are horrified by what we see of your private system. My conscience wouldn't allow me to work like that.
#87

And my conscience won’t allow me to practise in a system that shuts down in August because it has run out of money, or rations MRIs so that a patient cant get one for 6 month by which time having one is pretty much meaningless.

I am horrified by what I see of your public system…

There is no doubt in my mind why so many of your docs are coming to the US to practise medicine.

#88
Kevin Morris said:
I guess I'm one of those greedy speculators. I am debt free, I bought the smallest house I could fit in, I drive an 18 year old Jeep, and I saved my money for a rainy day and/or retirement. In the last couple of weeks, 10% of my savings have evaporated.
Kevin:

I truly do commiserate with your financial loss, but could you explain how “. . . 10% of your savings have evaporated?” Did your bank fail without insurance on the accounts? Did you have more money in the bank than the insurance would cover? Was your house robbed?

People often confuse putting money into SPECULATIVE instruments like the stock market, bonds, etc. with SAVING. The fact that putting money in the stock market is called an “investment” is in itself deliberately misleading. Stock brokers (with better sounding titles like “investment bankers,” “money managers,” etc.) really want folks to think they are saving (good word), rather than speculating (sounds risky).

Money put into owning stock is actually neither an investment nor is it savings. It is put there in the hope that hype or other people’s greed will drive the prices higher than the purchase price. Sometimes that doesn’t happen and the initial amount is decreased. That’s the nature of speculation as opposed to saving.

Happy RRing,

Jerry

#89
Steve Featherkile said:
And my conscience won't allow me to practise in a system that shuts down in August because it has run out of money, or rations MRIs so that a patient cant get one for 6 month by which time having one is pretty much meaningless.

I am horrified by what I see of your public system…

There is no doubt in my mind why so many of your docs are coming to the US to practise medicine.


That’s news to me. Which system shuts down in August? I must admit, things get pretty quiet for me in August, but that’s because everyone goes on vacation.

I’ve heard those stories about the wait time for an MRI, but whenever someone is interviewed, the problem always seems to be somewhere else. I concede there is a wait for MRI, but how long do 40-50 million of your countrymen have to wait - the ones who can’t afford health insurance?

Many Canadian Drs move to the U.S. That doesn’t surprise me. I’m a Speech Therapist and I could double my salary by moving south. That’s probably true of Drs as well. But if I were to move south I would be forced to make many of my clinical decisions based on finances rather than need. I can’t, in clear conscience, do that.

About a year ago I had some minor surgery. It was not urgent. Nevertheless, from the day the need was diagnosed to the actual surgery was about 4 weeks. I consider that to be excellent service.

From the stats I’ve seen, the Canadian system offers reasonable service to (almost) everyone in the country and costs 8% of GDP. The US system offers excellent service to perhaps 60%, mediocre service to 20-25% and no service to 15-20% and costs 11% of GDP. I’ll take the Canadian system any day.

#90
Ralph Berg said:
Ken and others, Don't buy into the PR spin from the Republicans and Wall Street. The numbers are so large a standard calculator is useless. They like to blame this on the Democrats and government intrusion. Of course, blame someone else.

These derivatives weighing down the economy are comprised of various debt, not just mortgages. Remember the story I posted about the investment group that borrowed 7.5 billion dollars to speculate on oil and went bankrupt? These are the type of deals that went down and we are bailing out.


Right on! Just wait for the “Credit Card shoe” to drop, it’s not going to be pretty! There is no such things as “Free”, not even in the “Land of the Free” and I sure hope there will be a lot of the “Brave” home when that shoe drops!

#91
Hans-Joerg Mueller said:
Ralph Berg said:
Ken and others, Don't buy into the PR spin from the Republicans and Wall Street. The numbers are so large a standard calculator is useless. They like to blame this on the Democrats and government intrusion. Of course, blame someone else.

These derivatives weighing down the economy are comprised of various debt, not just mortgages. Remember the story I posted about the investment group that borrowed 7.5 billion dollars to speculate on oil and went bankrupt? These are the type of deals that went down and we are bailing out.


Right on! Just wait for the “Credit Card shoe” to drop, it’s not going to be pretty! There is no such things as “Free”, not even in the “Land of the Free” and I sure hope there will be a lot of the “Brave” home when that shoe drops!

Credit cards are still profitable. Apparently WaMu’s credit card division went to JP Chase, as it is still functioning.
Bank of America went to default rates for 250,000 card holders whose credit rating hadn’t changed and had not paid late or overcharged. They and many Banks such as WaMu have been sucking blood from the credit card customers trying to cover their losses elsewhere.
Ralph

#92
Ralph Berg said:
Hans-Joerg Mueller said:
Ralph Berg said:
Ken and others, Don't buy into the PR spin from the Republicans and Wall Street. The numbers are so large a standard calculator is useless. They like to blame this on the Democrats and government intrusion. Of course, blame someone else.

These derivatives weighing down the economy are comprised of various debt, not just mortgages. Remember the story I posted about the investment group that borrowed 7.5 billion dollars to speculate on oil and went bankrupt? These are the type of deals that went down and we are bailing out.


Right on! Just wait for the “Credit Card shoe” to drop, it’s not going to be pretty! There is no such things as “Free”, not even in the “Land of the Free” and I sure hope there will be a lot of the “Brave” home when that shoe drops!

Credit cards are still profitable. Apparently WaMu’s credit card division went to JP Chase, as it is still functioning.
Bank of America went to default rates for 250,000 card holders whose credit rating hadn’t changed and had not paid late or overcharged. They and many Banks such as WaMu have been sucking blood from the credit card customers trying to cover their losses elsewhere.
Ralph

As long as people manage to pay, yes. Watch out when they don’t!

#93
Hans-Joerg Mueller said:
Ralph Berg said:
Hans-Joerg Mueller said:
Right on! Just wait for the "Credit Card shoe" to drop, it's not going to be pretty! There is no such things as "Free", not even in the "Land of the Free" and I sure hope there will be a lot of the "Brave" home when that shoe drops!
Credit cards are still profitable. Apparently WaMu's credit card division went to JP Chase, as it is still functioning. Bank of America went to default rates for 250,000 card holders whose credit rating hadn't changed and had not paid late or overcharged. They and many Banks such as WaMu have been sucking blood from the credit card customers trying to cover their losses elsewhere. Ralph
As long as people manage to pay, yes. Watch out when they don't!
That is true. You can only squeeze people so much before they can't pay either. Ralph
#94

Here is what a London based computer news site thinks about the bailout plan. Echos my thoughts pretty closely.
Ralph

http://www.theinquirer.net/gb/inquirer/news/2008/10/03/congress-set-sell-country

#95
Kevin Morris said:
Steve Featherkile said:
And my conscience won't allow me to practise in a system that shuts down in August because it has run out of money, or rations MRIs so that a patient cant get one for 6 month by which time having one is pretty much meaningless.

I am horrified by what I see of your public system…

There is no doubt in my mind why so many of your docs are coming to the US to practise medicine.


That’s news to me. Which system shuts down in August? I must admit, things get pretty quiet for me in August, but that’s because everyone goes on vacation.

I’ve heard those stories about the wait time for an MRI, but whenever someone is interviewed, the problem always seems to be somewhere else. I concede there is a wait for MRI, but how long do 40-50 million of your countrymen have to wait - the ones who can’t afford health insurance?

Many Canadian Drs move to the U.S. That doesn’t surprise me. I’m a Speech Therapist and I could double my salary by moving south. That’s probably true of Drs as well. But if I were to move south I would be forced to make many of my clinical decisions based on finances rather than need. I can’t, in clear conscience, do that.

About a year ago I had some minor surgery. It was not urgent. Nevertheless, from the day the need was diagnosed to the actual surgery was about 4 weeks. I consider that to be excellent service.

From the stats I’ve seen, the Canadian system offers reasonable service to (almost) everyone in the country and costs 8% of GDP. The US system offers excellent service to perhaps 60%, mediocre service to 20-25% and no service to 15-20% and costs 11% of GDP. I’ll take the Canadian system any day.


Well, Kevin, perhaps you should read these articles:
http://www.heartland.org/policybot/results.html?artId=15524
http://www.harp.org/canada-phillips.htm

This next one is good, private enterprise is now competing with the public health system, and winning. They actually provide a service!
http://www.nytimes.com/2006/02/26/international/americas/26canada.html

Gee, the waiting times in the Canadian Health System have become a constitutional issue in Canada.
http://www.nytimes.com/2005/05/21/international/americas/21chaoulli.html

Canadian NeuroSurgeons, Fed up with not being able to treat their patients are eyeing moving to USA.
http://query.nytimes.com/gst/fullpage.html?res=980CE0DE143EF934A25753C1A9659C8B63

I could go on, but you get the idea, don’t you, Kevin.

#96
Ralph Berg said:
Here is what a London based computer news site thinks about the bailout plan. Echos my thoughts pretty closely. Ralph

http://www.theinquirer.net/gb/inquirer/news/2008/10/03/congress-set-sell-country


Who the hell is Benson N. Hedgefund?..:wink:

(and where did I leave my musket and indian suit???)

#97

Hey Guys I got this a few days ago check it out

This should be the next “Shot heard round the world!”

If you do nothing else today you need to take the time to view this video!

Hopefully you will feel compelled to share it with your friends and family.

http://www.youtube.com/TheMouthPeace

Chuck

#98
Ken Brunt said:
Ralph Berg said:
Here is what a London based computer news site thinks about the bailout plan. Echos my thoughts pretty closely. Ralph

http://www.theinquirer.net/gb/inquirer/news/2008/10/03/congress-set-sell-country


Who the hell is Benson N. Hedgefund?..:wink:

(and where did I leave my musket and indian suit???)


Well, I will lament the fall of the empire. But it is interesting to read the what some think across the pond.
This is what I found interesting as I have read this several times elsewhere.

“That’s because the US financial system is awash with arcane derivatives that are called credit default swaps, which Warren Buffet has astutely called " weapons of financial mass destruction.” There are presently about $55 trillion in credit default swaps outstanding in the US financial system. There’s not enough money in the entire world to buy all those up."

As I told HJ some time ago we will soon see a common currency for the US, Canada and Mexico. The Fed has taken every step possible to trash the dollar. Economists for years have wondered why the Fed hasn’t taken any steps to prop up the dollar. When things get bad enough the new NA currency will be rolled out as the economic savior.
Another do this or disaster scenario.
Ralph

#99
Charles Cole said:
Hey Guys I got this a few days ago check it out

This should be the next “Shot heard round the world!”

If you do nothing else today you need to take the time to view this video!

Hopefully you will feel compelled to share it with your friends and family.

http://www.youtube.com/TheMouthPeace

Chuck


The mouth peace…another PR push by the troublemakers.
Mortgages are not the problem. They are nothing but a speed bump easily navigated.
The real problem is the massive “ponzi” scheme they created so millions of people could make money from money without contributing anything to the world.

“That’s because the US financial system is awash with arcane derivatives that are called credit default swaps, which Warren Buffet has astutely called " weapons of financial mass destruction.” There are presently about $55 trillion in credit default swaps outstanding in the US financial system. There’s not enough money in the entire world to buy all those up."

These derivatives are not a US problem, but a world problem.
I told you all months ago we were bankrupting the nation with our deficit spending and our massive trade deficits. I heard from you that the “experts” said trade deficits encouraged investment in our country.
Those “experts” and all those supporting the $700 billion bailout deserve the same fate as the most famous fascist, Mussolini. The entire world will suffer from their greed and fleecing of the financial system.
Ralph

#100
Charles Cole said:
This should be the next "Shot heard round the world!"
Thanks for that, Chuck.

I doubt it rates the as the next shot heard 'round the world. It’s more like a video of the bloody obvious.

Q: Why was sub-prime mortgage industry created in the first place?
A: Sub-prime mortgages were created BECAUSE MILLIONS OF AMERICANS WANTED THEM!

Owning your own home is the American dream. That Dream was out of reach for many Americans, especially people on low incomes. However, a sub-prime loan gave low-income buyers a way into the housing market that, in theory, they could afford.

Why would it surprise anyone that Democratic legislators supported sub-prime loans? Democratic constituencies are much more likely than their Republican counterparts to contain large low-income groups. Why would it surprise anyone that these groups would pressure their elected representatives for easy credit?

It’s hard to believe the bankers who made these loans didn’t know, or strongly suspect, that they could never be repaid. My question is, WHY DIDN’T THE BORROWERS KNOW THAT, TOO? We can, with some justification, blame the bankers, but whatever happened to caveat emptor?

America is in this mess because large numbers of people wanted easy credit. In the tradition of “the customer is always right”, the bankers gave it to them. That’s the free market at work. Do we blame bankers because people can’t count, or politicians because they don’t want regulators interfering with the wishes of those who put them in office?

The real issue here is where the dollars to make those sub-prime loans came from. The answer is, from places like China, Japan, Saudi Arabia and yes, even Australia.

Those folks want their money back. That’s what the bail-out package is really about.