Posted on 09/27/2008 7:07:30 AM PDT by SE Mom
“The president is right about this and there has been much hyperbole to the contrary.”
The president could be right. But if he is, why the urgency? If the vast majority of people will repay their mortgages, why not let the market sort out the rest? Why the $700 billion?
So- are you saying as long as everything is based on false assumptions and is propped up- no one knows what’s real value?
What drives the economy if not human emotion? This is a serious question. What external factor drives it? I am asking you this not for debate, but because you know more about this than I do.
“The final cost of this plan will be far less than $700 billion.”
That is a pipe dream sold by the plan backers to stop the taxpayer opposition to this scam.
I believe you are wrong by a factor of two or three. The plan will probably end up costing at least a few Trillion dollars.
Here is why:
Bush, Paulson, Bernanke and Barney Frank have hidden the true nature of the plan quite well.
Here are a few of the facts you are not considering:
The $700 billion is going into something resembling a revolving credit account. Paulson calls it “seed” money.
Paulson will buy bad investments for $700 billion and try to sell some off at various times. The money we get in return goes back into the account and Paulson will use it to buy more trashy debt paper. The money from the sale of that debt goes into the account and on and on and on.....
Except not all the money goes back into the plan or back to the taxpayer, as I will explain later.
Remember two things:
If these securities represented a way to make nice, juicy profits they wouldn’t be for sale or, if they were for sale, other investors would snap them up. They wouldn’t need the taxpayer to shell out for them.
Also, these securities are not all backed by real estate or hard collateral - many are bundled packages of other kinds of consumer credit and loans made by foreign banks. So no one really knows what the mix is or where the collateral (if any) resides.
Paulson and Bernanke have already said that they intend on paying top dollar for the bad debt they buy. They aren’t concerned about the cost to taxpayers - they want to give as much money to the current owners as possible to shore up the value of other debt held by investors and to get Wall Street as healthy as possible as fast as possible.
So any dreams of making profits are false hopes planted by plan backers to convince foolish people to support them.
Also - the plan calls for an unspecified amount, but a minimum of 20%, of the sale price (not the profit) of each sale to go to groups like ACORN to loan out to the same demographic that created much of the current bad debt.
So let’s say we have three securities bought for $100,000 each. One is a fairly solid investment and two are not.
So one is sold for $100,000 one for $25,000 and the other is a total loss. That brings in $125,000 on a $300,000 purchase.
But of that $125,000 at least $25,000 has to be handed over to ACORN, leaving only $100,000. Then there will be payments and costs to erode that number further. What is left will go back into the revolving account and Paulson will purchase more bad debt with it.
Let’s say he does end up with $100,000 and uses it to buy and sells another security for $1000,000. Then another $20,000 goes to Acorn, leaving $80,000.
When he uses that to buy and sell another security for $80,000 ACORN gets another $16,000 and only $64,000 goes back into the account.
So the door to the revolving account is essentially one way - OUT.
ACORN will do well and the people selling almost worthless debt to the taxpayers will do well but the taxpayers will not be making any profits and will not recover the original $700,00 billion.
Soon there won’t be enough money in Paulson’s account to buy more bad debt so the taxpayer will have to throw in another several hundred billion dollars.
By that time some of the new loans made by ACORN should be showing up as new bad debt and the scam will go on.
Well then, you would vote to impeach any president sitting under this circumstance.
Something has to be done to protect each and everyone of us and our savings. Maybe you have no savings - but many retired have worked for years to take care of their elder years and they would no longer be able to get jobs should all that money disappear.
I don’t like this plan in the least - but there will be a plan of some sort. Otherwise, the government just sits by and watches us all lose everything we worked for.
So, if you don’t like this action - you would most likely not like any action and would therefore impeach any doing anything.
Does it make you feel better to impeach those trying to help save our incomes and to the best of their ability trying to cure the mess that no one would cure with earlier efforts?
“Too bad the numbskulls don’t want to admit that it was World War II that got us out of the depression.”
Ironically, I was just talking about this on another thread. WWII certainly raised employment, but it did not lift us out of depression. How could a war cure a depression, anyway? It isn’t productive in a traditional sense, since most of what it produces will be destroyed in short order. We didn’t reach pre-1929 GDP levels until 1954, as crazy as that sounds.
Good grief! Think!
What would happen if Bush supported any plan? The dems hate him so much, they would immediately do all in their power to stop it.
Let him stay out of it - it is the job of the legislators to come up with the plan. He is just using the bully pulpit to MAKE them come up with a solution. And, he has worked diligently to try and prevent us being put into a recession and losing our incomes.
What more do you people expect of the man?
“What drives the economy if not human emotion?”
That is a very deep question. The best I can answer is that economics are driven by utility, or to be more specific subjective estimation of utility. That is, people act in order to satisfy a perceived need, or to remove felt displeasure. Economics consists in measuring which action will provide more utility (in the margin).
The president has been saying for the past several years that the economy is “strong”. Now, suddenly, it’s the end of the world, the economy is collapsing, and if the Congress doesn’t roll over and pass this bill, all hell will break loose next week.
Something’s not right here.
Well - I’m sure.
A president that has stood alone for 8 years to defend America against another attack, a president that has been maligned more than any other and kept cool and just kept on working - is not near petty enough to play games with our Pearl Harbor.
Apparently you have never come to know the man getting all the hate for 8 years.
President Bush has one last chance to stick it right back up...er in the democrats ear all of the crap he has taken. I hope he uses this chance to set the record straight on fannie and freddie and how it led to this meltdown and who was at fault.
Because panic is what will cause a depression and is the reason they want this done before the Monday markets open. If people are not confident, they will make a run on the banks. If foreign markets become scared of our economy, they will pull their investments and not invest further.
I cannot help but think that part of the rush is so that there will be no time for the add-on pork and underlying traps added in by the democrats. Explain the urgency and make them rush through a package that will be clean of inner padding for special interests.
He also warned about Fannie all through his tenure - even trying to get legislation through to fix it. Of course the dems would not allow it as they had used the social engineering within our regulations making banks give loans to the very high risk people. Then people decided to get loans on more house than they could ever afford - and the rest is history.
“So- are you saying as long as everything is based on false assumptions and is propped up- no one knows what’s real value?”
Excactly. Like everything else, money has a price. If it’s price is set too low (as it was during the recent period of massive credit expansion), we have what they call a shortage. That is, too many people buy it. The people that bought the easy money spent it more freely than they would have spent pricier money. The result is that enterprises had an incentive to invest in capital beyond the point that would give them a profit.
Everyone loves credit expansion, because it provides the illusion of profit. But it is only an illusion. It leads to what I’ve heard refered to as “clusters of error,” or a series of poor investments. This rarely happens when people have to pay fair price for their money.
There are much deeper reasons that not knowing the real value of money distorts markets, reasons that I don’t fully appreciate myself. Money is merely a medium of exchange. it is supposed to stand in for a person’s productivity; by producing something, I earn a claim on the produce of someone else. When you inflate the money supply, some people get new money first, and the spend it without adding any produce to the economy, which basically means that they get to steal the produce of others, at least until they stop turning a profit, in which case it dons upon them that they haven’t been very productive.
“Because panic is what will cause a depression”
That is where you and I disagree. Allowing the market to correct itself will not necessarily cause a panic. But there must be some deflation for there to be a recovery, because inflation was the problem. It is my estimation that inflation causes depressions, not deflation. There would be no panic, no bank run, unless the money supply had been inflated in the first place.
I do not welcome large-scale deflation. But I am not certain that injecting $700 billion will prevent a panic. It will delay one, but what guarantee is there that we won’t need more money later. And if the $700 billion dollars works, and the loans suddenly become profitable to someone, who’s to say the market couldn’t have handled it.
PER FOX- Hoyer says vote may be ready for tomorrow...
Listen, this isn’t the only issue. We can begin with the amnesty deals and work our way forward. I really like President Bush, I just don’t understand why he’s agreed to things that are so against principle. Impeach is a strong word, maybe we could just, oh, I don’t know, bawl him out?
As far as the most recent mess, he didn’t cause it, but he sure could have pushed for an untangling of it in 2004. Yes, we are stuck with an astronomical bill that has to be paid, or we are gonna sink.
It’s the kissy-facing with the Dems that is destroying our country...they’re evil.
I’ve been ruminating lately. Perhaps the very word “panic” was invented by bankers to make their enemies (i.e. depositors) appear to be irrational. The important thing to remember about panics is that the bank-runners are correct: their savings don’t really exist. In a sense, it is important for us to carry on the charade that our money has some value, otherwise we’d spark hyperinflation.
The vote won’t happen until John McCain wants it to happen.
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