The Bailout ... or lack there of[views:3497][posts:6]________________________________________ [Oct 4,2008 11:20am - monster_island ""] same ole , same ole ... To every american citizen ... BAD DEBT SHOULD BE " WIPED OFF THE BOOKS " RATHER THAN PURCHASED BY TAXPAYERS ... this is a travesty ------------------------------------------------------------------------ United States House of Representatives Statement on HR 1424 October 3, 2008 " Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes. That this bailout was initially defeated was a welcome surprise, but the power-brokers in Washington and on Wall Street could not allow that defeat to be permanent. It was most unfortunate that this monstrosity of a bill, loaded up with even more pork, was able to pass. The Federal Reserve has already injected hundreds of billions of dollars into US and world credit markets. The adjusted monetary base is up sharply, bank reserves have exploded, and the national debt is up almost half a trillion dollars over the past two weeks. Yet, we are still told that after all this intervention, all this inflation, that we still need an additional $700 billion bailout, otherwise the credit markets will seize and the economy will collapse. This is the same excuse that preceded previous bailouts, and undoubtedly we will hear it again in the future after this bailout fails. One of the most dangerous effects of this bailout is the incredibly elevated risk of moral hazard in the future. The worst performing financial services firms, even those who have been taken over by the government or have filed for bankruptcy, will find all of their poor decision-making rewarded. What incentive do Wall Street firms or any other large concerns have to make sound financial decisions, now that they see the federal government bailing out private companies to the tune of trillions of dollars? As Congress did with the legislation authorizing the Fannie and Freddie bailout, it proposes a solution that exacerbates and encourages the problematic behavior that led to this crisis in the first place. With deposit insurance increasing to $250,000 and banks able to set their reserves to zero, we will undoubtedly see future increases in unsound lending. No one in our society seems to understand that wealth is not created by government fiat, is not created by banks, and is not created through the manipulation of interest rates and provision of easy credit. A debt-based society cannot prosper and is doomed to fail, as debts must either be defaulted on or repaid, neither resolution of which presents this country with a pleasant view of the future. True wealth can only come about through savings, the deferral of present consumption in order to provide for a higher level of future consumption. Instead, our government through its own behavior and through its policies encourages us to live beyond our means, reducing existing capital and mortgaging our future to pay for present consumption. The money for this bailout does not just materialize out of thin air. The entire burden will be borne by the taxpayers, not now, because that is politically unacceptable, but in the future. This bailout will be paid for through the issuance of debt which we can only hope will be purchased by foreign creditors. The interest payments on that debt, which already take up a sizeable portion of federal expenditures, will rise, and our children and grandchildren will be burdened with increased taxes in order to pay that increased debt. As usual, Congress has show itself to be reactive rather than proactive. For years, many people have been warning about the housing bubble and the inevitable bust. Congress ignored the impending storm, and responded to this crisis with a poorly thought-out piece of legislation that will only further harm the economy. We ought to be ashamed. " |
| _______________________________________ [Oct 4,2008 8:15pm - monster_island ""] $700,000,000,000.00 Look at that number. It's amazing. Yet to hear our leaders talk about it, they need every penny to prop up the mortgage lenders. They don't. And I figured out how to put it in terms anyone can understand:. At first, I saw that number and I had to ask... How many bad mortgages are there? Then after playing with that hypothetical in my head I wondered, how many mortgages are there in active in the whole country? So I looked it up. According to this 2006 pdf from the U.S. Census, there are 33 million owner occupied dwellings with first mortgages active. Hmmm 700,000,000,000 / 33,000,000 = Over $21,000 cash the government could just give to everyone with a mortgage! What kind of stimulus would that have on the economy to hand 33 million people $21,000? The Bottom Line: If the Treasury simply took the $700 Billion and started paying off taxpayer mortgages, they could pay off every mortgage in the country worth less than $75,000... Or put another way, $700 Billion could pay off well over half of all outstanding first mortgages in the entire country. Do you really think they need this much money? So I say we just take the cash and pay off half the mortgages out there and see what that does to the credit market and the economy. Are ya with me? |
| _______________________________ [Oct 4,2008 10:46pm - sever ""] I'm sticking with my secede idea. |
| ____________________________________ [Oct 5,2008 1:33am - secthammer ""] i'm sticking with my fesces idea |
| ________________________________________ [Oct 5,2008 2:19am - bobnomaamrooney ""] Abolish credit, bring back bartering. |
| _________________________________ [Oct 5,2008 4:17am - Samantha ""] monster_island said:$700,000,000,000.00 Look at that number. It's amazing. Yet to hear our leaders talk about it, they need every penny to prop up the mortgage lenders. They don't. And I figured out how to put it in terms anyone can understand:. At first, I saw that number and I had to ask... How many bad mortgages are there? Then after playing with that hypothetical in my head I wondered, how many mortgages are there in active in the whole country? So I looked it up. According to this 2006 pdf from the U.S. Census, there are 33 million owner occupied dwellings with first mortgages active. Hmmm 700,000,000,000 / 33,000,000 = Over $21,000 cash the government could just give to everyone with a mortgage! What kind of stimulus would that have on the economy to hand 33 million people $21,000? The Bottom Line: If the Treasury simply took the $700 Billion and started paying off taxpayer mortgages, they could pay off every mortgage in the country worth less than $75,000... Or put another way, $700 Billion could pay off well over half of all outstanding first mortgages in the entire country. Do you really think they need this much money? So I say we just take the cash and pay off half the mortgages out there and see what that does to the credit market and the economy. Are ya with me? If they gave that money back to the taxpayers, it would get a lot of people out of debt, which would definitely stimulate the economy. Say, if everyone over the age of 18 who isn't on welfare got a share of that money... just a rough estimate, but that would be at least $5000 per person. I could finally afford to get rid of my old credit card debt (from when I was in college and got laid-off from my stupid job due to the crappy economy and couldn't land another job for a few months because the economy sucked so bad) get my student loans in better shape, AND buy a better car! That would definitely stimulate the economy. I think the economy is in such a crappy state because household incomes haven't risen enough to match the rising cost of living. People simply can't afford to live. A small percentage of the population is ridiculously rich while everyone else (including the middle class) is getting poorer. A generation ago, it was much easier to get by. I remember, after my cousin got married, my uncle was lamenting about how much it sucks to be in my generation. He and my aunt bought their first house when they were in their early 20s. He had a bachelor's degree and worked full-time. My aunt had a high school diploma, and I think she either worked part-time or not at all because she was pregnant. They could afford a house. Now, my cousin and his wife, both in their late 20s, who both work full-time... one has a bachelor's degree... the other a master's... All they could afford was a 2 bedroom condo. WTF? |
| ________________________________________ [Oct 5,2008 5:10am - Conservationist ""] Pretty lively debate on this here: http://www.corrupt.org/news/bailout_bloviation A generation ago, it was much easier to get by. Why has it changed? Quite honestly: liberal policies. Inflate money. Allow immigration that makes labor cheaper, but reduces the productivity per worker, devaluing the currency. Focus all of our effort on taking care of those who cannot take care of themselves, instead of on our best. While none of us like NCLB, keep in mind that it comes on top of 30 years of liberalization of education, which has resulted in far more attention being spent on the bottom of the class than the top. The crowd is out of control, and it's dragging down our society into the third world: http://www.anus.com/zine/articles/crowdism/ Good luck with the resulting spiral. Of course, people are so polarized that they'll go down blaming The Other Side without a clue who raped their asses and wiped a dick on the duvet. On the bailout? I think it's a good idea -- keep the financial ecosystem intact. The errors were already made long ago, and when the system got delusional, people ran with it. |