The bailout

Discussion in 'Life After Brown' started by DS, Sep 24, 2008.

  1. DS

    DS Fenderbender

    I found this on vindy,no author was mentioned,but I found it informative and well...kindy scary.Its BIG money 700billion$
    I know it involves low interest loans to failing corporations,but I
    fail to comprehend how that would help anything.If anyone can
    explain it in laymans terms please do.Heres the blog...
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    Published:Wednesday, September 17, 2008
    Taking stock of the national economy isn’t an exact science
    We suppose it depends on what the definition of fundamentally is.
    President Bush maintains that the U.S. economy remains fundamentally sound. Republican presidential candidate John McCain echoed those words, and then issued a clarification that he was talking not so much about the economy, but about the fundamental soundness of the American work force. Democratic presidential nominee Barack Obama sees very little about the economy that he would describe as sound.
    The problem, of course, is that no one really knows. If you knew that the economy was sound (or that it was unsound) you’d be on your way to being a billionaire, because you would know exactly what to do with your money. (Buy low, sell high.)
    What’s going on in an economy can only be known to a certainty through hindsight. On Oct. 28, 1929, everyone in the United States knew that the stock market had dropped by 12 percent, but no one knew that it was the first day of what came to be known years later as the Great Depression. But while no one may know what the economic future holds, the layman has reason to suspect that some people have been abusing the system in too many ways for way too long.
    Ugly trends
    Each year has seen hundreds of billions of dollars in budget deficits and the national debt has ballooned by about 65 percent over the last eight years. During the same time, trillions of dollars in U.S. trade deficits for durable goods and electronics from China and other parts of Asia and for oil from the Middle East and South America have resulted in foreign countries holding much of our debt. Few people could remember when the United States was less the master of its own economic destiny than it is today.
    The Bush administration sent a message to Wall Street over the weekend that it was done with bailouts when Treasury Secretary Henry Paulson said taxpayer money would no longer be used to bail out troubled investment banks. Lehman Brothers responded by filing for bankruptcy and Merrill Lynch agreed to be bought out by Bank of America. Still desperately searching for cash is insurance giant AIG.
    Paulson seemed adamant: Wall Street would have to start finding ways of saving itself. But the street wasn’t left totally on its own. The Federal Reserve will continue to make short-term emergency loans under generous terms to solvent investment banks suffering temporary liquidity problems and this week it broadened the type of securities it would accept as loan collateral.
    But in truth, the administration will be holding its breath. While the administration was willing to let Lehman and Merrill Lynch fend for themselves, it knew a week earlier that it couldn’t stand by and allow mortgage giants Freddie Mac and Fannie Mae fail.
    We said at the time that the Fannie and Freddie bailouts might not be the end of what the federal government will have to do to prop up the economy, and we will stand by that.
    But no one knows.
     
  2. drewed

    drewed Shankman

    Ok the most important part of doing this is bailing out the major finance companies.
    They hold mortages on peoples houses, well techincally its the finance companies house until you pay it off. if they fail you loose you house, if the insurance companies fail you dont get insurance etc make sense?
    Its like the great depression, banks failed everyone lost there lifes savings. and we're trying to prevent that buying out the major finance companies.
     
  3. DS

    DS Fenderbender

    Drewed,as I type this post,28 people have viewed it and YOU are the only one that responded.Whats up with that? Doesn't anyone realize how big of an issue this is? Is it that everyone thinks they will not be affected?
    Do they think there nothing they can do about it so who cares?
    I just figured out that $700billion=2,800,000 houses valued at $250,000 each.....thats a lot of houses.
     
  4. drewed

    drewed Shankman

    Yea ds i noticed.....
    It could actually come to be a fairly profitable program for the gov't when the markets turn around and housing increases, that 700 bil could be gone pretty quick
     
  5. cachsux

    cachsux Wah

    Ron Paul nails it pretty good. Basically we`re going to crap out some imaginary money to bail out companies that were wrong to loan money to people who should have never had it loaned to them.



    Congressman Ron Paul Schools Bernanke on the Bailout Plan
     
  6. evilleace

    evilleace Member

    Basically it is bad either way but the lesser of the two evils is if we have the bailout. Also we have got to get the national debt under control, and I think that banks and finance companies should be separate and we might not have this problem.
     
  7. dillweed

    dillweed Well-Known Member

    I have been wondering about losing our homes to this mess. What if the banks up and say we have to give them total amount we owe on the house or they'll take it. What the heck are they going to do with thousands of unsellable houses? Would it really be of any benefit to them at this time?
     
  8. drewed

    drewed Shankman

    And thats why theyre trying to work out this bailout.
    Thats shouldnt be that much of a worry, because youre right they dont do much good to people right now. The thing that caused all of this is people that were skirting by on their credit getting houses using variable rate mortages, the rates fluxuated to the higher portion of it, and they cant make the payment. So the finance corps are forclosing on all these houses, no income coming in from them, having to payout inurance to protect their investment, no one can qualify to buy them and if they do they have to sell them at a loss because property values falling.
     
  9. cachsux

    cachsux Wah

    If your making your payments you will be safe. A financial institution can sell your contract but it is still binding for both sides regardless.
     
  10. dillweed

    dillweed Well-Known Member

    aha, drewed and cachsux thanks for the input. Drewed, your simplified explanation helped my financially impaired mind grasp it.

    House pmnts fine for now but do worry about the future. Husband and I both have sound jobs but so did many others!
     
  11. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Banks cannot classify a mortgage as payable in full upon demand without due cause. A mortgage is a contract and both sides in the mortgage must abide by the terms of the contract. Mortgages are bought and sold all the time, usually for a discount. My home mortgage was originally through M&T but they sold it to Chase. Did I have any choice in the matter? Absolutely not, and I do not like Chase. However, I read the mortgage and selling the note was one of the terms in the contract.

    To get back to your question, no, the bank cannot demand that you pay the mortgage in full without due cause. Make your payments on time, ensure your escrow is fully funded, maintain the proper insurance and you should be all set.
     
  12. cachsux

    cachsux Wah

    I can only tell you what I was told when I got my first house. Always pay as much extra a month that you can to reduce the principal,even a few dollars helps.