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Bail Out...an alternate solution... - 9/27/2008 1:14:46 PM
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Concerto
Posts: 197
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Hi all:
I recently read an alternative to the proposed $700 bill bail out. So, I cannot claim that this is my idea, but, when I read it, I thought it was very interesting.
Why not give the $700 billion to the American taxpayers? Think of this. Those who are struggling with late mortgage payments will be able to pay them down significantly. All those in debt will be able to be pay off their debts. Plus, people will start spending to stimulate the economy.
What do you think?
C
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RE: Bail Out...an alternate solution... - 9/27/2008 1:23:11 PM
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GregandJenny
Posts: 616
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From: Near Seattle Washington
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Do you think it will be enough and if it is do you think that people would spend it wisely.
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RE: Bail Out...an alternate solution... - 9/27/2008 2:05:09 PM
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ekserekseez
Posts: 661
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Better yet, why not let the American taxpayers KEEP the $700 billion, since it's ours to start with?
NO BAILOUT. Let the banks fail, let the mortgages crash, let the whole mess come tumbling down. The market will fix itself far faster and more efficiently than the government ever could.
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RE: Bail Out...an alternate solution... - 9/27/2008 3:18:39 PM
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blessedinnyc
Posts: 1954
Joined: 10/12/2007
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quote:
ORIGINAL: Concerto
Hi all:
I recently read an alternative to the proposed $700 bill bail out. So, I cannot claim that this is my idea, but, when I read it, I thought it was very interesting.
Why not give the $700 billion to the American taxpayers? Think of this. Those who are struggling with late mortgage payments will be able to pay them down significantly. All those in debt will be able to be pay off their debts. Plus, people will start spending to stimulate the economy.
What do you think?
C
I was actually thinking about the same thing. What if we did two things:
1.) If you don't have a mortgage, we give you $2000 to invest in corporate bonds for two years.
2.) If you do have a mortgage, we pay down your mortgage by $2000. If you have defaulted on a mortgage and the bank suffered a loss, we give your bank up to $2000 to cover that loss.
This both stimulates the economy and rewards those who have been responsible. The only people left out are those who've been irresponsible.
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RE: Bail Out...an alternate solution... - 9/27/2008 4:21:13 PM
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ekserekseez
Posts: 661
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Dear blessedinnyc:
Why don't YOU run for president? You have more sense than either clown in now.
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RE: Bail Out...an alternate solution... - 9/27/2008 9:27:45 PM
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ekserekseez
Posts: 661
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Let the banks fail. The FDIC is unconstitutional socialism, anyway.
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RE: Bail Out...an alternate solution... - 9/27/2008 9:41:45 PM
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Ps103
Posts: 11654
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From: Here, now
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Where do you keep your money?
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RE: Bail Out...an alternate solution... - 9/27/2008 10:27:35 PM
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ekserekseez
Posts: 661
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Except for short-term checking, not in US banks.
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RE: Bail Out...an alternate solution... - 9/28/2008 9:48:46 AM
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relady
Posts: 1281
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From: Greater St. Louis Metro
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quote:
Let the banks fail. The FDIC is unconstitutional socialism, anyway. Actually, that's not entirely true. The government is charged with looking out for the general welfare of it's citizens. A responsible government would never purposely let the economy crash. Secondly, the Constitution DOES give the government the ability to intervene in interstate commerce issues. If banking doesn't qualify as interstate commerce, I don't know what does.
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RE: Bail Out...an alternate solution... - 9/28/2008 10:02:51 AM
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ekserekseez
Posts: 661
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The Constitution presupposes that the government, especially the federal government, will use the least intrusive means possible to intervene in areas permitted by the document. The reason we have the mess we have today (and outrageous tax rates, and prohibitive regulations) is because of the ham-handed feds interfering in the market.
If the banks all failed and the economy crashed, the free market (if actually left alone) would fix itself much more quickly and efficiently than the government will. THAT would promote the general welfare of all citizens.
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RE: Bail Out...an alternate solution... - 9/28/2008 10:54:03 AM
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csl7037
Posts: 1602
Joined: 3/24/2008
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quote:
ORIGINAL: ekserekseez
The Constitution presupposes that the government, especially the federal government, will use the least intrusive means possible to intervene in areas permitted by the document. The reason we have the mess we have today (and outrageous tax rates, and prohibitive regulations) is because of the ham-handed feds interfering in the market.
If the banks all failed and the economy crashed, the free market (if actually left alone) would fix itself much more quickly and efficiently than the government will. THAT would promote the general welfare of all citizens.
I've definitely heard it argued that the measures taken during the Great Depression is why it lasted so long and that it would've corrected itself much more quickly if left alone.
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RE: Bail Out...an alternate solution... - 9/28/2008 12:27:15 PM
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relady
Posts: 1281
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From: Greater St. Louis Metro
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quote:
I've definitely heard it argued that the measures taken during the Great Depression is why it lasted so long and that it would've corrected itself much more quickly if left alone. I've heard that argument too, but not from any source I feel is truly credible. I don't want to see the economy crash around me - if that happened both my hubby and I would be out of work and on the streets. If the government wants to take steps so that doesn't happen to me or anyone else, I'm ok with it.
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RE: Bail Out...an alternate solution... - 9/28/2008 4:54:08 PM
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danas_mom
Posts: 552
Joined: 6/17/2005
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quote:
ORIGINAL: Concerto
Hi all:
I recently read an alternative to the proposed $700 bill bail out. So, I cannot claim that this is my idea, but, when I read it, I thought it was very interesting.
Why not give the $700 billion to the American taxpayers? Think of this. Those who are struggling with late mortgage payments will be able to pay them down significantly. All those in debt will be able to be pay off their debts. Plus, people will start spending to stimulate the economy.
What do you think?
C
Hubby read this to me the other day, probably the one you're thinking of. The place I saw it posted didn't have the person's name attached, so I don't know who wrote it or where it was found originally.
Bail Out Americans
I'm against the $85,000,000, 000.00 bailout of AIG.
Instead, I'm in favor of giving $85,000,000, 000 to
America in a 'We Deserve It Dividend.'
To make the math simple, let's assume there are
200,000,000 bonafide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man,
woman and child. So 200,000,000 might be a fair stab at
adults 18 and up..
So divide 200 million adults 18+ into $85 billon that
equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We
Deserve It Dividend.
Of course, it would NOT be tax free. So let's assume a
tax rate of 30%. Every individual
18+ has to pay $127,500.00 in taxes. That sends
$25,500,000, 000 right back to Uncle
Sam.
But it means that every adult 18+ has $297,500.00 in their
pocket. A husband and wife
has $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your
family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads.
Put away money for college - it'll be there.
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs.
Invest in the market - capital drives growth.
Pay for your parent's medical insurance - health care
improves.
Enable Deadbeat Dads to come clean - or else.
Remember this is for every adult U S Citizen 18+ including
the folks who lost their jobs at Lehman Brothers and every
other company that is cutting back. And of course, for those
serving in our Armed Forces. If we're going to
're-distribute wealth' let's really do
it...
(End of snippet)
I know people who are a lot more financially savvy than I can probably poke holes all through it, but personally I would love to have almost $600,000 cash between hubby and I.  We live in a low cost of living area, so for us it would mean:
Pay off all our current debts, including the mortgage
Build our dream home and furnish it the way we want to, paying cash for all
Buy two brand new vehicles, paying cash for both
Pay off hubby's student loans
And it would still leave a large chunk for saving/investing
Ahhh, one can dream.
_____________________________
I will not sacrifice to the LORD my God burnt offerings that cost me nothing. ~ 2 Samuel 24:24
Spirit of Ashes Creations
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RE: Bail Out...an alternate solution... - 9/28/2008 5:18:19 PM
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blessedinnyc
Posts: 1954
Joined: 10/12/2007
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quote:
ORIGINAL: relady
I've heard that argument too, but not from any source I feel is truly credible. I don't want to see the economy crash around me - if that happened both my hubby and I would be out of work and on the streets. If the government wants to take steps so that doesn't happen to me or anyone else, I'm ok with it.
Well, economic downturns are natural- some might go further to call them necessary and healthy. Typically in the economy, you have periods of expansion and consolidation- just like with waking and sleeping- or using your cell phone and charging it.
My view is that sometimes, recessions are necessary, and it's in the interests of our long-term health not to have the government get too involved. In the wake of the dot-com crash, the government lowered interest rates and encouraged people to spend money. This shortened and weakened the recession, and some of the bail-out measures back in 2002 are hurting us now (low interest rates.) If the government steps in too much, we will have too much inflation and/or federal debt in several years. This will force the fed to raise interest rates or taxes (if they are smart), thus creating another recession.
At the same time, it makes sense for the government to keep the recession from getting deeper than it needs to. But how deep is enough? I think we need to allow some unprofitable businesses (airlines, mortgage brokers, retailers, unnecessarily energy-intensive companies) to fail. Sadly, we may need unemployment to go up another 2-3% as workers migrate into profitable industries. This means that, IMHO, we'll need a recession as bad as the late 70s and early '80s.
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RE: Bail Out...an alternate solution... - 9/28/2008 5:42:12 PM
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relady
Posts: 1281
Joined: 4/11/2005
From: Greater St. Louis Metro
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Blessed, I will defer to you on this subject, as you obviously have WAY more experience and knowledge than I in this area. I just keep getting the feeling, however, that this little "burp" could be oh, so much more than just a recession if allowed to continue. I don't know, but I'd rather err on the side of fixing things, I think.
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RE: Bail Out...an alternate solution... - 9/28/2008 6:46:07 PM
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blessedinnyc
Posts: 1954
Joined: 10/12/2007
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quote:
Blessed, I will defer to you on this subject, as you obviously have WAY more experience and knowledge than I in this area.
Actually, I'm not sure I do. I've done my best to learn from folks who are experienced at this (IE: my Dad, various college business/finance professors, people at work), but the only recession before this where I had to worry any was the dot-com bust (I was a computer science major in 2003 and 2004 when programming jobs were still scarce).
quote:
I just keep getting the feeling, however, that this little "burp" could be oh, so much more than just a recession if allowed to continue.
I actually agree here, and I'm willing to trust your experienced realtor instincts on this. (Again, I just graduated from college a year or two ago, so most people on this forum have lived through more recessions than I have.) However, the question is what got us into this mess in the first place?
I think the problem started in the early '80s. We should have had a longer, deeper recession back then, but instead borrowed a lot of money. This borrowing has continued until today. We let the market get a little too big with the dot-com boom, and lowered interest rates too much with the dot-com bust. This triggered more borrowing. Thus, we have the economy we have today.
I'm all for government intervention if it will truly fix things, but previous intervention got us in the shape we're in now. I wonder if the reason you're feeling that way- as well as so many people- is the fact that it's been 70 years (or at least 25) since we've had a truly painful recession. If the government intervenes now, will we eliminate the recession? Or will we merely move it back to a later date?
quote:
I don't know, but I'd rather err on the side of fixing things, I think.
I think everyone would, but I don't think we want the "fix" to break things either, though. I mean, I can "fix" the problem with my mortgage by making my mortgage payment with my credit card, but that's not really a fix, is it? The best long-term move is to either sell the house or give the keys back to the lender, and try to get my financial house back in order. It might be traumatic, but I'll be better off in 10-15 years than if I had tried to keep living beyond my means and staving off foreclosure by using my credit card.
In the worst-case situation, the country produces enough food for everyone to eat. If a bail-out is too much, and we were to opt not to go for one, we'd all survive the ten years it would take for us to find ourselves in a better situation than if we hadn't gone for the bail-out.
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RE: Bail Out...an alternate solution... - 9/28/2008 8:45:45 PM
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prophet
Posts: 521
Joined: 4/19/2005
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quote:
I think the problem started in the early '80s. We should have had a longer, deeper recession back then, but instead borrowed a lot of money. This borrowing has continued until today. We let the market get a little too big with the dot-com boom, and lowered interest rates too much with the dot-com bust. This triggered more borrowing. Thus, we have the economy we have today.
You are right....began woth . com thingy then Greenspans easy credit expansion to keep the economy alfoat...these are but delaying the inevitable. i belive this present govt to just trying to avoid the D word....recession is unavoidable....US is already in one inspite of the stats. If the Krontadieff winter takes place the D word will become true 
Sciptures ring true: The debtor will become slave to the Lender
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Create in me a Clean Heart, O Lord.
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RE: Bail Out...an alternate solution... - 9/28/2008 9:34:36 PM
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relady
Posts: 1281
Joined: 4/11/2005
From: Greater St. Louis Metro
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quote:
I wonder if the reason you're feeling that way- as well as so many people- is the fact that it's been 70 years (or at least 25) since we've had a truly painful recession. I think my issue is that I didn't really get too badly affected by the recession in the 80s and I'm not a young person and if this turns really bad...I will see my later years being much harder than my early years and I'm much less physically or psychologically able to handle them, not to mention financially. We've already been down the layoff garden path and lost all our retirement. Another journey down that path and I really doubt we could bounce back. This one just does scare me more and I really think it's just because I'm older and I see less chance of being able to recover on a personal level.
From a realtor perspective, it's just crazy. I have been busier this year than ever, in spite of all the craziness. Things are slowing now, but I always expect that in an election cycle and the fall months. But it is slower all over -- long term that is probably not a bad thing. A hot seller's or buyer's market is never sustainable for the long term. But home prices still aren't really where they should be relative to median income. It's interesting to say the least....
quote:
I can "fix" the problem with my mortgage by making my mortgage payment with my credit card, but that's not really a fix, is it? The best long-term move is to either sell the house or give the keys back to the lender, and try to get my financial house back in order. It might be traumatic, but I'll be better off in 10-15 years than if I had tried to keep living beyond my means and staving off foreclosure by using my credit card . You are absolutely correct.
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RE: Bail Out...an alternate solution... - 9/29/2008 10:38:34 AM
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NoShow
Posts: 461
Joined: 5/10/2005
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I saw the flaw in this immediately. Out of curiousity, I gave it to my ten year old and she found the flaw too.
quote:
So divide 200 million adults 18+ into $85 billon that
equals $425,000.00.
It comes to $425 not $425,000.
Look at it. One billion is one thousand million. So if one were dividing $200 billion by 200 million, one would get one thousand. $85 billion is less than one half of $200 billion, so the answer has to be less than $500.
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RE: Bail Out...an alternate solution... - 9/29/2008 12:08:24 PM
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NoShow
Posts: 461
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I want to clarify my prior post. I work in Accounting\Finance and deal with those kinds of numbers often. So the miscalculation jumped out at me. I specifically told my child that there was an error and to see if they could find it.
I did not mean by my post, that anyone "Smarter Than A Fifth Grader" should have found it. In rereading my post, I can see how one might see that "tone"; and I apologize if it was offensive to anyone.
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RE: Bail Out...an alternate solution... - 9/29/2008 12:59:25 PM
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GroupW
Posts: 2905
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: blessedinnyc
quote:
Blessed, I will defer to you on this subject, as you obviously have WAY more experience and knowledge than I in this area.
I think the problem started in the early '80s. We should have had a longer, deeper recession back then, but instead borrowed a lot of money. This borrowing has continued until today. We let the market get a little too big with the dot-com boom, and lowered interest rates too much with the dot-com bust. This triggered more borrowing. Thus, we have the economy we have today.
The recession we had back then was probably about the right depth. I think you need to separate the fact of the recession from the poor fiscal response to it. Monetarily, in a few short years, we right-sized corporate balance sheets, broke persistently high inflationary expectations, and put us on a course that resulted in one of the longest economic expansions on record. The wheels didn't really come of the wagon until 2001, and even then the role of fiscal/monetary policy is somewhat open to debate. Many of our paradigm changing new technologies such as the telephone, the car, mass production technologies, etc have resulted in extreme optimism and price bubbles. The .com phase was really nothing new in this respect.
The question for today is the appropriate degree of governmental intervention in the financial markets. I'm usually a hands-off kind of guy, except for cases where the markets fail. Markets are very good at some things, but very poor at others. For example, markets have a "freeloader" problem and an "externalities" problem. When something like a freeway can be enjoyed by everyone regardless of whether or not they actually paid for it, we have a freeloader problem. Defense is a good example of this. The top 5-10% of all taxpayers pay most of the freight, but every citizen benefits. Markets don't account for this very well.
Externalities are when one person creates a cost (like pollution) but doesn't have to pay for it (i.e. factories used to send all sorts of stuff into the air but weren't responsible for the cancers etc. that it caused.)
When markets fail, it's appropriate for the government to step in. Most people don't realize this, but today the markets have failed. Bank's can't lend to each other, even people with good credit have trouble finding mortgages that they can afford, student loans are extremely hard to come by. We have a good friend living with us who isn't sure how she'll afford her last semester of school because she can't get that last little school loan. We have another friend who will likely default on his school loan because he can't refinance it.
In cases like these, people suffer unnecessarily not because they haven't managed debt prudently, but because banks have no cash to lend even where such lending is otherwise prudent.
Now, we can let the markets make this adjustment VERY rapidly and create a fiscal crisis that will likely cost 1 in every 10 Americans his job, or we can do this adjustment in an orderly fashion that doesn't create the same amount of economic stress.
This isn't altogether different than modern bankruptcy laws. We have bankruptcy laws because when companies are given some time to wind down their affairs in an orderly fashion, all the creditors are better off. No different here. We need a deleveraging in this economy, but to do so rapidly and in a disorderly fashion as we have so far will most likely lead to a suboptimal solution in the long run.
BT
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“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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