Bailout

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jaxon
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Bailout

Post by jaxon » Wed Oct 01, 2008 8:58 am

I know that there was some discussion in another thread, but this topic is big enough to support it.

How do you feel about the proposed US Bailout package? $700 Billion.

My reaction is generally negative. I understand that action must be taken to avert a further crisis, but this is the wrong way to go about it. I realize that liquidity is an issue, and a "run on the banks" could be a complete disaster. Money needs to be spent, but not like this. Those that gambled in the market do not deserve taxpayer money. Rewarding failure prevents the free market from doing what it needs to do to create a better base.

If it were up to me, I'd inject money, but in a different way. I think that the feds (in the USA) should offer a one-time reverse property tax, to be applied against mortgages. It would need limits, and I don't have all of the data, but think of it this way......the federal governments pays off 10% of everyone's mortgage, up to a limit. Yes, if you don't have a mortgage, you don't participate, but every government program has winners and losers.

The banks gain in that they get the cash.....this will help them with the liquidity issue. The homeowners gain in that many now are not in jeapardy of losing their homes. The debt levels for Americans drop significantly.

At the same time, they need to remove the "tax deductability" of the mortgages. Doing so would be very unpopular, but right now their system encourages debt. They need to straighten out the system, not just make a huge bailout.

They also need much better restrictions on mortgage eligibilty. (minimum down, percentage of income, limits on terms...etc) This should be combined with a large increase in the guarantee on bank deposits for individuals, so that they know that money they save is safe.

In addition, they need to place more regulations on the stock market. I know that they have temporarily banned shorting of a list of financial stocks, but in my humble opinion, they ought to flat out ban all shorting of stocks. Getting back to basics, the stock market was created as a place where entrepreneurs could raise capital to fund business projects. It also allowed investors to participate in a wide variety of investment options. Short selling changes the concept from "investing" to "gambling", and doesn't serve the fundamental purpose of the market. Banning all shorting of stocks would create a much less volitile market, while at the same time still allow for the free flow of capital.

I'm sure we'll get lots of opinions on this one!
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Re: Bailout

Post by FootbalYouBet » Wed Oct 01, 2008 9:58 am

jaxon wrote:If it were up to me, I'd inject money, but in a different way. I think that the feds (in the USA) should offer a one-time reverse property tax, to be applied against mortgages. It would need limits, and I don't have all of the data, but think of it this way......the federal governments pays off 10% of everyone's mortgage, up to a limit.
why should people dumb enough to get in over their heads with too high a mortagage get bailed out?? Its like when people are dumb enough to live on river banks but dont buy flood insurance, etc.

When both candidates running for office agree that a national bailout is needed and when all the experts agree, maybe there is something to it that the average jow just doesnt get. This whole situation shows that the average joe know squat about the big picture and the details of any situation. The majority of the people who vote or have an opinion about anything political dont know squat about it. That often includes me as well. Let those that know what they talking about run the country, whichever country it is.
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Re: Bailout

Post by Ron » Wed Oct 01, 2008 10:28 am

There's only 2 ways out of this.

1. Go with the bailout plan. Hurts the taxpayer the least by a mile.

2. If #1 fails ... the Fed will tax the dollars right out of the taxpayers wallets by printing money. Otherwise known as inflation and inflation is a fancy word for stealth tax. (or to use US terminology ... taxation without representation)
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Re: Bailout

Post by Sir Purrcival » Wed Oct 01, 2008 3:11 pm

I do like the idea of paying some of peoples debt directly but I don't think that it will save some of these financial firms. Paying say 10% of a mortgage might save some peoples homes in the short term but this is not a hiccup in the economy we are talking about here. I expect that it may be years before some of this recession/depression begins to shake itself off and if and only if some substantial changes are made in the way of lending practises. It might be better to spend some of that money retraining those who are bound to be losing jobs into areas not so hard hit. Keeping people employed will help keep the extended credit from becoming a defaulted mortgage.

The practise of getting money has been too easy. I don't expect the average joe to necessarily understand the world of high finance but this isn't really what its about is it. It is pretty simple, don't borrow money that you might not be able to pay off! Lending institutions I hold to higher standard. They are in this fix because they basically have thrown caution to the wind. They were handing out money without any real regard for a persons ability to pay it. That is just plain stupid and appears to be a case of rampant, runaway capitolism at play. Anyone with a rice grains amount of common sense should have been able to figure out that as soon as the economy started to slow, as soon as some of the US's decade of foolish spending started to catch up, that people and businesses would begin to default. If their folly didn't have such a devasting impact on us, I would sit back and say serves em damn well right and let the chips fall where they may.
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Re: Bailout

Post by hgtff » Thu Oct 02, 2008 8:46 am

Sir Purrcival wrote:don't borrow money that you might not be able to pay off!

nail on the head, but sadly i know people who don't know how to save money, they get some money in their pocket and it's gone immediately, racking up big credit card bills is no problem for these people... I just don't get why the financial institutions kept giving money to irresponsible people.. that makes no sense. I hate the fact that their poor business practises get their asses saved by the government but it's probably for the greater good.. still *poop* though cause if a business is managed that badly it shouldn't survive.

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Re: Bailout

Post by Cool » Fri Oct 03, 2008 9:39 am

The people/government are saving themselves... the taxpayers are/will have to pay it, if not, all their investments could go for a bigger fartknocker than they already have.
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Re: Bailout

Post by Lerriuqs » Fri Oct 03, 2008 9:52 am

Something that could interest everyone...The roots of this are based on misguided social policy...

http://www.pittsburghlive.com/x/pittsbu ... 90330.html

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Re: Bailout

Post by jaxon » Tue Oct 07, 2008 9:17 pm

Lerriuqs wrote:Something that could interest everyone...The roots of this are based on misguided social policy...

http://www.pittsburghlive.com/x/pittsbu ... 90330.html
Interesting read. I think the issue is more complicated than this article suggests, but I'm sure that it is a contributing factor. Lesson is simple, you can't lend money to people in amounts greater than they can repay....and the system not only allowed it, but created incentives to do so.
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Re: Bailout

Post by AGENT-784 » Thu Oct 09, 2008 12:31 pm

Search "Money as Debt" in Google video and watch for about 45-47 minutes.

Search "Catherine Austin Fitts", or her website, "Solari".

Lots of compelling reading, so please be patient, if you sincerely want to understand the financial rot.

Another guy who might be worth googling is Webster G Tarpley who authored "SURVIVING THE CATACLYSM"...
Amongst the conspiracy theorists, his stuff might be iconic.

Curious that socialism becomes increasingly palatable, but only when it is bailing out rich people.

You can draw your own conclusions.
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Re: Bailout

Post by Gerry » Wed Oct 15, 2008 6:34 pm

I'm not happy that it had to be done, but I do think that it is needed. Most Americans, especially Republicans, are holding their noses as they agree with the government's action.

I think that a lot of rules will be changing in the US over the next few years, and the ones they have will be more closely enforced.

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Re: Bailout

Post by Gerry » Wed Oct 15, 2008 6:37 pm

What happened in the US was capitalism getting cancer, so to speak.

Capitalism is fine, as it sure beats the alternative (that has been well established by now, hasn't it?), but the tumour needs to be dealt with.

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Re: Bailout

Post by FootbalYouBet » Wed Oct 15, 2008 6:42 pm

I have always thought that capitalism = get what you can for yourself\lookout for number one\me me me I I I self self self.

If that is so, then there must be something better?
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Re: Bailout

Post by Gerry » Wed Oct 15, 2008 6:45 pm

Cool wrote:The people/government are saving themselves... the taxpayers are/will have to pay it, if not, all their investments could go for a bigger fartknocker than they already have.
Who are you referring to when you say "government/people", and who are the "taxpayers"? Are they not one and the same?

Everyone (most, if not all taxpayers) has money in the stock market. The real value of a company has not magically disappeared over the last few weeks. But what you can sell your shares for has decreased greatly due to the freeze on capital. If capital becomes liquid again soon, value (that you can liquidate) will return. The depression of the stock market only matters to people who want to sell now or in the very near future. I have RRSPs and I'm not worried about them because it'll be a while before I need to cash in. And, when it is getting close to retirement time I'll take my money out of stocks and into an interest bearing account.

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Re: Bailout

Post by Gerry » Wed Oct 15, 2008 6:50 pm

FootbalYouBet wrote:I have always thought that capitalism = get what you can for yourself\lookout for number one\me me me I I I self self self.

If that is so, then there must be something better?
Capitalism doesn't equal that anymore than socialism equals brotherly love.

That said, there's something to be said for being "selfish". The best cared for person is one who looks after himself. It saves someone else the trouble, and we always receive relative to the effort we are willing to give.

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Re: Bailout

Post by FootbalYouBet » Wed Oct 15, 2008 7:50 pm

Gerry wrote:
FootbalYouBet wrote:I have always thought that capitalism = get what you can for yourself\lookout for number one\me me me I I I self self self.

If that is so, then there must be something better?
Capitalism doesn't equal that anymore than socialism equals brotherly love.

That said, there's something to be said for being "selfish". The best cared for person is one who looks after himself. It saves someone else the trouble, and we always receive relative to the effort we are willing to give.
well, I dont know what name anyone wants to put on it, but I beleive in a society where everyone works for the good of all, no super rich, and no poor, except those that refuse to contribute.

In the past, some have had the right kind of idea, but used the wrong methods to impliment.
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