Fannie_mac

[jckinsman]

Why are we rewarding people for getting in over there heads in debt. My husband and I play by the rules we pay our bills, we have a mortgage and some debt because we have been eaten alive in gas and medical bills.We still pay our bills. We lost our retirement in the stocks.We are middle america. Why would we rush in and buy all of these people out without consequence for there actions? ( I mean everyone involved,from the top)Then My husband foots the bill!!! This does not make sense. What do you think that is going to do to middle america? There are no tax cuts here people,we are simple voting on more taxes or rearrangement of taxes. I would rather rearrange(yes,cut out and put that money to better use,like not strapping our children with "too much debt") and leave our military alone.(we are going to need them)

Edited October 11, 2008 by jckinsman

[Justin86]

[quote name='jckinsman' post='1674856' date='Oct 11 2008, 02:50 PM']Why are we rewarding people for getting in over there heads in debt.[/quote]
Because that's the socialist thing to do.

[Mercy me]

I wish that I didn't agree Justin but I do. I really don't like the socialism that has come at us.

I don't understand what makes people think that it is a good thing to set people up to fail. Giving people who can't afford mortgages large mortgages only succeeds in driving drive up housing demand making housing more expensive and sets up failure.

[CatherineM]

I liked one quote from the hearings that said that when they are making money, it's all theirs, hands off, and when they lose money, they want everyone to divvy it up. The head of Lehman Brothers on TV just made me boil. CEO's shouldn't be making that much money. I forget the figure, but 100 years ago the head of big companies made like 10 times what the line worker made, and today it's more like a 100 or 1000 times more. It shouldn't be like that.

[Justin86]

Btw, it's actually [b]Freddie[/b] Mac, and Fannie Mae. Confusing, I know.

[Paddington]

jckinsman....yup!

[lilCook009]

[quote name='jckinsman' post='1674856' date='Oct 10 2008, 11:50 PM']Why are we rewarding people for getting in over there heads in debt. My husband and I play by the rules we pay our bills, we have a mortgage and some debt because we have been eaten alive in gas and medical bills.We still pay our bills. We lost our retirement in the stocks.We are middle america. Why would we rush in and buy all of these people out without consequence for there actions? ( I mean everyone involved,from the top)Then My husband foots the bill!!! This does not make sense. What do you think that is going to do to middle america? There are no tax cuts here people,we are simple voting on more taxes or rearrangement of taxes. I would rather rearrange(yes,cut out and put that money to better use,like not strapping our children with "too much debt") and leave our military alone.(we are going to need them) [/quote]

The reason the goverment is doing this is to try and unfreeze the cridit market. It seems very socialist I know, but really they are trying to save capitalism. Capitalism works on the philosophy that you can borrow money now to say bil a new factory or pay your workers, because after you do that you will make money on the product and be able to return the money. But at the moment banks are afraid to give lones because they were afird of this that and the other thing. If you want to know the ins and outs of the problem I suggest you listen to the "This American Life" podcast from NPR. It basically expains everything.

Edited October 11, 2008 by lilCook009

[philothea]

[quote name='lilCook009' post='1675047' date='Oct 11 2008, 01:19 PM']The reason the goverment is doing this is to try and unfreeze the cridit market. It seems very socialist I know, but really they are trying to save capitalism. Capitalism works on the philosophy that you can borrow money now to say bil a new factory or pay your workers, because after you do that you will make money on the product and be able to return the money. But at the moment banks are afraid to give lones because they were afird of this that and the other thing. If you want to know the ins and outs of the problem I suggest you listen to the "This American Life" podcast from NPR. It basically expains everything.[/quote]
That's what the previous, already-passed bill, did. Going to take a little while to work, though...

I'm not so sure about the current deals being discussed. Some of them sound pretty outrageous, but I haven't had the heart to do any serious research.

[lilCook009]

[quote name='philothea' post='1675049' date='Oct 11 2008, 11:26 AM']That's what the previous, already-passed bill, did. Going to take a little while to work, though...

I'm not so sure about the current deals being discussed. Some of them sound pretty outrageous, but I haven't had the heart to do any serious research. [/quote]

Currently what they are thinking about doing is to buy preferred stock in some of the banks they were going to bail out. This means that the goverment will see profit off their stocks before the other investors. This means the tax payers might even see a return on the 700 billion they will pay for the bail out. They are doing this so the banks will have more liquidty and will be from willing to lend. The biggest problem, at the moment is that the commercial paper market is frozen. The commercial paper market is basically what big companys use for loans. This is what I was talking about before, but I couldn't remember the name. Anyway with out this you have no capitalism. The reason the commercial paper market is frezzing up is because credit default swaps. These are basically insurence for bonds, so if you have a hundred dollars in a company you could go to another and say I will pay 2% a year on this bond, but if this company goes bankrupt you give me my hundred dollars back. On one level they sound very save, but not so. Becuase their are no regualtion on this, so you don't have to own a bond to put insurence on it, and it is private so no one but the two people in the agreement know about the deal. The reason you would do this is to bet on the house. A better way of putting this is say there was this guy named Joe (he symbolizes the company), and when he dies his insurence policy will pay out a million dollars to his beneficiaries. So then some other people want a million dollars too, so they take out life insurence of Joe. Then Joe gets sick and more people start taking life insurence out on Joe. So, you can see this obviously won't work to well because once Joe dies the insurence company will own a lot of people a lot of money. This is what happened to A.I.G. and it is why they needed to be rescued by the goverment. You might wonder why A.I.G. would even conside insuring these companies, but think about a year or two ago could you even imagine Lemen Brothers going down? To make this whole situation worse the people who did the swapping did something called netting. Netting is where you decide that a company is going down, so you buy a lot of credit default swap protection. Then the company starts to fail and more people want protection, and the cost of protection goes up. So you sell your protection for more money than you are paying for. So if you payed 20,000 dollars a year you might charge 40,000 a year. This means you a making money with no risk to your self. But the person you sold might be doing the same thing as you. The problem with this is if some one can't pay, the chain breaks down and the amount of money in cost goes up with every link. This is what frozen the commercial paper market, the banks became uncertain of the ablity for people to pay back the money.
Source: This American Life, "Another Frightening Show About the Economy"

Edited October 11, 2008 by lilCook009

[Mercy me]

What really burns me up is that [i][b]no one[/b][/i] is doing [u][b]anything[/b][/u] this fix the root of the problem!

[philothea]

[quote name='lilCook009' post='1675162' date='Oct 11 2008, 06:49 PM']Currently what they are thinking about doing is to buy preferred stock in some of the banks they were going to bail out.[/quote]
Oh! Well that would be good. What was disturbing me was recent talk of giving foreclosed buyers a free refinance at the reassessed/depreciated value of their house.

[quote name='Mercy me' post='1675212' date='Oct 11 2008, 08:09 PM']What really burns me up is that [i][b]no one[/b][/i] is doing [u][b]anything[/b][/u] this fix the root of the problem![/quote]

What [i]is[/i] the root of the problem?

[CatherineM]

Greed is the root of the problem. I think the Pope had some things to say about materialism lately. I guess he's about the only one working on that problem. I think the Dali Lama has said some stuff about it too.

[Justin86]

lilCook, I'm sure the dozens of listeners to NPR would agree with you that capitalism is based on the idea of borrowing, but in reality that's not the case.

Capitalism is based on the idea of the free-market. That is, whatever problems may or may not occur in the economy the markets will sort them out by themselves. According to real capitalism these banks and AIG should be allowed to fall, and we deserve to suffer whatever consequences result.

Already the politicians are saying it may take a year for the bailout to work. Do you really think the markets couldn't have sorted out this problem by themselves in a year? Even if they couldn't fix the economy, it would only be what we deserved. What we saw here was the result of subprime mortgages. Mortgages were given to people who could have never payed them back. Banks knew it was a problem, but decided to give them anyway as an quick way to make money. The borrowers at worst, also knew they were never going to pay back loan, but wanted a million dollar house anyway, or were just to lazy to sit down and make a budget. In either case everyone to blame all worshiped the same thing: material possessions. They all wanted everything, even if they couldn't afford it. How Christian is this? Why is supporting corrupt business practices a good thing for the country?

Both Christian and capitalistic principals demand that these institutions be allowed to fall. It's as simple as that.

[lilCook009]

[quote name='Justin86' post='1675275' date='Oct 11 2008, 07:29 PM']lilCook, I'm sure the dozens of listeners to NPR would agree with you that capitalism is based on the idea of borrowing, but in reality that's not the case.

Capitalism is based on the idea of the free-market. That is, whatever problems may or may not occur in the economy the markets will sort them out by themselves. According to real capitalism these banks and AIG should be allowed to fall, and we deserve to suffer whatever consequences result.

Already the politicians are saying it may take a year for the bailout to work. Do you really think the markets couldn't have sorted out this problem by themselves in a year? Even if they couldn't fix the economy, it would only be what we deserved. What we saw here was the result of subprime mortgages. Mortgages were given to people who could have never payed them back. Banks knew it was a problem, but decided to give them anyway as an quick way to make money. The borrowers at worst, also knew they were never going to pay back loan, but wanted a million dollar house anyway, or were just to lazy to sit down and make a budget. In either case everyone to blame all worshiped the same thing: material possessions. They all wanted everything, even if they couldn't afford it. How Christian is this? Why is supporting corrupt business practices a good thing for the country?

Both Christian and capitalistic principals demand that these institutions be allowed to fall. It's as simple as that.[/quote]

Yes I really think that the market would not have been able to sorted it self out in a year. But, I agree that a good economy only works when their is punishment for irrisponcible action, I also think that absolutly no regulation is a bad thing. We live in what we consider a civilized society, because we have laws, and punishment for not following those laws. So why not have laws on what you can do in the market? No I don't mean laws like you can't trade with certain people, but laws that require responsablity. You will probably say that I am a communist, but I am not. I don't think that goverment should have that much power, but without some regulation on the market people get greedy. You also not accused me of supporting corrupt business, because I don't beleive that, I just want more regulation. Also I think attacking my faith is immature on your part. I am not supporting something anti-Christian, and just because you don't agree with me it does not give you the right to make acusations. But that aside, I think that the bailout is good to prevent everything from going down. But I also think that the news is exsagerating the problem, in the 1970's stock went down by half and we havn't reached that point yet. I understand that you beleive that capitalism is based on a completely free market, but history has shown that completely unregulated markets will fail and bring everyone down with them, that is what happened in the great depression (I realize that we are not headed for another great depression) .

[Justin86]

[quote name='lilCook009' post='1675343' date='Oct 12 2008, 12:07 PM']Yes I really think that the market would not have been able to sorted it self out in a year. But, I agree that a good economy only works when their is punishment for irrisponcible action, I also think that absolutly no regulation is a bad thing.[/quote]
As do I. However, there is nothing more socialistic then the idea that the government should own big business, and and constantly throw money at them every time they are about to fail. It's not going to work. We're going to just keep giving them tax dollars until we, the middle class, work just to support their corrupt practices. It's an absurd idea, and that is why the vast majority are adamantly against it.

[quote]We live in what we consider a civilized society, because we have laws, and punishment for not following those laws. So why not have laws on what you can do in the market? No I don't mean laws like you can't trade with certain people, but laws that require responsablity. You will probably say that I am a communist, but I am not. I don't think that goverment should have that much power, but without some regulation on the market people get greedy. You also not accused me of supporting corrupt business, because I don't beleive that, I just want more regulation. Also I think attacking my faith is immature on your part. I am not supporting something anti-Christian, and just because you don't agree with me it does not give you the right to make acusations. But that aside, I think that the bailout is good to prevent everything from going down. But I also think that the news is exsagerating the problem, in the 1970's stock went down by half and we havn't reached that point yet. I understand that you beleive that capitalism is based on a completely free market, but history has shown that completely unregulated markets will fail and bring everyone down with them, that is what happened in the great depression (I realize that we are not headed for another great depression) .[/quote]
Two things I fail to understand about your logic: You agree that you want responsibility in our laws, however you favor the bailout? How is rewarding corrupt corporations for their behavior at all being responsible? As for attaching my faith to this I fail to see how that is immature. I plainly explained how this is the direct result of our greed, and that's definitely not a Christian principal.

Edited October 12, 2008 by Justin86