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Passions in Poetry

Straight Talk About Bailouts

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Balladeer
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Ft. Lauderdale, Fl USA


0 posted 12-04-2008 09:04 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer


For anyone interested, this is an excellent talk given by Fred Thompson concerning the bail-out situation the country and companies are facing. Agree with him or not, it is very informative..
http://blip.tv/file/1528079
rwood
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since 02-29-2000
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Tennessee


1 posted 12-04-2008 11:25 PM       View Profile for rwood   Email rwood   Edit/Delete Message      Find Poems  View IP for rwood

Oh no! Not Homeboy Fred Thompson! Well. Ok.

I gave him a go since he's a former rep. of ours.

I liked the airplane drop idea.

and the "severe penalties for anyone caught saving," thing made me laugh.

quote:
Thompson lobbied Congress on behalf of the Tennessee Savings and Loan League to pass the Garn-St Germain Depository Institutions Act of 1982, which deregulated the Savings and Loan industry.[17] A large congressional majority and President Ronald Reagan supported the act but it was said to be a factor that led to the savings and loan crisis.
Wiki

I wonder if he feels any sense of Ooops on that?

He's a good actor.
Grinch
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since 12-31-2005
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Whoville


2 posted 12-05-2008 07:03 AM       View Profile for Grinch   Email Grinch   Edit/Delete Message      Find Poems  View IP for Grinch

Well, I agree with Thompson that spending got us into this hole in the first place but thatís about as far as it goes.

Thompson ridicules the idea that we canít halt the nosedive into financial meltdown by using the thing that got us there in the first place - spending - which, at first glance, sounds very convincing. His calls to commonsense are quite appealing. I mean if something is causing a problem who in their right mind would suggest doing more of the same to halt the problem - thatĎs so counter intuitive it just has to be wrong - doesnĎt it?

Weíve spent our way into a recession, everybody knows that, the recession and fear of a depression has caused a forest fire of fear thatís raging through the economy. Money may be tight next year so people stop spending, companies arenít selling so unemployment starts rising then companies go bust because banks stop lending. Each fuels the fire like a wind in a forest fire and the raging inferno picks up speed - fast. The only way to stop the conflagration is to remove the fuel thatís feeding it.

A forest fire thatís running out of control is a hard thing to stop but thereís one technique that works very well, itís called backfiring, the idea is that you start a series of controlled fires to burn up all the combustible materials in the fireís path. It sounds a little crazy, lighting a fire to stop a fire is very counter-intuitive, but it works, and if you apply a little common sense it isnít hard to work out why it would work just as well with a financial forest fire.

Thompson isnít likely to see that though, heís too busy throwing gasoline on the fire.

Balladeer
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3 posted 12-05-2008 09:22 AM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

Thanks to you both for checking it out.

I agree with the using small fires to stop big fires analogy. I have a hard time seeing multiple trillions of dollars in bailouts being a small fire, though...more like burning down San Francisco to keep the fire from going to Sacramento. I think your "busy throwing gasoline on the fire" is  unwarranted but I understand, since he is a Republican.

At any rate, I certainly don't have the answers. I simply like Thompson's common sense approach to it in a way people can understand, whether they agree with it or not. Thanks for taking the time to listen to it.
Denise
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4 posted 12-05-2008 10:51 AM       View Profile for Denise   Edit/Delete Message      Find Poems  View IP for Denise

I've always loved Fred's common sense. Thanks for sharing the link, Michael!
Grinch
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since 12-31-2005
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Whoville


5 posted 12-05-2008 11:19 AM       View Profile for Grinch   Email Grinch   Edit/Delete Message      Find Poems  View IP for Grinch

Maybe youíre right Mike, the gasoline shot may be unwarranted, it gives the impression that Thompson was actively fuelling the flames and that isnít true and definitely not what I meant to imply. Iíll take that back.

What I was trying to get across was that the negative stance of shooting down any plan for recovery only acts to decrease the chance of recovery unless you offer a credible alternative.

quote:
I certainly don't have the answers.


That was closer to my point regarding Thompson, see I donít think he has either, at least I didnít hear any. He seemed to be just another  bystander shouting at the fire chief that the backfire isnít going to work. The irony is that if he shouts loud enough the fire-fighters may start to listen and his predictions will become a self-fulfilling prophecy.

If enough people believe heís right he might just end up being right.

Thereís nothing to fear but fear itself.
rwood
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since 02-29-2000
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6 posted 12-05-2008 02:44 PM       View Profile for rwood   Email rwood   Edit/Delete Message      Find Poems  View IP for rwood

Actually, Grinch, I think your "backfire" approach makes plenty of sense, though they need to "fire" or at least put a few executives in the hot seat for their poor performances.

Here's something that I found interesting in reference to answers, a proposal by Dave Ramsey. Like Deer's intro on Thompson, many may not agree but he has some smart "for starters" that need to be examined. And he's entirely short and sweet about it, too.

Common Sense Fix

Your reply made me think of this quote from his proposal.

quote:
This backstop will cost less than $50 billionóa small fraction of the current proposal.


Grinch
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Whoville


7 posted 12-05-2008 05:32 PM       View Profile for Grinch   Email Grinch   Edit/Delete Message      Find Poems  View IP for Grinch


Rwood,

Insuring the toxic mortgages is already something the Governmentís looking at, in the UK the government has already introduced a 2 year guarantee to underwrite any mortgage where a dramatic reduction in the mortgageeís income can be proved.

Rolling back previous unpaid payments is a mistake to my mind -  this simply rewards the people who bought above their budget and are, at least partially, to blame for the problem in the first place. Iíd prefer the instigation of a fixed interest only payment scheme, it would in effect freeze the existing mortgage principal repayment agreement and turn the homeowners into rent paying tenants. That way the finance holder gets an income, albeit reduced, until the crisis is over, at which point the mortgage kicks back in at the same point it was frozen. The homeowner loses the rent they pay, which seems fair, the mortgage holder doesnít lose out, in fact they gain the additional rent and the housing market doesnít get decimated by the tsunami of foreclosed properties hitting the market.

Cancelling golden parachutes and bonus payments for the bright sparks who instigated this debacle is a no-brainer - in fact Iíd recommend no parachute leaps for all of them.

Mark to market accountancy is a pet hate of mine - scrap it, it doesnít work.

Capital gains tax is a little  difficult for me to comment on - I donít know how it works in the US - in the UK you donít pay it at all on property if itís your main residence so itís unlikely to affect the housing market. My only worry in other areas would be the loss of revenue - whatever you give with one hand you need to finance with the other, or have a clear plan about how to finance it in the future.

nakdthoughts
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since 10-29-2000
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Between the Lines


8 posted 12-05-2008 06:30 PM       View Profile for nakdthoughts   Email nakdthoughts   Edit/Delete Message      Find Poems  View IP for nakdthoughts

well I didn't read it because I am too tired right now but I was so upset this morning at the news that even if they give the car companies the bailout they are needing more after Obama is President.

So I sent an email to my state rep...asking why instead couldn't they have  sent  $50,000/$100,000 or whatever was  a reasonable amount to every tax paying citizen  in America and let them spend it on the needs of their families.

Whether it's food, clothing, a car, their mortgage payment, utility bills, college tuitions  whatever...wouldn't that have kept every company in business and  everyone would benefit, not just the  corporations and their bosses... And I am sure it would be comparable to the trillions this will all add up to not knowing for sure where it will end or what the results will be.

I am probably too naive but I am awaiting an answer from him.  And I disagree that WE got us into this because I, myself, have just paid off my mortgage after giving up many unnecessary "things" in my life, besides having a husband walk out on me several years ago, besides a DUI expense of accident and  probation payments for 2 years etc, because of him...I have paid off every credit card and only use cash or money orders which is what they probably have been trying  to tell us to do for years and yet they are upset if we don't charge now.

In fact when I pay cash I don't get the discounts at the Department stores. And  because I don't have medical coverage right now I get charged more at the Drs when I pay the full amount for a visit when someone with a medical plan may only have to pay the balance.

In fact I was charged even more this summer when I hadnt seen a Dr for 2 years and went back to him for the same illness that I have that was  acerbated by the DUI problems. His secretary charged me $75 more saying if I was a regular patient, it would have been less and then the Dr wouldn't give me the same medicine that worked for me ( it was  probably cheaper by now)and gave me a prescription that would have cost me $400 a month. I didn't get the medicine and just  calmed myself down and used something over the counter. Do I sound upset? You bet!

Sighing~~ in Southern PA
Huan Yi
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Waukegan


9 posted 12-05-2008 08:12 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi

.


"So I sent an email to my state rep...asking why instead couldn't they have  sent  $50,000/$100,000 or whatever was  a reasonable amount to every tax paying citizen  in America and let them spend it on the needs of their families. "


Too risky.
How many would spend any of it
on a big three car?

Most tax paying citizens can't afford
being stupid.  

,
nakdthoughts
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since 10-29-2000
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Between the Lines


10 posted 12-06-2008 08:20 AM       View Profile for nakdthoughts   Email nakdthoughts   Edit/Delete Message      Find Poems  View IP for nakdthoughts

Huan Yi
Too risky?  well what do you call giving  out so much money with no stipulations  to the banks ( many who just bought out other banks) who haven't even released anything to those who needed loans  whether new indiviuals or companies, or AIG spending theirs on  bonuses/vacations etc and unless the media exposed it all who would have ever known?

Nothing about any of this makes much sense. And I do blame the banks and mortgage companies as much as those who bought those huge homes ...they all couldn't be that stupid.  

I don't want to sound like my parents or grandparents but "I remember when"... I looked for my first house ( and it was a Rancher, one floor style because  I knew I didn't have the money to furnish anything larger).
We knew that you needed to have at least one paycheck cover the mortgage alone and at the most two weeks pay. The rest was needed for utilities, taxes,food and other bills. So how could the banks have not made sure of it?

I use to be a very optimistic person...

M
rwood
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11 posted 12-06-2008 10:05 AM       View Profile for rwood   Email rwood   Edit/Delete Message      Find Poems  View IP for rwood

quote:
So how could the banks have not made sure of it?


Thatís what needs to be exposed.

It used to be a general standard of 20/20 for ďA PaperĒ loans. (20% down, 20% debt ratio, with great credit.) Conventional bank standards.

Finance companies are not the same as Banks and they have a great many titles/classifications, and they are not operated the same way. But they are ďusuallyĒ subsidiaries, sister companies, etc. etc. of/to holder Banks. Itís a great handshaking business plan. What the bank doesnít want to touch, they toss to their ďB Paper,Ē crunchers. (Very little to 0 down, 30% debt ratio, with little or less than perfect credit.)

I canít even imagine ďC PaperĒ but it is a subprime lending termÖfor something.

They all have money to sell and operate on projections (those magical bottom line numbers that convince stockholders to stay invested, which includes both profit and loss.) Stockholders/owners generally expect profits to soar 3% to 6%+ per year over and above last yearís actual bottom lines, and losses must be kept at a general 2-4% by law. Varying by state.

Now, when customers didnít pour in for loans, doable or otherwise, what to do what to do? Get creative! Hence the Bridge, Balloon, Variable rate, Non-conventional yada yadas that took an always existing risk and twisted it into a virtual pretzel of financial loopholes and nightmarish flexibility.

And they mostly had to tamper with every figure to make the borrower look good enough on paper for a loan. Not on every borrower, bien sur! But on enough borrowers to look good enough, themselves, on paper to the stockholders.

How did they do that? EASY!

When your credit is pulled and the numbers are crunched and your debt ratio proves to be 40 or 50%, letís jack the numbers down by excluding all notes that are close to being paid off, (even if you can renew those loans at any time which would put you to 60-70% debt ratio) Thatís not a current concern but donít do it until AFTER loan closing, Ok? And letís scratch those pesky hospital bills for now since everybody gets sick sometime and it doesnít matter that they can put a lien on your home AFTER we give them something to put a lien on. HAHA. As long as they are 2nd and not 1st, weíre happy!! And that back child support? Well, itís ethical to want a home like anyone else so weíll scratch it for now, because you havenít been sued, yet, but just be sure to get caught up on that because itís hard to pay your house payment from jail! And all those open department store credit accounts? Take the balance from your current Visa and pay those off, and againódonít charge anything on those until AFTER closing!! All this brings your debt ratio down to a grand total of 32%, but the closing isnít for 3 months, and by that time the payments you make on all your debts will reduce them to our magic 30%!!! Yeah! Welcome to the world of being a Home Owner!

Oh, and we need to count your overtime and your bonuses as income, even though you were laid off for 3 months, things have surely picked up!! Weíll prorate your yearly expected raise for fiscal accounting into your income, as well. Just bring me a copy of your check when you get that, Ok? And didnít you say your 16 year old son worked at McDonaldís?? Weíll count his income as RENT!!! Bring me a copy of his check, too.

On closing day? Iím sorry, we couldnít get you the fixed ?% rate, (which they never intended and knew they couldnít) But we did manage to get you a variable of 8.99% and we feel very confident that the rate will fall to an all time low by the end of the year! Ok? Great!

Sign Here ______________________________.


If yall think Iím joking? That crap is the very reason why I bailed.

nakdthoughts
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since 10-29-2000
Posts 19275
Between the Lines


12 posted 12-06-2008 10:50 AM       View Profile for nakdthoughts   Email nakdthoughts   Edit/Delete Message      Find Poems  View IP for nakdthoughts

Wow Regina, I don't think I could ever work in that field and feel I have done an honest days work for the pay. Sighing~~

Bad enough I work in the schools and have to see the "crap" that goes on just so they get enough monies and the raising of scores and the  simplification of testing just to say they are graduating to the next levels when we are lucky if the students can write their own names legibly and read and comprehend without being told what every single word means.

I try my best as a substitute to actually get through to the kids and sometimes have to do it my own way and hope no one higher up pops in and says that's not the way they want me to "teach".

I actually was "let go" last year after 10 days at the start of school ( after spending $250 of my own money to set up the room) because the title one  assistant principal said I was too mean after asking the children  what they thought of me. I had them staying in their seats and behaving and ready to learn...if that were to continue it might prove that the minority students there WERE capable of learning, thus the extra funding would probably go elsewhere.. Nevermind that the  moment my phone ended one job, I was in demand by others...their loss and sad to say the loss to those students too!

Such Greed and Dishonesty in so many areas of today's living.

M
wranx
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since 06-07-2002
Posts 3778
Moved from a shack to a barn


13 posted 01-27-2009 08:03 AM       View Profile for wranx   Email wranx   Edit/Delete Message      Find Poems  View IP for wranx

There aren't words (acceptable here)to describe how I feel about my grandchildren getting the opportunity to help pay for Citigroup's new (French) corporate jet
rwood
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since 02-29-2000
Posts 3797
Tennessee


14 posted 01-27-2009 08:21 AM       View Profile for rwood   Email rwood   Edit/Delete Message      Find Poems  View IP for rwood

Maybe they're gonna use that jet for the money drop Fred talked about?

All those people with those big net-enclosed trampolines will have an advantage.

I need to adopt a kid to qualify for the gov. grant to get one provided me through the new bail-in on the bailout program.
 
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