Where does the money come from? Pre all of this mess we were projected to run a 400+ billion dollar defecit. We have a gigantic debt on top of that. Now we are spending hundreds of billions to bail out companies and might have to do another trillion on top of that? Sounds like a recipe for disaster.
...another good idea:
Let’s vote for Obama and implement all his big ideas—about half a trillion’s worth.
There is going to be serious inflation over the next 5-10 years. Anyone knowledgeable enough to know what the best investments are given inflationary circumstances?
The solution being proposed by the Bush administration is the most expensive bailout in the nation’s history, sharply curtailing the ability of the next president to push for tax cuts or new spending.
No tax cuts for McCain, no new spending for Obama...why do I get the impression that if the Dems are voted in they'll ignore this restriction, yet if McCain gets in the no new tax cuts will be heralded from the housetops.
Once again, a poltiical reporter making comments clearly above their pay grade, and some of our Freepers falling for it.
If this new entity buys a trillion dollars in mortgages from the financial entities that own them, the only losses will be those mortgages that are fully defaulted on. And in a default, there is still a chance to sell the property on a bankruptcy offering.
Remember, the banks and brokers have already written off a little over $500 billion so far, so their cost of carrying these mortgages is already lowered. So they then turn around and sell the paper to the new entity at say, 30 cents on the dollar. There will be some more writedowns, but we will finally be able to quantify the total. The uncertainty of how much of these writedowns remained is the biggest reason why the financial stocks had not been able to find a proper pricing level.
The new entity will now own say a trillion in mortgages, but they don’t have a trillion in risk. The vast majority of this paper will likely pay off in the long run. Remember, the government actually made money over the S&L bailout in the long run.
The only reason the government is doing this is because it is too large for the private sector to handle in the short term, and because the last thing this country needs is for Goldman Sachs and Moegan Stanley to be owned by non-US sovereign funds, which is where this was leading us to (Dubai owning 49.9% of Goldman and China owning 49.9% of Morgan Stanley).
And please, no flaming about free markets and ‘let the bastards fail’. We all know that lousy governemt regulation and oversight caused a significant hand in this issue, so the need for government providing their part of the solution financially is reasonable.
However, the next mortgage broker who tries to submit a ‘stated income’ application should be shot on sight.
And I want Franklin Raines and Angelo Mozilo and Richard Fuld arrested this year!
At what point does it make more economic sense in the long-term to just let a company fail? While I understand the implications of a mega-company like Fannie Mae/Freddie Mac crash and burn (or any of the other companies being bailed out) - massive financial panic and losses.
BUT
With a price tag of $1 Trillion - I just don’t know that the collapse of said companies would be as expensive overall. At least if they collapse, the market will eventually correct and fix the problems. When the Government bails them out - the problems are still there... Nothing is “fixed” it is just, in auto-body terms - Bondoed over. A patch that hides the still-there damage.
Before it is all over, my children will be paying 110% of their income to pay back these disasters.
bttt
hahah 1 Trillion.. they WISH.
This is a MULTI TRILLION DOLLAR MESS FOLKS! The S&L Bailout was about 1/2 a Trillion, this one is insanely bigger than that. THis is multiple trillions folks.
On the plus side, that’s a trillion dollars President Obama won’t have to spend on socializing health care and handing out walking-around cash to the Jeremiah Wrights of the world.
Isn't there a whiff of Weimar Germany in all of this chaos......or at least modern day Argentina or Zimbabwe??
The only possible way this will not be a disaster for the taxpayer is if, somehow, the real estate bubble is inflated.
I wonder how they will do that? Print lots of money maybe?
Inflation may become a big problem...soon.
The well is almost dry. The American economy is based on people buying crap. When people stop buying crap, the rest of the world has no use for us. I give it three years.
The deal is done and it's check out time. Nothing will unwind this situation.
Most of you will hold onto the lie that sounds best. Good grief Charlie Brown.
Well at least we’re finally getting some honesty. Maybe now people will wake up and think before they support these insane centrally controlled economic measures. But I kind of doubt it... oh well.
Let’s call it what it is—housing reparations. The banks were forced to lower their standards on lending and lend to people who they knew weren’t creditworthy. They also were forced to lower the bar on down payments, so when the market started to fall an unprecedented number of mortgages were under water.
Lots of the money that is lost now went to the lucky ducks who sold their houses at that artificial peak, and some of the unrecoverable assets are the houses that the uncreditworthy are clinging to. Not nearly all minority, but the system was corrupted because too many minorities wouldn’t qualify with regular standards, and a disproportionate share of the losses have come from their loans.
Can we freeze government spending now?
How about all elected federal employees and those federal employees earning in excess of $120K give up 1/2 of their pension plans excluding 401k type savings?
How about all federal employees pay market rates for their health care costs?
An immediate 1/3 reduction in pay of federal employees earning in excess of 120K?
Cutting 10% of the federal workforce over several years by putting in place a total hiring freeze?
How about putting a stop to funding NGO’s with my tax dollars? ACORN comes to mind.
For more than seven decades, American government has acted to provide housing for the poor.This is a great book!In America’s Trillion-Dollar Housing Mistake, Howard Husock explains how, as with so many anti-poverty efforts, low-income housing programs have harmed those they were meant to help while causing grave collateral damage to cities and their citizens.
Public housing projects, Mr. Husock writes, are only the best-known housing policy mistakes.
His book explains how a long list of lesser-known efforts—including housing vouchers, community development corporations, the low-income housing tax credit, and the Community Reinvestment Act—are just as pernicious, working in concert to undermine sound neighborhoods and perpetuate a dependent underclass.
The average number of credit cards that each/every American has: 8.