Comments on: Really good questions and some half-baked answers about the bailout

By: A Khristin

A Khristin — Wed, 01 Oct 2008 16:28:42 +0000

As the price of living goes up so does inflation. As the price of living goes down so does stagflation. The consumer pays the price. If we were to add taxes to busineses the taxes for consumers would go up. The consumer will have to pay. Buying out the market creates unusual subsidies. If mortgages were to sell it would skew the budget causing forcloses. Buying out the banks creates security in the market. Can we aford this though.

By: ourayco

ourayco — Wed, 01 Oct 2008 15:15:12 +0000

Great questions and thoughts Mr Fox!
What a huge whole greed has made in American economics. I do disagree that those who were the consumers of these mortgages were just as guilty or more guilty than those who offered. As with any buying and selling, the consumer has the decision to make, not the lender. If you can't afford it ..don't buy it. As a nation we are over our heads in credit debt. Unfortunately the generations being raised in this mess are the ones that have to suffer the consequences of those before them.
Casino or Wall Street. I don't see a difference.

By: Ash002

Ash002 — Wed, 01 Oct 2008 14:36:59 +0000

The Dems response to the Bush "plan" was pathetically weak. Can these guys fight for the American people. What about insisting on protections and buyins and regulation which will help prevent a repeat? Congress roled by a lame duck!!

By: bob weisberger

bob weisberger — Wed, 01 Oct 2008 06:07:59 +0000

Justin - Thank you for your response re CDSs etc and thanks for this forum. And for those of you awake or with DVRs, Charlie Rose is interviewing Warren Buffett on tomorrow's program. If you have missed his recent shows, which have been tremendous on the financial meltdown, they are all on his website and well worth a look.

By: deBohun

deBohun — Tue, 30 Sep 2008 22:55:09 +0000

f the Treasury owned these mortgage securities, it would greatly skew the market in ways we cannot begin to predict. It certainly wouldn't allow for a normal return to market equilibrium. The idea that any institution could sell to the TARP, only complicates this further by encouraging banks to sell to the government for easy money, rather then to put in the hard work necessary to work out a solution, through write-downs or other methods, with home owners who are on the verge of foreclosure. The likely result is that the housing market will be flooded with foreclosed homes. While that might bring home prices down to their proximate market values, it won't solve the underlying problems of why they were over-valued in the first place. Consequently, the whole inflationary process would merely begin anew once the market became flooded with vulture capital. Who would benefit from this? Again, only the rich, those with enough in their pockets to take advantage of such scavenging opportunities. The average homeowner will merely see their home value fall, while their mortgage remains the same. In short, the rich get a nice opportunity, while the rest get turned into mortgage serfs, bound to houses they can neither afford to sell, nor afford to keep.

By: thewalls76

thewalls76 — Tue, 30 Sep 2008 21:11:45 +0000

I've noticed that TIME's sister, CNN, has dropped the 'bailout bill' title and switched to calling it a 'rescue bill'. And, to think, John McCain says the media doesn't give him any help. It sounds like someone at CNN decided (as some of your writings here have indicated) that the media didn't 'sell' the bill properly to Americans. As in the 'breaking news' headline that the market rallied on the hopes lawmakers will pass a 'rescue' bill. Maybe the market rallied because people realized the sky wasn't falling and the emperor has no clothes.

By: eli cryderman

eli cryderman — Tue, 30 Sep 2008 20:29:23 +0000

Yes Bryan, you are correct; not to mention hyperinflation. Just ask Zimbabawee how that's going for them. $100 Billion of their dollars buys 3 eggs. Or maybe Weimar Germans have a better understanding.

Karl Marx would be proud: "Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly" 5th measure in eliminating capitalism

By: Bryan from Houston

Bryan from Houston — Tue, 30 Sep 2008 20:17:19 +0000

Eli,

In a government with a fiat currency, all roads lead to inflation.

By: eli cryderman

eli cryderman — Tue, 30 Sep 2008 20:04:19 +0000

Almost there folks...just keep asking the questions. Sooner or later you'll be bound to ask why we have a Federal Reserve Bank (a private enitity, not a government branch) and why we have a fiat currency (backed in nothing but broken promises). Study history; fiat currencies and the empires they fund do not last. We need to return to sound monetary policy, fiscal responsibility and a drastically limited government. Stopping the bailout is the first step to prosperity. We need to live once again within our means and not on credit. The credit markets need to freeze up so that lending requirements are tighter, so loans are more secure, with less risk.

By: Kimm

Kimm — Tue, 30 Sep 2008 19:58:36 +0000

I'm so impressed with this breath of fresh air forum.
I started with instinct to just say no to bailout, however the more I read and learn the more I am convinced it is a big mistake to give this sum of money to our (The Peoples') Treasury for a bailout. Does not even sound as though they will treat it as a deposit.

Among many questions I have is the means that investment banks leveraged (x30) CDO's and derivatives, who did they borrow from? Along with this I do not believe there are enough defaulted mortgages to warrant $700BLN bailout.

I also ask if the mortgage backed securities were being traded on face value of amount borrowed or tied to total repayment amount over life of mortgage?

Finally I ask about AIG and the fact that their failed investments consisted mainly of European holdings, so why did Paulson give AIG our money?