New Bailout Question

[Saille]

(x-posted elsewhere on the web)

 

So, what should we be doing about this?

 

Here are my thoughts, and I'm asking for input:

 

I do grasp the comparisons to similar events in Japan in the past. I grasp that they're trying to head something off, but they're doing it by reacting in the same way (bailing out large financial entities with government money) sooner. Is it possible the whole theory was flawed?

 

When I look at the likely price tag for my family, my gut reaction is that, if we had access to that money, we could pay off a car and probably most of our small mortgage rider as well, reducing the debt loads of two financial institutions currently in the news, and taking our monthly expenses down by hundreds of dollars. Which would make it a lot easier to hunker down in the event of a depression. I fail to see how maintaining the current (or somewhat worsened) economic situation while the financial effects of this bailout trickle down is going to help us. Surely this is true for many, many Americans?

 

Further, I keep hearing about the importance of hashing this out before end of session so they can go...campaign? Are they on glue? I'm not voting for someone who um...how to edit this...molests? me with a financial cattle prod so they can come ask me to re-elect them!

 

Anyway, I'm calling all my congresspeople this morning to tell them that my dh and I advise them to remain in session while they explore the possibility of "trickle up" economics as an alternative solution to this problem.

 

Is my reasoning flawed?

[Guest Virginia Dawn]

I can only address the "trickle up." Personally, I don't think there is even close to enough capital to trickle up. You are lucky to have what you do. The majority are overextended with credit and short on liquid assets. Because of the low interest rates and inflation of the dollar, very few people have been saving money. In fact that is part of the problem.

[Once]

I think I am getting what you are saying. Correct me if I'm wrong. The total bailout package divided by the number of American people is something like $46 K. (If that number is wrong then stop reading) You are suggesting giving that to the individaul people of the US and getting them to put it on their debt. Right.

 

It is an interesting idea. Forgiving $46 K of my debt would change things for me considerably! Which would free me up to "trickle up" and buy those things that I need or want thus improving the economy.

 

However, it is hard to imaging that all people would be responsible enough to deal with such an windfall. It would be nice to recieve though. Just not likely to make it to it's intended destination 100% of the time. I will smile all day thinking of the bailout that could have been.

:001_smile:

[Guest Virginia Dawn]

Oh, I see. I should have read the post twice. My first impression was that she had investment money herself.

 

You are right, it is an interesting idea. Forgiving 46K of our debt would put us on easy street. I could sure go for some trickling up then!

[Saille]

The total bailout package divided by the number of American people is something like $46 K.

 

The sad thing is, I could do the above with 12K, which is the number I heard bandied about. 46K doesn't even bear thinking about. We could pay off those debts, my student loans, and probably invest in a wind-solar tandem system for that amount.

 

Also, my point is that those debts are being held by financial institutions. I don't think we should necessarily hand someone with a disastrous mortgage a blank check...perhaps specific debts or kinds of debts could be paid down directly.

Edited September 29, 2008 by Saille

[Once]

Now, that $46 K amount I heard from a friend and I have not done the numbers myself. I think I want too as it seems important to me now. But I do not have time until tonight.

 

$700 billion divided by the US population = ?

 

My calculator does not go up that high.

 

However, as I understand it, the govenment plans on recouping some of this money by reselling the property/mortgages at a later date. Right? So for now in theory it is not lost money the way it would be if it was given to me. I also would question how people get included as you are always going to miss someone. For example, I am Canadian living in the US and did not receive the stimulus bonus everyone else did. I would be very upset at not receiving $46K, it was hard enough not receiving the first one since I am part of the economy that the stimulus check was suppose to stimulate. kwim?

 

Intresting ideas!

[Once]

I googled it. Bail out costs are $2 K per person. So for our family it would be $10 K. Still a nice amount but not the same. :tongue_smilie:

 

Anyhow, it would still help out a bit but not get to the heart of the issue. There are a few finanical institutions but they do not mortage for all the people and some people would use the money for things like medical bills and credit card debt and such so it would not go straight to the mortgage companies in trouble.

 

I'll get out of the way now since I'm only adding wrong info. :001_huh:

[Guest Virginia Dawn]

I was thinking about this while I was out weeding my kale. I realized that this wouldn't work. :-(

Someone somewhere would be in the hole. The fact is there are far more debts than there is money. There may be more debt than there ever will be money. The whole credit thing is a gamble on future earning potential. Our government's real income could possibly fall far short of its debt which is compounded daily.

 

Spending is still out of control. If that was happening in a family, they might be advised to cut up their credit cards, cut back on expenses, sell unneeded luxury items, downsize, and pay down their debt. Why doesn't this apply to our government?

[K&Rs Mom]

Spending is still out of control. If that was happening in a family, they might be advised to cut up their credit cards, cut back on expenses, sell unneeded luxury items, downsize, and pay down their debt. Why doesn't this apply to our government?

 

Because they can "make" more money - print more bills, borrow from other countries (while they give aid to those same countries), manipulate numbers, pick our pockets, etc..

[laylamcb]

You're all right. :001_smile: And wrong. :001_huh:

:lol:

Many economists and advisers have suggested addressing the root of this problem, which is the bad loans and all of the resulting foreclosures. Just the kind of trickle-up approach that the OP suggested. We don't all need cash (though we'd all LOVE it and many of us would do great things with it!). We need to put cash into restructuring and refinancing these bad loans so that folks could stay in their houses and begin paying on them again.

 

There are several reasons why this won't happen, but here are just a few thoughts:

 

1. This would require Wall Street, Congress, and the banks to cool their heels a bit as homeowners head on in to have their mortgages worked on. These are entities that do not wait for anything, and certainly not for the proles like us. As the OP mentioned, Congress is champing at the bit to get this done YESTERDAY--motto: better a bad bill than no bill!--because they need to get home and campaign for reelection. (Note: Have you called your congressperson today and told him/her not to BOTHER coming home if he/she votes for this travesty?)

 

2. The Powers That Be believe in their hearts and in their minds that they know how to spend our money better than we do. Truly. They do. It doesn't matter that this was a COMPLETELY AVOIDABLE, multi-year disaster-in-the-making, that they had lots and lots of warning, and that they did nothing about it until it was too late. Now we must trust these hooligans with all of what's LEFT to fix this problem. Sorry if I'm not jumping up and down enthusiastically. (Note: In case you are not convinced that this is a bipartisan, longtime issue that COULD and SHOULD have been addressed, and in case you don't believe that the principals who are at the forefront of this bailout scheme were the ones DIRECTLY involved in creating the crisis, read this from the New York Times, dated September 2003. Prepare to be fightin' mad.)

 

3. Finally and ultimately, as someone else noted, we (and I'm using the generic American "we" here) have no one but ourselves to blame. We want what we want when we want it, and for many years now, we've gotten it. We haven't cared where it came from, how easy and cheap it was to get, or what we'd do with it when we were finished with it. We haven't cared that aquiring this thing here prevented us from saving for that thing there. Well, we're now reaping what we've sown--which unfortunately is nothing.

 

Sorry for the bitterness, folks. I'm trying so hard not to SHAKE with anger over this whole mess. But it's a struggle for me, as I'm sure it has been for all of you. :001_smile: