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Straight Talk About Bailouts
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Straight Talk About Bailouts |
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Balladeer
Administrator
Member Empyrean
since 1999-06-05
Posts 25505Ft. Lauderdale, Fl USA 
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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 |
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rwood Member Elite
since 2000-02-29
Posts 3793Tennessee |
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:Wiki I wonder if he feels any sense of Ooops on that? He's a good actor. |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
Well, I agree with Thompson that spending got us into this hole in the first place but that’s about as far as it goes. Thompson ridicules the idea that we can’t 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 - that‘s so counter intuitive it just has to be wrong - doesn‘t it? We’ve spent our way into a recession, everybody knows that, the recession and fear of a depression has caused a forest fire of fear that’s raging through the economy. Money may be tight next year so people stop spending, companies aren’t 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 that’s feeding it. A forest fire that’s running out of control is a hard thing to stop but there’s one technique that works very well, it’s called backfiring, the idea is that you start a series of controlled fires to burn up all the combustible materials in the fire’s 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 isn’t hard to work out why it would work just as well with a financial forest fire. Thompson isn’t likely to see that though, he’s too busy throwing gasoline on the fire.  |
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Balladeer
Administrator
Member Empyrean
since 1999-06-05
Posts 25505Ft. Lauderdale, Fl USA |
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. |
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Denise
Moderator
Member Seraphic
since 1999-08-22
Posts 22648 |
I've always loved Fred's common sense. Thanks for sharing the link, Michael! |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
Maybe you’re right Mike, the gasoline shot may be unwarranted, it gives the impression that Thompson was actively fuelling the flames and that isn’t true and definitely not what I meant to imply. I’ll 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: That was closer to my point regarding Thompson, see I don’t think he has either, at least I didn’t hear any. He seemed to be just another bystander shouting at the fire chief that the backfire isn’t 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 he’s right he might just end up being right. There’s nothing to fear but fear itself. |
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rwood Member Elite
since 2000-02-29
Posts 3793Tennessee |
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: |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
Rwood, Insuring the toxic mortgages is already something the Government’s looking at, in the UK the government has already introduced a 2 year guarantee to underwrite any mortgage where a dramatic reduction in the mortgagee’s 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. I’d 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 doesn’t lose out, in fact they gain the additional rent and the housing market doesn’t 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 I’d recommend no parachute leaps for all of them. Mark to market accountancy is a pet hate of mine - scrap it, it doesn’t work. Capital gains tax is a little difficult for me to comment on - I don’t know how it works in the US - in the UK you don’t pay it at all on property if it’s your main residence so it’s 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. |
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nakdthoughts Member Laureate
since 2000-10-29
Posts 19200Between the Lines |
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 |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. "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. , |
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nakdthoughts Member Laureate
since 2000-10-29
Posts 19200Between the Lines |
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 |
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rwood Member Elite
since 2000-02-29
Posts 3793Tennessee |
quote: That’s what needs to be exposed. It used to be a general standard of 20/20 for “A Paper” 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 “usually” subsidiaries, sister companies, etc. etc. of/to holder Banks. It’s a great handshaking business plan. What the bank doesn’t want to touch, they toss to their “B Paper,” crunchers. (Very little to 0 down, 30% debt ratio, with little or less than perfect credit.) I can’t even imagine “C Paper” but it is a subprime lending term…for 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 year’s actual bottom lines, and losses must be kept at a general 2-4% by law. Varying by state. Now, when customers didn’t 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%, let’s 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) That’s not a current concern but don’t do it until AFTER loan closing, Ok? And let’s scratch those pesky hospital bills for now since everybody gets sick sometime and it doesn’t 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, we’re happy!! And that back child support? Well, it’s ethical to want a home like anyone else so we’ll scratch it for now, because you haven’t been sued, yet, but just be sure to get caught up on that because it’s 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 again—don’t charge anything on those until AFTER closing!! All this brings your debt ratio down to a grand total of 32%, but the closing isn’t 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!! We’ll 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 didn’t you say your 16 year old son worked at McDonald’s?? We’ll count his income as RENT!!! Bring me a copy of his check, too. On closing day? I’m sorry, we couldn’t get you the fixed ?% rate, (which they never intended and knew they couldn’t) 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 I’m joking? That crap is the very reason why I bailed. |
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nakdthoughts Member Laureate
since 2000-10-29
Posts 19200Between the Lines |
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 |
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wranx Member Elite
since 2002-06-07
Posts 3689Moved from a shack to a barn |
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 |
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rwood Member Elite
since 2000-02-29
Posts 3793Tennessee |
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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