Bail Out Failed (mortgage, mattress, how much)

[LocalX]

Wall Street is in place for one thing, to generate capital. With this capital factories, rails, investments are made in this country. The fact being we no longer manufacture ANYTHING in this country has turned Wall Street into a big casino. All the bail out will do is bail out the owners of the casino. Let it fail, americans are resilient and we can bounce back. We need to get back to basics.

[dman72]

Originally Posted by LI2South

I am not sure how I feel about any of this either. One way is not better than another...
I did some reading on Newsday.com (I know most of you dislike Newsday) but there are a lot of bloggers on there. Beside some really sad and sickening blogs - I read blogs forecasting homes on Long Island will once again be affordable (talking mid to higher 200's)... the 700 drop on Wall Street today... my hubby and I found ourselves so upset we couldn't eat dinner... what do we do? TRY to sell now? We bought in the beginning of 2004... We could NEVER afford to take such a huge hit if home prices drop that much! We are not in danger of losing our home or anything, but who could get out from under a drop like that?
All of this is really scary to me...
I do have an opinion that I am sure I will get grief for... but here goes anyway...
If I lend "Sue" $10K and she does not pay me back... who is going to bail ME out? NO ONE.... Anyone going to give me a 35K silver chute? NO!
I know what this is doing to our economy but I am not sure I agree with the bail out. It is saving the greedy ones... It isn't helping any of the "little people" and that makes me sad. Without us "little people" what would there be?

If you can afford your mortgage, you stay in your home..you never take a hit if you don't sell it.

The problem is the mentality that buying houses and moving up after massive appreciation is a guaranteed investment...it isn't and it never will be. My condo has already lost 15% in value judging by recent sales..but I haven't "lost" anything yet because I haven't sold. I will try to rent the place instead of sell it when I buy a house to avoid the loss.

The simplistic view of this "bailout" is dangerous. Let's say you work for a company that gets paid 60-120 days on something it sells. Many companies don't have great cash reserves, so they borrow against that base of future receivables to operate. Now, the banks don't want to take that risk so they tighten up on the percentage of the receivables they will allow you to borrow against. Now your company falls short on product..now some of your customers also under the crunch pay you later...now your company may start running short on PAYROLL.

This isn't just about dumping money into some fat cats pocket on Wall St. folks. Educate yourselves a little bit, and that doesn't mean going to WABC and listening to Sean Hannity and Rush Limbaugh feed you lies.

[dman72]

Originally Posted by LocalX

Wall Street is in place for one thing, to generate capital. With this capital factories, rails, investments are made in this country. The fact being we no longer manufacture ANYTHING in this country has turned Wall Street into a big casino. All the bail out will do is bail out the owners of the casino. Let it fail, americans are resilient and we can bounce back. We need to get back to basics.

A dangerous and simplistic view of the true ramifications of a credit crisis.

I'm a left leaning Democrat, but I also work in accounting for a manufacturing company, and I've taken MBA level business classes.

[Jrprofess]

Originally Posted by LocalX

Wall Street is in place for one thing, to generate capital. With this capital factories, rails, investments are made in this country. The fact being we no longer manufacture ANYTHING in this country has turned Wall Street into a big casino. All the bail out will do is bail out the owners of the casino. Let it fail, americans are resilient and we can bounce back. We need to get back to basics.

I think an alternate plan that leverages the FDIC assurances will be more beneficial in the long-term, soothing the uneasy middle income saver, still allowing for the market to correct, and letting the country start the slow recovery. I am in the corporate world, and understand the risk of not having commercial credit/lending available to do business, but to get this back up and running on a dollar-dilluting bailout still means we have banks and markets running on smoke and mirrors. We'll simply run into this issue again in 18 months. Or destroy our dollar's value to the point that it will take 10 years to recover. Let the pain soak in...and start the ugly climb out...

[Jrprofess]

Originally Posted by dman72

If you can afford your mortgage, you stay in your home..you never take a hit if you don't sell it.

The problem is the mentality that buying houses and moving up after massive appreciation is a guaranteed investment...it isn't and it never will be. My condo has already lost 15% in value judging by recent sales..but I haven't "lost" anything yet because I haven't sold. I will try to rent the place instead of sell it when I buy a house to avoid the loss.

The simplistic view of this "bailout" is dangerous. Let's say you work for a company that gets paid 60-120 days on something it sells. Many companies don't have great cash reserves, so they borrow against that base of future receivables to operate. Now, the banks don't want to take that risk so they tighten up on the percentage of the receivables they will allow you to borrow against. Now your company falls short on product..now some of your customers also under the crunch pay you later...now your company may start running short on PAYROLL.

This isn't just about dumping money into some fat cats pocket on Wall St. folks. Educate yourselves a little bit, and that doesn't mean going to WABC and listening to Sean Hannity and Rush Limbaugh feed you lies.

I understand completely your statement regarding the borrowing against receivables (the "float") as my corporation deals mostly through dealers and resellers who run their business on this model, but it does not mean that this particular plan is the right move. (just my two cents)

Although the prognosticators claim this will get lending and credit rolling again I think what is being forgotten is that lending standards have and will finally return to historically tight norms. This will absolutely mean that companies can not borrow at the same interest rate or capital levels as before (if at all), even after a bailout. We will still have to address the issues you noted above, and will have managed to put a debt load and dollar dilluting plan in place that will challenge our economy for the next twenty years. Playing devil's advocate, why not deal with these same lending challenges and economic pains, although potentially more painful without a bailout, and not cause harm to our federal debt burden and the value of our dollar.

There are too many banks. That is part of the problem. Failings and consolidations although scary, are necessary. The world never needed a Commerce Bank, Credit Union, WaMu and Chase all on opposite corners of the same block. And now we realize they were all functioning on fiction and leverage.

[dman72]

Originally Posted by Jrprofess

I understand completely your statement regarding the borrowing against receivables (the "float") as my corporation deals mostly through dealers and resellers who run their business on this model, but it does not mean that this particular plan is the right move. (just my two cents)

Although the prognosticators claim this will get lending and credit rolling again I think what is being forgotten is that lending standards have and will finally return to historically tight norms. This will absolutely mean that companies can not borrow at the same interest rate or capital levels as before (if at all), even after a bailout. We will still have to address the issues you noted above, and will have managed to put a debt load and dollar dilluting plan in place that will challenge our economy for the next twenty years. Playing devil's advocate, why not deal with these same lending challenges and economic pains, although potentially more painful without a bailout, and not cause harm to our federal debt burden and the value of our dollar.

There are too many banks. That is part of the problem. Failings and consolidations although scary, are necessary. The world never needed a Commerce Bank, Credit Union, WaMu and Chase all on opposite corners of the same block. And now we realize they were all functioning on fiction and leverage.

Understood, but a lot of the same people who profited immensely from bad lending (if you've work in real estate, mortgages, or sold your house in the last 5 years, I'm talking to you) are complaining that we're in this situation now and saying "how could it get like this"? It was a feeding frenzy. If people are willing to just let the chips fall where they may..I hope they realize the real ramifications.l

[rocafeller05]

Here is my theory...The $700 billion dollar bailout equates to roughly $200,000 for every man, woman, & child in america. I say p*ss on the banks and give the $200,000 to each person. This way the economy will get booming. The housing slump will diminish. Debt will get paid off. And there will be no need for small loans or personal credit.
Hey its a thought. And who wouldnt like a $200,000 check in the mail? lol.

[dman72]

Originally Posted by rocafeller05

Here is my theory...The $700 billion dollar bailout equates to roughly $200,000 for every man, woman, & child in america. I say p*ss on the banks and give the $200,000 to each person. This way the economy will get booming. The housing slump will diminish. Debt will get paid off. And there will be no need for small loans or personal credit.
Hey its a thought. And who wouldnt like a $200,000 check in the mail? lol.

More like $2,500.

So you'd have a run on foreign made televisions and Chinese made Hannah Montana merchandise from Wal-mart. That would really get us off in the right direction. Congratulations, you screwing up the decimal place just destroyed our economy!! LOL .

[Jrprofess]

Originally Posted by dman72

More like $2,500.

So you'd have a run on foreign made televisions and Chinese made Hannah Montana merchandise from Wal-mart. That would really get us off in the right direction. Congratulations, you screwing up the decimal place just destroyed our economy!! LOL .

There has been an email circulating based on the percentage of adults aged 18 years and older that figures the number to be 85k. I'll try and find it and post. Good for a laugh, and does make you think at least for a moment...

[Kbinspections]

Originally Posted by nancy thereader

I am not sure how I feel. I really do not understand the whole fiscal thing anyway.

Don't feel so bad, know one knows, including the the experts.