What happens if there is no bailout??

[chuck22b]

Originally Posted by tony23

I really don't follow - it seems to me that you're saying the bailout decreases the risk to investors and creditors. As a result, they will measure their risk better, thus eliminating the need for future bailouts.

That doesn't make sense. If investors are protected from the losses of risky investments, they will not have any incentive to stop making risky investments - which will necessitate more bailouts in the future.

That is why the original bail out from Bush didn't make sense. Buying risky assets with zero consequences on behalf of the banks.

The new bail out has conditions tied to it including restrictions, regulations, and possible equity stakes. So, there is still risk (of losing control of the company), but the point is that it's a more "measurable" risk. The current risks in the market is unmeasurable. If businesses default, credit card defaults, school loans defaults, etc.... no body knows how far and what is the extent of the risk. Hence why nobody wants to touch anything with a stick and why credit is frozen.

Risks are in the most part measurable. Insurance companies measure risk and offer different drivers with different rates on their insurance. Risk is measured in almost everything. The problem is, is that the current level of risk in banks are unmeasurable... and that's the problem.

-chuck22b

[goodbyehollywood]

Originally Posted by chuck22b

At the end, we'll have high unemployment, probably higher crime, fewer opportunities for education (no loans and government is funding unemployment), social security for the elderly will probably collapse (fewer people funding into the system while a huge drawl will come out starting already), and those capable (wealthy) will leave the country to find other places that have a more favorable climate. We'll probably see the first time in decades of a population exodus (net reduction).

We're probably going to see these things, with or without the bailout. Unemployment will be higher, because a lot of mortgage, construction and housing-related related jobs, as well as a ton of jobs in the financial sector, have gone away and won't come back. The bubble staffed these jobs to an unsustainable level. People who would've been selling cars or working retail decided traded up to selling real estate or mortgage loans instead. Now their high incomes are gone, with virtually no chance of replacing that earning power elsewhere. Higher crime dovetails with increased unemployment and feelings of resentment.

College loans need an overhaul, too. People have gotten it in their heads that everyone has a right to go to the college of their choice and buy the house of their dreams. And they do... if they're willing to work and sacrifice for it. Only in the past few decades have people come to expect the government to boost their lifestyles. Social security is already set to collapse, as huge numbers of Boomers cash out what they paid in. Most of us in the generations after don't expect to see SS, especially with the burgeoning deficit. Our pay-ins are just socializing the retirement of others, and a lot of us would opt out right now if we could. And people are already retiring out of the country in droves. House Hunters International is one of the most popular shows on HGTV. I know people who are already buying retirement property in other countries. If taxes go up, more will do it sooner.

As for the shrinking credit, companies are reluctant to loan, because borrowers are increasingly unlikely to pay back. When you see people walking away from their homes with no remorse, bankruptcy rubberstamped with no stigma attached and a feeling of having beaten the system replacing the shame of reneging on commitments, it's difficult to imagine that anything will make the credit flow freely again. There is no trust.

The bailout isn't a panacea. It isn't even a solution. It's simply a desperate, short-term attempt to hold the panic at bay a little longer. Yes, stocks will enjoy a relief rally, but we're in a nasty bear market, coupled with a recession that hasn't even shown its teeth yet, and the trend is down. People who don't support this bailout simply don't think it will work and they're tired of squandering money subsidizing the failures of others.

[Dd714]

Originally Posted by chuck22b

The new bail out has conditions tied to it including restrictions, regulations, and possible equity stakes.
-chuck22b

The new bail out plan has $150 billion added to it - fluff. Protection for children from wodden arrows, research for race tracks, etc. The lobbiest had a field day with this bill.

[HappyTexan]

It's just more lipstick on the pig.

[k374]

senate is going to pass this thing today and house is going to pass it on Fri. No questions about it.

[goldengrain]

Are they just printing more dollars to pay for the bailout?
How low can they devalue the dollar until the public just can no longer take it?
Will food go the way of oil, priced so high that few can afford good sustenance?

This is all caused by the removal of regulation and greed by those in the financial market, yet the ones who made the decisions have no change to their lifestyles.
Congress had to approve of the regulation changes.

[texdav]

The new baiout also includes more money for other than the financial;that is the pork they are giving away to get more votes.Even thyen they do not even know as no one does waht the assets are worth and what they will be paying. Tha6t's the thing;no othyer bank or invest wants themm because the value is unknown .The governamnt will be buying waht no other investor will ;kind of site unseen.There is alot of investment money out there right now but none of them will touch these assets for anyhtihng. Any politician that says moenyWILL be made is flat lying;that's why they have gotten he name "poison assets'.

[Philip T]

Sort of completes the Greater Fool theory. Yunno -- The story goes that it does not matter how stupid you are with buying something or paying too much -- some Greater Fool (than you) will come along and want to buy it for more.

Turns out the Greatest Fool in this regard is all of US.

[Tee11]

Protection for children from wooden arrows

Please, someone explain... what does that even MEAN???

Who comes up with sth like that? Who hopes to get reelected with THAT?