Global Crisis?

[InVermont]

Well, the 700 billion goes to buy up debt from banks. Assuming that the Gov. pays $.70 on the $1 (at one time, banks were doing $.40 on the $1, but lets be conservative), $700 billion give you $1 trillion worth of debt (mortgages, mostly)
Now, the foreclosure rate is ~3%, so 97% of the debt you bought is giving you $1 for every $.70 you spent. That 3% leaves at least the assets (the house), which should still be sell able.
So if it was anyone else, I'd say the bailout would snag a nice profit.
But this is the US Government, so I'm sure they will figure a way to screw it up.

[Deusxmachina]

Well, the 700 billion goes to buy up debt from banks.

Including banks in other countries. And there's the rub. The representatives in my area voted against it, so I guess I'll let them keep their jobs come election time.

[steeb]

Including banks in other countries.

Indeed, now I'm not a banker but what I find strange is that all that is happening is this money is being shifted about.

1) It's taxpayer's money (for the countries that are injecting funds to save from collapse)
2) It appears to me to be just countries trading these unpaid for funds, everything is boroowed from someone else who is borrowing from someone else........?

Steeb

[whurlston]

The representatives in my area voted against it, so I guess I'll let them keep their jobs come election time.

Unfortunately, one of mine did not and the person running against him IMO is a worse choice. Not sure what to do. For me though, the global crisis has had to take second stage the last couple of weeks because of a more localized national crisis in my homeland.

[InVermont]

The representatives in my area voted against it

Fortunately, the representatives in my area voted for it. 1929 is a wonderful lesson in doing nothing, and we don't need another WWII to pull us out of an endless Depression.

Personally, I think we need to toss them all out for getting us here in the first place.

[JimF]

Personally, I think we need to toss them all out for getting us here in the first place.

I am inclined to agree. It is far beyond Democrat or Republican at this point. They have all been catering to their special interest groups without looking after the public welfare for far too long. Throw them all out. And it will create such confusion in Congress that they won't be able to pass anything for at least a year. It might be enough time for the economy to recover.

[4zm4r3d02]

Don't leave out the Republican party in pulling a fork and knife up to the pork party. Remember the "Stimulus Package" last year? It was paid for by selling bonds (mostly to China) so we "Smart Americans" would turn around and buy goods (mostly from China). Funny how that didn't rebound the economy.

I hate politics with a passion. Both parties are exactly the same.

Exactly the same.

No, the democrats want to throw us scraps, while the republicans want us to beg for them.

[Deusxmachina]

Fortunately, the representatives in my area voted for it. 1929 is a wonderful lesson in doing nothing, and we don't need another WWII to pull us out of an endless Depression.

Personally, I think we need to toss them all out for getting us here in the first place.

The same people who got us into this mess are the same people to be trusted to get us out? You may trust Henry Paulson with a 700 billion dollar blank check that can't be reviewed later, but I sure don't.

On a different note, hey, everybody, how about that Alan Greenspan the other day? He ALMOST admitted he was wrong! The Congress guy asking him questions worded them very carefully... "So you say you now realize your view of the world was... not right...?"

"Not right"? Say "wrong," jackass!

And what is one of the reasons Greenspan was "not right?" It's because he plumb-never had seen a housing downturn before! "Oops!" as he throws his hands in the air and shrugs. Unbelievable.

[Deusxmachina]

Bernanke and Paulson are idiots and/or scam artists.

http://themessthatgreenspanmade.blogspot...rnank.html

"This was [his] claim to be worthy of running the Fed," she says. He was "familiar with history. He knew what had been done." But perhaps this is actually Mr. Bernanke's biggest problem. Today's crisis isn't a replay of the problem in the 1930s, but our central bankers have responded by using the tools they should have used then. They are fighting the last war. The result, she argues, has been failure. "I don't see that they've achieved what they should have been trying to achieve. So my verdict on this present Fed leadership is that they have not really done their job."

http://www.istockanalyst.com/article/vie...eid_1.html

"Of course it does. That bypass is intentional Ms. Schwartz. It is an outrageous and in fact insane attempt to protect those who have made bad bets from the proper outcome of those wagers.

That protection stems from the fact that both of the main protagonists in "addressing the issue", Chairman Bernanke and Secretary Paulson, in fact were prime architects in causing the problem in the first place.

Chairman Bernanke was on The Federal Reserve Board during the Greenspan years, when Alan Greenspan "pumped liquidity" after 9/11 and the Tech Wreck, yet at the same time removed essentially all regulation and oversight from the banking sector. He is thus complicit in the generation of the credit bubble that led to this disaster, and to take strong action against the perpetrators of same he would both have to admit that he in fact was one of the prime causative factors in the mess and would be forced to resign in disgrace.

Secretary Paulson is in an even worse situation - he, as Chairman of Goldman Sachs, testified in Congress as far back as the year 2000 that Investment Banks should have the shackles of leverage restraint removed from them. He failed to get that from Arthur Levitt in 2000 (President Clinton's chair of the SEC) but came back to the well in 2004 under President Bush and was successful. Two years later, having used that expansion of leverage to garner a personal fortune of $500 million dollars, he cashed out tax-free to take his seat as Treasury Secretary.

Every one of the large firms that has failed - all five (Fannie, Freddie, AIG, Lehman and Bear Stearns) - would still be in operation today if their leverage had been held at the pre-2004 12:1 limit. Therefore, Secretary Paulson must accept personal responsibility for the decisions that led to the failure of these firms, as he was one of the primary individuals in American Business who argued for removal of these constraints.

[mabloom]

A few years back, an economist friend predicted the current financial crisis. To explain it in terms that I (as a non-economist) could understand, she dumbed it down for me, saying in part that this could be expected after burying hundreds of billions of dollars in the sands of the Iraqi desert, but removal of leverage restraints would change the "could" to "should".

- Michael

(PS: In fairness, I should note that her politics were in conflict with her economic opinion: she was also opposed in principle to pulling out the troops, abandoning the Iraqi people)