Okay, that brings us up to $1.314 trillion. Next item?

I laughed at Section 3 of the text of the proposal. The 2nd consideration (of 2), is "protecting the taxpayer". The first consideration is only for providing stability and preventing disruption to the markets. If there was ever anything that so blatantly showed who this bailout is for, it's right there.

Here's some of my questions though, obviously the 700 billion, or whatever they end up spending for these junk financial products, will need to be spent up front. Where exactly does the government get 700 billion dollars from in a few weeks/month other than just creating more money? Will anyone really want to buy treasuries from a government that's on the hook for this much? Won't this cause even more inflation and destruction in the value of the dollar?

I feel like a complete rube for actually having money in a savings account anymore, because the government tries its damnedest to destroy the value of those savings. I've done better in an online savings account than my crap S&P 500 index fund over the past 5 years, and I really don't see that changing any time soon. I guess it comes down to whether you want your money to be inflated to worthlessness or just to lose it outright in those wonderful, all-knowing markets.

Justin, can any of this be traced back to Michael Milken's analysis in the early 1980s that determined that "junk" corporate debt carried a risk premium that was unwarranted? It seems to me that possibly these conclusions could have been overextended to apply to other types of debt by the Masters of the Universe generation that just got laid off. The result was too little risk premium - the teaser rate, so to speak.

Justin, Curmudgeon

Paul Krugman places this in perspective perfectly:

"Comrade Paulson has seized the economies commanding heights upon behalf of the masses."

Is there a more perfect statement than that?
Seriously.

Are the mortgage guarantees going to cost $300 million, $300 billion, or $300 trillion?

"...you get a price tag of $1.014 trillion. Throw in up to $300 million in mortgage guarantees contained in the housing bill passed over the summer, and you're up to $1.314 trillion....the $300 trillion in mortgage guarantees...."

Wow.
I hope it isn't $300 trillion. Holy Freakin-Big-Bailout Batman.

Talk about a failure of the American education system when a Princeton Grad in economics doesn't know the difference between $300,000,000 and $300,000,000,000 and $300,000,000,000,000. Perhaps this sheds some light on the failure of the American economic system....Y'all can't count!
Thank's for brightening my day Justin, I have been going back and forth between chuckling and chortling to myself for the past half an hour.

"$300 trillion in mortgage guarantees in particular vastly exaggerates the likely outlay"

i sure hope so.

The world GDP is $54 trillion http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal), so if Y'all imperialize the whole world and use everyone as slaves and use every $ solve this problem it would only take 6 years to pay off the $300 trillion in mortgage guarantees.

hehe

still chuckling, but the chortles have died down...

The world's total financial assets are $140 trillion, and the US financial assets total about $50 trillion (http://bigpicture.typepad.com/comments/2007/01/worlds_assets_h.html).

I don't think the US (even after it imerializes the whole world) has the collateral to support a $300 trillion loan for the mortgage guarantees.

hehe

These tax payer funded bailouts are staggering, especially when you consider that last year, the total federal tax burden for all 139 million individual tax filers in the USA was $1.118 trillion. The totals for these bailouts already exceed our entire collective burden for last year! Every tax payer in America now owes an additional $9,460. Is any one else a little annoyed by this?

i say, let the fakes on wall street crash as hard as possible and let the fraudulant system shatter into as little pieces as possible, so that thisexis of evil will never be rebuildable.

most of us little guys have little to nothing to lose in this spectacle.

but EVERY ONE OF US WILL VOTE THIS NOVEMBER,

TO MAKE SURE THE EXIS OF EVIL DON'T RETURN TO POWER.

"$1.314 trillion" Justin , What would happen if we gave that much money directly to the defaulting buyers rather than the lenders. It would help struggling Americans more, definitely reduce the default rates directly , and thus bring the underlying problem of this crisis back to order.Do you think think is a bad idea or is it doable.
Ajay
http://decisionstats.com

Here is a poem on the whole crisis.Its based on the song American Pie.

A weekend poem on this week's sub prime crisis.With Due apologies to the song American Pie by Don Mclean.

Bye Bye Mr American Tie,
Drove your balance sheet to the ground ,while aiming high
And good old boys were taking risky bets, why
Saying this will be the day I will fly
This will be the day I fly

It happened in a land far away,
Wall Street suits and ties went to play,
With exotic mortgages and collateral held sway.

The jesters they were, they passed securities
Bought and Sold ,each one in piece.
There was nobody to stop the band,

And music played ,and the players danced.
Collected fat bonuses and spent it at once.
Stock options had so much romance……….

Till I got the news the day the music died.

I started singing -
Bye Bye Wall Street Tie,
Drove your balance sheet to the ground ,while aiming high
And good old boys were taking risky bets, why
Saying this will be the day I will fly
This will be the day I fly

My hands were clenched in fists of rage,
Bad news from front to last page,
I was going to lose my mortgage,
My Smart bank had invested in that lucrative phase,
Now it kicked up my mortgage rate…….

And no one could tell me why.
The day the music died.The day the music ………DIED

Hey Justin
Thanks for the great day, chuckles are gone now, just a pleasant grin left.
If your looking for an editor for your articles I would consider quitting my day job.
Hope your taking the sarcasm as lightly as I intend it.

Courtesy; your friendly-neighborhood-high-school-math-teacher.

Are there any implications for the US Government's credit rating in any of this? Given that you're struggling with the m/b/t-rilions in any of this i don't feel so bad in asking whether a bailout on this scale contributes significantly to overall US government debt or liabilities?

Our poor students. It must be difficult to learn how to count all these numbers. Is Justin from Princeton?

What I don't get (among other things) is why this isn't a top TOP story in Time or CNN. It's difficult to quite grasp the enormity of the situation, but hey, it's, um, huge. Blink.

I think Gerik points at the right question. Of the $0.7 trillion they're seeking authorization for, how much of that would be going into play 'immediately' (say, next 1 or 3 months)? That would be a truly awesome amount of money injected into the financial system in such a short period of time (it's amazing on its own if spread out over say, 6 months or a year... but 30 days - wow). How inflationary might that be? If the plan isn't to use all of that money up front, why authorize so much - now - when so few have had a chance to think about just what it is we're doing.

If the point of emergency legislation is doing enough to staunch the crisis and buy time for a full solution; then $0.7 trillion is either a down payment not the full cost (i.e we'll use it all on Tuesday and then think and work for 2 months) or way more than is needed now. Can we get some clarification on the intended timetable. I'd really hate to write a blank check that isn't going to be used right away; and if it is going to be used right away I'd like to know that as well.

By way of comparison, the $0.3 trillion mortgage guarantees from this summer are on a (as I recall) 3 year authorization window - that's more 'programmatic' that 'crisis reaction' in design.

Every time you make a sale through a brokerage house, you pay an SEC fee of 7 cents or so.

Why shouldn't the current bailout of the financial industry be paid for by those who use their services through the imposition of a fee? If $1.00 (for example) were added to every brokerage transaction, the program would (eventually) pay for itself, rather than be added as a permanent part of the national debt.

I urge all involved to consider this proposal.

Robert Blacher
Lake Worth, FL
(an individual investor and taxpayer)

Here is a letter I just wrote to Senator Battin, I am fearful that this Bail out if not done right will just delay a another breakdown in a few years.

Hello, My name is Dana Bailey, my Husband and I own a home in Banning, CA. Making a long story short,.... I realize you have numerous obligations. My husband is a superintendent in the Construction Industry and has had more time off than work in the last two years, He was laid off almost two years ago from the tract home production halt, I also had a similar issue as I am in Outside Sales for windows for these new homes. Needless to say ..we have been struggling on the mortgage and somehow kept it before going 30 days (28 or 29 days) but as things became worse in the market, we went over thirty .I worked with our Mortgage company EMC Mortgage Corp whose loans are through Bear Stearns and got our payment modified to help and I am praying that we can maintain it. The problem is that the modification is only a band aid with it being interest only and set to change in 5 years. The home values in Banning are down so much that we owe $350,000 on a home worth $225,000 at best. I do not think we can gain that value back in 5 years so we will face the prospect of this all over again in 5 years. My point is as you are representing us going forward with all these changes I am asking that you see our story as an example of how the little guys like us are not really being helped if the Mortgage companies are not forced to make us a loan that is REALITY based so we can stay here. They are still making so much on each individual loan, Why can they not see that they will benefit and the economy will benefit if they rework the loans more reasonably ....??? Oh.... I forgot....it is because the government plans to pay them for bad little loans like ours, so what incentive do they have to help us? Help us by prolonging the inevitable... They have NONE. So Lance and I have to decide should we ruin our credit now, or wait for the bomb to drop in five years? Should we go down with the ship as it is sinking....or? at 46 and 44 years of age we will have to start all over again. I am asking you to see this perspective as I know many others just like us, The loans should not be allowed to have such terms.... it is partly the reason this whole crisis is here..... loans that are not reality.... make it reality and we can pay it and live.... go out to dinner again.... buy clothes, wash the car for God sakes.... I can't even afford that right now, send money to my Son in Nevada on his first job as a pilot for Scenic Airlines that does not pay super great, so he can go out shopping and so it goes....... the cycle of a decent economy.......... thanks for reading. Please share our view as you work for the reforms and reorganization that is needed. Thank you!!! Dana Bailey 951-544-4768Banning, CA CC: Paul Krugman-New York Times, Justin Fox-Time Magazine

Banana Republic. That is what this then Great Country will settle for. Where were the government when these same financial institutions that now are failing were giving loans for people without any credit, sometimes without SS#. I am no financial wiz but I could clearly see what was coming. The gov let it go to fill the pockets of their friends (resulting in big donations...). This GOP sold this country in so many different ways that is very sad to think about it. Imagining that they got this country with a surplus and they are leaving it bankrupt....

If they MUST help I want see legislations such as:

1) ) any financial institution that seeks help will not distribute dividends for at least 5 years and no employee will get any bonus

2) The shareholders will be given extreme power to fire CEOs, Board directors and vote on companies' plans. Shareholders would vote the board of directors.

3) The gov will make it illegal to brokers, investors to make extra money when their funds make money. If they do not return money when the fund their administer loses, they cannot pocket when the fund makes money.

4) Any type of investment that the average American Citizen cannot use, such as naked shorting, options, etc, would be banned to level the playing field.

5) Any institution that benefits form this bailout will automatically decrease all mortgage principals they hold by 5% and decrease the interest by 1%

6) Have the person of Carl Icahn to oversee all this implementation. See his blog to understand why.

please do not leave us, the American People, to again pay for the Wall Street greed. We cannot afford it anymore

CAN SOMEONE PLEASE HELP ME UNDERSTAND.

I am a US citizen and taxpayer. It seems that we are all in dire straits because of our economic and financial system which is ready to implode because of the mortgage loan problem
that the Bankers have created. I only applied for a mortgage loan and they gave me one.

Now they want 700 Billion dollars so they may have my mortgage loan bought by the US governmnet and be paid off so, they may start to loan out mortgages again.

But, I still owe them the mortgage loan that they gave me. The home equity is less than the money they still want from me. I am paying taxes so, if the government is going to collect taxes from me in order for the government to give the Bankers money to pay my mortgage loan off. What's going on?

The way I see this scam is the Bankers getting money which is created from thin air and then I will need to pay more taxes to repay this
vast government debt. I am in reality paying more than double what I originally owed for my mortgage plus interest.

Why could'nt Washington instead of giving the Bankers money for creating the problem in the first place just give each and every US taxpayer say $50,000 to pay off all their debt they owe to the Bankers. The bankers will still get the money for the bad loans owed by the people. This way the US taxpayer gets assistance to survive this crisis and save their bungalows and the Bankers get cash to keep on paying their servants in the Hamptons.

Or maybe this bailout is to keep the taxpayers in perpetual debtors bondage and give the bankers Billion Dollar bunus' for creating this problem.

Total Cost of Mortgage Bailout (including companies specific loans
etc) = 1300 Billion Dollars

Number of US households defaulting on loans = 100 million (assumed)

Bailout per Household = 13,000 Dollars

Deleting extravagent houses/overpaid /people at fault /above 3
bedrooms = 50 million households

New Bailout per Household =26,000 Dollars

Lowering of EMI by Lowering of Mortgage Rate, by Fed Rate Cut =1000
Dollars per annum

Lowering of EMI by increasing tenure to 40 years = 500 dollars per month

Why cant we give tax payer's money back to the tax payer themselves

Risk Added to Govt Treasury = 0

Jobs lost at financial sector = 0

Houses lost by ordinary Americans =0

Note- Numbers are close approximation of estimates using Fermi Logic
of problem solving.Feel free to tweak or spin them.

Can someone tell whats the problem in this logic ???

--
http://www.decisionstats.com/?p=458

HELL NO TO THE BAILOUT AS PROPOSED BY THE THIEVES THEMSELVES!

give 700 billion tax dollars to THE BELEAGUERED MORTGAGE HOLDERS AND UNEMPLOYEED

who are VICTIMS OF THE THIEVERY PERPETUATED BY WALL STREET AND THEIR CRONIES IN WASHINGTON!