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Author Topic: The bailout - any suggestions?
The Famous Druid

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Icon 1 posted September 26, 2008 15:17      Profile for The Famous Druid     Send New Private Message       Edit/Delete Post   Reply With Quote 
700 billion dollars.
That's a lot of money.

Imagine a semi-trailer carrying a shipping container full of $100 notes, that's a little under $2 billion.
Now imagine a convoy of 358 of those trucks, that's how much taxpayers money GWB wants to give to the geniuses on Wall Street (including some foreign-owned companies) to cover their gambling losses.

It's not surprising that many people are saying "There's gotta be a better way".

Well, we're a bunch of geeks, we're smart people, right? And we just know that the movers and shakers in Washington have their aides trawling the internet looking for ideas, so lets put all "Here's another fine mess you've gotten me into" recriminations aside and try to find a way out of this mess that doesn't involve bankrupting Uncle Sam by giving truckloads of cash to a bunch of greedy parasites who should have known better.

Here's my humble suggestion.

The banks are going broke because they lent huge amounts to people who had little chance of paying it back, the infamous 'sub prime' mortgages. Many of these are now in default, and there are 3/4 of a million homes in some stage of foreclosure in the USA. As noted elsewhere once they've been vacant for a while, you literally can't give some of these houses away.

So, Uncle Sam offers to buy them.
All of them.

To avoid 'rewarding' banks for reckless behaviour, they're bought at a discount, say 75% of their 2003 value, this should be enough of a black-eye to teach the banks a lesson, without sending them broke.

The families who are currently living there are given the opportunity to stay on, as rent-paying tenants.

Assuming an average price of $200,000 per home, you could buy all of the current foreclosures for 'only' $150 billion, $700 billion will buy 3.5 million homes, that should cover most of the sub-prime defaulters.

The rental income should be enough to cover Uncle Sam's borrowing costs, and the houses can be slowly sold off over the next couple of decades to repay the debt.

Bingo.

We've kept the banks afloat without just giving them truckloads of money, kept roofs over the heads of millions of ordinary Americans, and the long-term cost should be small. If the houses are sold at the right time, Uncle Sam could even turn a profit.

So, any other ideas?

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TheMoMan
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Icon 1 posted September 26, 2008 18:36      Profile for TheMoMan         Edit/Delete Post   Reply With Quote 
___________________The Famous Druid de TheMoMan ___ Thats better than I can see Alaska from my home state. Actually I like it, and I prefer not to give the money to speculators and their Golden Parachutes. I am ready to endorse TFD's proposal.

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Icon 1 posted September 26, 2008 19:26      Profile for tweety   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
I like the idea, but honestly like the idea of Uncle Sam owning these sumbitches more. I say we socialize (and I mean that economically and, well, socially) these companies, at least for the short term. Get them back on their feet, sell the stock at a profit (because part of ownership would of course be the stock), take the profit and use it to pay for socialized medical care and other necessities, and of course give any excess back to all citizens, not just those who pay taxes.

This way, we get a short to medium term solution that will pay back a nice profit to the people. These a-holes on Wall Street will flip out that we're going all European on their asses and begin to develop something akin to a conscience.

Oh, yes, and part of the deal would be to allow these people who were approved for these ludicrous mortgages the deal of a lifetime: keep their mortgage payments at the same level they were at at the very beginning, at least for 10 years. Give these people time to stay in their homes, wait out the real estate bust, and then sell later and hopefully gain a tidy profit for themselves.

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The Famous Druid

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Icon 1 posted September 28, 2008 00:20      Profile for The Famous Druid     Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by tweety:
I like the idea, but honestly like the idea of Uncle Sam owning these sumbitches more.

Yeah, that would be fun, but we're in this mess because the regulators weren't doing their jobs, and even with the best of intentions, it's kinda difficult to regulate what you own.

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HalfVast

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Icon 1 posted September 28, 2008 05:22      Profile for HalfVast     Send New Private Message       Edit/Delete Post   Reply With Quote 
Sell Alaska back to Russia for 700 billion. Done and done. [Razz]
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The Famous Druid

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Icon 1 posted September 28, 2008 13:57      Profile for The Famous Druid     Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by HalfVast:
Sell Alaska back to Russia for 700 billion. Done and done. [Razz]

[Applause] [Applause] [Applause] [Applause] [Applause]

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If you watch 'The History Of NASA' backwards, it's about a space agency that has no manned spaceflight capability, then does low-orbit flights, then lands on the Moon.

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nibbler
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Icon 1 posted September 28, 2008 21:55      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
I really don't think anything should be done.

I agree with Maxine Waters, Barney Frank, Gregory Meeks, Artur Davis, Lacy Clay, and others that Franklin Raines has done a splendid job.

I'm not so sure why everyone is so worried about Fannie and Freddie.

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Callipygous
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Icon 1 posted September 29, 2008 13:46      Profile for Callipygous     Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by nibbler:
I really don't think anything should be done.

I agree with Maxine Waters, Barney Frank, Gregory Meeks, Artur Davis, Lacy Clay, and others that Franklin Raines has done a splendid job.

I'm not so sure why everyone is so worried about Fannie and Freddie.

Well nibbly Chester, it looks like you got your wish. Markets in free fall, the US and world economies popping like party balloons. Gotta go now to grab what money I can and stash it under my mattress so bye for now and...

I hope you enjoy the ride.

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nibbler
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Icon 1 posted September 29, 2008 14:48      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
I just figured that since John McCain is evil that we should do like the Democrats did in 2004 when he and other Republicans tried to fix the problem.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

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GrumpySteen

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Icon 1 posted September 29, 2008 15:04      Profile for GrumpySteen     Send New Private Message       Edit/Delete Post   Reply With Quote 
Amazing how those evil Democrats managed to do all that in 2004... -after- a Republican president was in office, but not before. Obviously it was all a big conspiracy to make Bush look bad. It couldn't possibly have anything to do with the deregulation of the banking industry back in the 80s. [Roll Eyes]

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TheMoMan
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Icon 1 posted September 29, 2008 15:24      Profile for TheMoMan         Edit/Delete Post   Reply With Quote 
__________________ de TheMoMan __ Well it seems that the shrub can not even get his own party to vote for his proposal, Hmm something may be wrong with the Tax & Spend Liberals. Many did vote for the shrubs pump, seems his own party is letting him sink.

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Benjamin Franklin,

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nibbler
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Icon 1 posted September 29, 2008 15:29      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
Absolutely not - The Fannie/Freddie disaster is a direct result of Democratic ideals that government chartered institutions be forced to make loans to people who can't repay them. Then the people in charge cooked the books and said everything was ok. There was a congressional hearing because several Republicans thought something was wrong at Freddie/Fannie. Did you hear what the Democrats (who took big contributions from guys like Franklin Raines, who made was $91.1 million from 1998 through 2004, including some $52.6 million in bonuses )

Watch the video and hear with your own ears what the Democrats in the hearing had to say.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

Then after listening, can you say that it wasn't caused by crooked execs being guarded by the very people who should have stopped them?

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nibbler
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Icon 1 posted September 29, 2008 15:50      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
Oh yeah - I just thought I'd update those of you who don't know that much about Raines, he made a sweet deal to pay back a little of the money he stole and walked scott free.

Raines makes a deal

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tweety
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Icon 1 posted September 29, 2008 16:14      Profile for tweety   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
nibbler – here's the problem, Bush is the President of the United States, the Leader of the Free World. Not Congress. If this was all so rotten why didn't Bush step in and use his influence and position to lead, yes, lead the nation in a better direction?

Here's the answer: he's not an economist, but he believes the long-term fundamentals of our economy are sound. Oh, and that we're not in a recession.

If you don't grok what I'm getting at, take a time out and really, really think about it hard.

Hate to be harsh on this, but morons run this country and morons voted them in.

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GrumpySteen

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Icon 1 posted September 29, 2008 16:35      Profile for GrumpySteen     Send New Private Message       Edit/Delete Post   Reply With Quote 
nibbler wrote:
Absolutely not - The Fannie/Freddie disaster is a direct result of Democratic ideals that government chartered institutions be forced to make loans to people who can't repay them.

I am amused by your answer.

Subprime lending was illegal before deregulation. How, exactly, do you rationalize your view that deregulation had nothing to do with the collapse of the lenders due to subprime lending?

I eagerly await further hilarity as you attempt to answer this.

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nibbler
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Icon 1 posted September 29, 2008 16:39      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
Did you watch the Video?

Tweety - Do you understand that congress is charged the oversight of many government programs and that they have the authority to step in when things are going wrong?

Republicans started drawing attention to the problem ten years ago then had formal hearings to try and to put a halt to the shenanigans going on over at Fannie/Freddie 5 years ago, then again 4 years ago. The ranking Democrat members all said that there was no problem and dismissed the panel.

These same people (chief among them is Barney Frank who responded to Republican concerns "Fannie Mae and Freddie Mac are not in a crisis" ) are now trying to say that president Bush is responsible.

He tried to reel them in starting in 2001!


Why would they deny wrong-doing?

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nibbler
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Icon 1 posted September 29, 2008 16:59      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
The real problem is that the largest holder of mortgages in the country was charged by congress (with a Dem lead) to give "poor people" mortgages.

Poor people don't need mortgages - they need to pay rent until they can handle the responsibility of home ownership.

It wasn't that Banks were going out and beating people over the head because they wanted to loan money they wouldn't get back. It was people who made themselves house poor because of government programs designed to make poor people feel better about themselves.

If poor people pay rent and fall behind - they just find another place to pay rent. If that have a mortgage - they default, then it takes time and energy of the mortgage holder to convert the house back into value. Banks have a supply of liquidity to cover these transitions.

Fannie Mae Head Franklin Raines (Clinton's White house Budget director) said under oath in 2004 that they didn't need reserves because their investments were "risk-less".


When the inevitable happened as the Republicans warned, suddenly the same Dems are now saying that it's because of the Republicans.

Ridiculous.

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YaYawoman

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Icon 1 posted September 29, 2008 17:26      Profile for YaYawoman     Send New Private Message       Edit/Delete Post   Reply With Quote 
Hey there steen. Dont fall for the subprime meme.
They were the weakest link and fell first, but prime is next, believe it. The most toxic mortgages of them all were not subprime but alt-a loans which were considered prime loans. The interest only, neg-am option arms are getting ready to implode over 2009, ivy zelman of credit suisse had a chart of different mortgage issues coming up and that is the year of the great re-cast.

When you hear alt-a, think cali, more specifically the bay area.

Subprime lending has never been illegal, in many cases it served a very valuable purpose. If divorce, death or illness or layoffs happened a borrower was able to do a last ditch refi until able to refi agian into a better rate 3-5 years down the road, it was a good way to avoid foreclosure.

Now during this bubble it was used not as a last ditch way to keep the house while improving income flow, but was used as a first level affordability product. THAT is where the weakness first started.

The whole koolaid driven real estate never goes down, buy now or be priced out forever, just heloc your way to happiness has been exposed as the shitburger it always was.

Real estate used to be local, when the local bank held the mortgage you took out until maturity, but with rmbs, cdo, debt equals wealth shit it has gone global in a big way. Bigger than 700 billion would ever be able to fix.

i am glad this bill failed the house vote. I feel it is a travesty to make the fsckers who created and benefitted the most from this crap whole on the backs of the taxpayer.

Regulation was starved, no funding equals no enforcement. Just enforcing the laws already on the books would have helped.

Oh and the republican vs democrat that has popped up a bit here and there on this thread? Both parties are responsible. Honest. both parties were greedy, stupid, shorsighted.

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GrumpySteen

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Icon 1 posted September 29, 2008 17:29      Profile for GrumpySteen     Send New Private Message       Edit/Delete Post   Reply With Quote 
Nibbler:
So, according to your argument, subprime lending being made legal during deregulation has nothing to do with the subprime lending crisis. Without suprime lending being made legal, they would still have made subprime loans and the mess would still have occurred?

Are you retarded?

YaYa:
Oh, I'm well aware of the complexity of the the economic crisis and that it goes far beyond the mortgage industry. I'm just pointing out to Nibbler that he's making idiotic statements. The whole A-rated investments was a fabrication, too, which is quite amusingly explained in simple terms over here.

Plus... I like stick figures [Big Grin]

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Icon 1 posted September 29, 2008 17:30      Profile for tweety   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
nibbler – Yes, I'm very well aware of how the freakin' US gov't works and is set up. Hence, my response. The Office of President is supposed to lead. Bush has been too busy continuing daddy's war to pay attention to domestic issues. It's a genetic problem in the Republican party's DNA. The Dems seem to have a reciprocal genetic flaw.

Now, get off your friggin' ridiculous high horse and face the facts, Bush has not done his job properly. He's known for bad business decisions, and that trait is now biting us in the ass. Unbridled Greed created this problem. Evil Greed, not Good Greed, created this problem. The Repubs, led by GWB, continue to insist on laissez-faire economic policies which always lead this nation into economic turmoil. Learn some history, then join the discussion. Until then, keep your trap shut.

Like it or not, we are headed toward a more Socialist economy, whether gov't mandated or we as a society/economy get there on our own. Pure, undiluted Capitalism does not work. No economic or political framework, pure and undiluted, works. The world is gray, analog, it ain't black and white/digital.

And, yes, I am very, very testy today, and it has a tangential, at best, relationship to the frigtards on Wall Street and in DC. Eat it.

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Callipygous
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Icon 1 posted September 29, 2008 17:36      Profile for Callipygous     Send New Private Message       Edit/Delete Post   Reply With Quote 
So nipply I see that although Bush is nominally President, and claims to be a Republican, he actually has little real power. Can't really join the dots on that one...

Eight years on, blaming the previous administration for current problems only makes you look...
quote:
Originally posted by nibbler:

Ridiculous.

Yes.

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Colonel Panic
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Icon 1 posted September 29, 2008 17:46      Profile for Colonel Panic         Edit/Delete Post   Reply With Quote 
Sell South Carolina, Georgia, Mississippi, Alabama and Louisiana to the Chinese.

Throw in all the redneck's kidneys as a bonus.

Net gain for America.

BTW, Nibbler, Painted, Chesty, ASM are all "dirty thirty" right wing trolls. They will never change their minds. They get their truth feeds from Fox. Move on, carry on.

CP

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The Famous Druid

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Icon 1 posted September 29, 2008 17:53      Profile for The Famous Druid     Send New Private Message       Edit/Delete Post   Reply With Quote 
Ah, you've gotta love a True Believer.

After 8 years of Republican rule, everything bad that happened is because of them pesky Democrats.

I s'pose it must have been a Democrat who boasted...
quote:
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.


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nibbler
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Icon 1 posted September 29, 2008 18:01      Profile for nibbler   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
While many on both sides have watched as the greedy (and I am mostly talking about buyers who ran on the edge of their wallets) put themselves into peril.

The specific problem of Freddie/Fannie is squarely on the backs of those who blocked the investigations and berated the people at FHEO for raising the red flag.

Banks fail all the time - weak banks are bought by strong ones and the system rolls on. But when the largest holder of mortgages (who played by their own rules) was irresponsible and when Federal Employees who were charged with its oversight were ambivalent, that shook the whole system.

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The Famous Druid

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Icon 1 posted September 29, 2008 19:06      Profile for The Famous Druid     Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Originally posted by nibbler:
The specific problem of Freddie/Fannie is squarely on the backs of those who blocked the investigations and berated the people at FHEO for raising the red flag.

 
Despite the 'creative editing' of the video (the only Republican shown is pro-regulation, the only Democrats shown are anti) it was the Republican Majority who controlled the committee, and it was Republicans who proudly patted themselves on the back for deregulating the banking industry.

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