quote:

Originally posted by Sandy Fitzgerald:
Yes something is wrong!! You're starting a precident! Whoops, I screwed up and now you have to write me a new loan, or maybe i'll just pay what I feel I can. Where do I sign up for that deal?

Isn't that what this country has been doing with third world nations for decades?

quote:

I'd like to see a bailout in which everyone at fault is held accountable, and I'd also like to be 18 again. Which do you think is more likely?

18. You may not physically be 18 but can always act like one.

quote:

Originally posted by KSC02:

quote:

Originally posted by Sandy Fitzgerald:
Yes something is wrong!! You're starting a precident! Whoops, I screwed up and now you have to write me a new loan, or maybe i'll just pay what I feel I can. Where do I sign up for that deal?

Isn't that what this country has been doing with third world nations for decades?

Yup, that's pretty much it.

soo what wine pairs with the bail out?

I'd give my vote for Martinelli Jackass Hill

quote:

Originally posted by g-man:
soo what wine pairs with the bail out?

I'd give my vote for Martinelli Jackass Hill

quote:

Originally posted by DoubleD:
seanr7: life is not always fair.

True, but this should work both ways. I feel like I am getting the shaft by being fiscally responsible and meeting my debt obligations.

quote:

Originally posted by Dave Tong BBP:
Or am I missing something?

Yeah, you’re missing something. The current situation is far more than the man on the street who can’t pay his mortgage and has little to do with politics. The US economy (and most of the global economy) is not built on intrinsic value anymore. This is about perceived market value and how that has crumbled. You’re welcome to argue whether the loss in value is real or not; artificially manipulated or a natural cycle, but the results are the same regardless. The stock market is a very sophisticated pyramid scheme currently propped up by artificially low interest rates and inflated property values which, unfortunately for most, enough people in the game have called the bluff for what it is. Read a little about the fundamentals of the Wall Street Crash of 1929 and you’ll see a lot of parallels. The possibility of a steep crash and long economic recovery is very real, unlike the mathematical correction of 1987. When an economies growth is built on lending and those lenders disappear, the ability to recover also begins to disappear. I can’t tell you how many projects I see now in which the developer’s only resource is foreign investment.

Unfortunately, you are indeed speaking some of the wisest words this thread has yet seen, GD.

quote:

Originally posted by Red guy in a blue state:

quote:

Originally posted by DoubleD:
seanr7: life is not always fair.

True, but this should work both ways. I feel like I am getting the shaft by being fiscally responsible and meeting my debt obligations.

If you are in the market for a house, you should be in a great position. If you need a new car, you shouldn't have any problems getting the best rate. Little consolation? Perhaps. There will be a number of people whose credit is shot. Who knows how that will affect them in the future.

quote:

Originally posted by DoubleD:

quote:

Originally posted by Red guy in a blue state:

quote:

Originally posted by DoubleD:
seanr7: life is not always fair.

True, but this should work both ways. I feel like I am getting the shaft by being fiscally responsible and meeting my debt obligations.

If you are in the market for a house, you should be in a great position. If you need a new car, you shouldn't have any problems getting the best rate. Little consolation? Perhaps. There will be a number of people whose credit is shot. Who knows how that will affect them in the future.

Not my fault and not my problem. People (and corporations) should be responsible for their own actions and not look to the government to bail them out every time they make a stupid and/or irresponsible decision.

And yes, times like these can present some interesting opportunities.

quote:

Originally posted by DoubleD:

quote:

I'd like to see a bailout in which everyone at fault is held accountable, and I'd also like to be 18 again. Which do you think is more likely?

18. You may not physically be 18 but can always act like one.

Exactly.
We're going to get a bailout because the alternative is cascading deflation of assets and default on debt. It will act like its sponsers are requiring responsibility, and that will be as convincing as if I pretend to have the body of an 18 year old.

May I ask what incentives are in place to prevent the exact same behavior if these people know the American taxpayer can be forced to pay the tab? Let me guess, congress will come up with another "solution." They will come up with it in a hurry, with no thoughts to the unintended consequences.

This bailout makes me sick.

I agree - what contemptible scoundrel stole the cork from my lunch?

So, to simplify all this, should I pop my best bottles now and enjoy them since I won't be able to afford to keep my cellar cooler running?

das kapital...

To reiterate what has already been mentioned here, the bailout is necessary to prop up the economy but it is by no means going to be a cure-all. Drastic changes need to come about and the market correction should have occurred a long time ago. Ideologically, I am flatly opposed to a large amount of governmental influence on business. Business should be run as a free enterprise with as little mingling from the government as possible. That is why this bailout is really hard for me to accept. However, the alternatives could be much worse and I do realize that my children's children will be paying for this until the day that they die.

Something has to be done. I'm not sure the Bush Administration's solution which looks like it was written on a paper napkin is the one. I'm not sure that the Congressional solution will be an improvement, although better thought out as they have more brains on it.

After this shakes out, it will be interesting to see if other nations will still buy our paper which is funding our deficit spending.

And to see what happens when the baby boomers stop buying and start to save for retirement, since most of our GDP is consumer driven.

And we are assuming, of course, the bail out will work.

It looks like a tentative agreement has been reached: Clicky. I am concerned about the speed in which all of this has passed. The bankruptcy garbage that has been proposed (giving judges the right to change mortgage terms) is insane. It has not been determined if this piece of legislation should be included, but this will ultimately punish well-run firms that have done the right thing during all this mess.
Not sure what to feel about this. Have all other options been explored? My guess is no.

quote:

Originally posted by Keeno:
I am concerned about the speed in which all of this has passed.

You don't remember the passage of Patriot Act with little or no debate?

quote:

Originally posted by tanglenet:

quote:

Originally posted by Keeno:
I am concerned about the speed in which all of this has passed.

You don't remember the passage of Patriot Act with little or no debate?

Funny you should mention that. I was just beginning my senior year in college when that was enacted, so I don't remember much about how it was passed (kind of a shame I wasn't more plugged in). I didn't realize it's impact until I began working in the financial services industry in 2002. There is a lot of unnecessary regulation for financial firms wrapped into that bill as well.

quote:

Originally posted by Dave Tong BBP:
A lot of you seem to have significant experience of the financial services industry. So, politics aside, is the bailout necessary? Is it the right/smartest thing to do?

Though I'm not ideologically opposed to the idea of nationalization, it doesn't seem to me that it's necessarily the best answer. The problem is that people are defaulting on their mortgage payments, right? So the bank siezes the house and can't sell it, and the people now have to find somewhere else to live. Doesn't it make more sense to restructure the debt and keep them living in the property, paying what they can?

Or am I missing something?

Another weird thing that seems common is when banks foreclose on rental property is it is often standard procedure to evict the paying tenants. That just seems stupid all around.

quote:

Originally posted by yhn:

quote:

Originally posted by Dave Tong BBP:
A lot of you seem to have significant experience of the financial services industry. So, politics aside, is the bailout necessary? Is it the right/smartest thing to do?

Though I'm not ideologically opposed to the idea of nationalization, it doesn't seem to me that it's necessarily the best answer. The problem is that people are defaulting on their mortgage payments, right? So the bank siezes the house and can't sell it, and the people now have to find somewhere else to live. Doesn't it make more sense to restructure the debt and keep them living in the property, paying what they can?

Or am I missing something?

Another weird thing that seems common is when banks foreclose on rental property is it is often standard procedure to evict the paying tenants. That just seems stupid all around.

yhn: Banks are not in the business of being landlords. Without getting overly complicated, a rental property loan should have at least a 1.25% debt service coverage. That means that the rent from the tenant should cover the loan payment with extra left over for insurance, maintenance, taxes, etc. If the borrower can't pay the bank debt from the rental income, the bank may be better off to foreclose if the borrower can't sell it - which potentially means dumping it for a loss. Would you buy a property where the expected rents couldn't cover the loan payment? Probably not, which is why the bank has no interest in trying to keep these properties. At that point, it is dump the property and try to recoup as much of the loan as possible.
There is more to it than this of course, but you get the idea.

Keeno; I knew quite a few people that bought property that didn't cash flow. They were all betting on the come, ie Capital Gains.

The rental property would show a loss which would be subtracted from their W-2/earnings. Taxes on that earnings was 35+% Fed plus State. If they turned around and sold the property for a nice Capital Gain in 3-4 year, they could often make more money overall and the tax rate was lower. Maybe rents might even grow to be revenue nuetral. Worked fined until values collapsed or they lost the ability to handle the negative cash flow.

Banks gladly made those loans if they believed the people would make the payments, but that is not the business banks themselves are in.