Why do AMERICAN taxpayers have to pay for the bailout?

[jkjsooner]

Those more knowledgable, please explain why it is the AMERICAN taxpayers who will be funding this huge financial bailout. Haven't we been told over and over that this is a global economy? Aren't many of the stock and bond holders (and creditors) of these financial companies foreign? Won't the whole world suffer from a global financial meltdown?

I understand other countries have their own troublesome financial institutions but if we're all in this together then we all need to pay the price.

I understand why we might pay the price for Fannie and Freddie. These institutions loan to U.S. buyers and so their solvency affects us much more than those outside the U.S. If F&F went under it would have dire consequences to our housing market.

Given, our economy won't stabilize until affordability is again reached in the housing market and that requires significant price drops (even from today's levels) which is a fact ignored by politicians who want to prop up the market but I digress....

[SoonerProphet]

Why does liquidity in the market have to be provided by the state?

[jkjsooner]

Why does liquidity in the market have to be provided by the state?

Generally I agree but if the alternative is Great Depression II then I suppose something needs to be done...

Here's my plan. If (and that's a big IF) the government must buy bad assets from these companies, I would stipulate that it be limited to real estate backed assets and that the real estate must be located within the U.S. I don't want to hear about our government buying mortgage backed securites that can be traced back to a house in London (which is much more screwed than we are, BTW).

[jkjsooner]

And here's a question for the conservatives out there. Assuming you believe Bush when he said he is for free markets but these are extraordinary times and we need this $700 billion solution, here's your choices and tell me which is less troublesome for a conservative:

1. Do not regulate the markets until it gets to the point where taxpayers must pay for a $700 billion bailout.

2. Put some regulations in years ago to address this out-of-control financial orgy we've had over the last ten or so years. All it took was some type of regulation to make sure everyone had skin in the game....

And don't tell me the outcome wasn't predictable. There have been too many people warning us for a long long time, and these were mainstream economists not your perpetual "the sky is falling" types.

Which of these looks more like socialism to you?

[8timechamps]

Blame it on China.



Seriously.

[mdklatt]

Why does liquidity in the market have to be provided by the state?

Because the market apparently sucks at it.

[Lott's Bandana]

Let's put FEMA in charge.

[frankensooner]

Didn't you listen to W last night, he said that the loans will be worth something once the market is righted and the government will get its money back. sheesh.

[Bourbon St Sooner]

And here's a question for the conservatives out there. Assuming you believe Bush when he said he is for free markets but these are extraordinary times and we need this $700 billion solution, here's your choices and tell me which is less troublesome for a conservative:

1. Do not regulate the markets until it gets to the point where taxpayers must pay for a $700 billion bailout.

2. Put some regulations in years ago to address this out-of-control financial orgy we've had over the last ten or so years. All it took was some type of regulation to make sure everyone had skin in the game....

And don't tell me the outcome wasn't predictable. There have been too many people warning us for a long long time, and these were mainstream economists not your perpetual "the sky is falling" types.

Which of these looks more like socialism to you?

Don't worry, you'll get your regulation. And I'm sure it will be just as burdensome, overbearing and useless as Sarbanes-Oxley.

[Viking Kitten]

The way it was explained to me, if we (the taxpayers) take over the bad loans, that will make the balance sheets at the troubled banks look better. Then we're banking on foreign investors seeing that and pumping money into those firms. Hope it works. If it doesn't we're screwed, according to everyone I've talked to.

[royalfan5]

Well, we can all go seek our fortune in Bolivia if it keeps heading south. It worked for Butch and Sundance, right?

[royalfan5]

Those more knowledgable, please explain why it is the AMERICAN taxpayers who will be funding this huge financial bailout. Haven't we been told over and over that this is a global economy? Aren't many of the stock and bond holders (and creditors) of these financial companies foreign? Won't the whole world suffer from a global financial meltdown?

I understand other countries have their own troublesome financial institutions but if we're all in this together then we all need to pay the price.

I understand why we might pay the price for Fannie and Freddie. These institutions loan to U.S. buyers and so their solvency affects us much more than those outside the U.S. If F&F went under it would have dire consequences to our housing market.

Given, our economy won't stabilize until affordability is again reached in the housing market and that requires significant price drops (even from today's levels) which is a fact ignored by politicians who want to prop up the market but I digress....

The ECB hasn't exactly been sitting around twiddling it's thumbs the whole time. The UK nationalized a large Bank to bail it out last year. Barclays stepped in to preserve a large chunk of Lehman Bros. I don't think you can make the claim that international institutions aren't helping or at least trying to help.

[Partial Qualifier]

And here's a question for the conservatives out there. Assuming you believe Bush when he said he is for free markets but these are extraordinary times and we need this $700 billion solution, here's your choices and tell me which is less troublesome for a conservative:

1. Do not regulate the markets until it gets to the point where taxpayers must pay for a $700 billion bailout.

2. Put some regulations in years ago to address this out-of-control financial orgy we've had over the last ten or so years. All it took was some type of regulation to make sure everyone had skin in the game....

And don't tell me the outcome wasn't predictable. There have been too many people warning us for a long long time, and these were mainstream economists not your perpetual "the sky is falling" types.

Which of these looks more like socialism to you?

*ahem* -- read this article (from 2003) very carefully, from beginning to end. (http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B 63&sec=&spon=&pagewanted=print)



Here's my favorite line:



''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''


this is why I want to throw something really hard when I hear liberal pundits sarcastically asking conservatives "so, now you're socialists!? How does that feel?"

:confused: :mad:

[soonervegas]

The problem with regulation is that like BSS said....it isn't always effective and people just find loopholes. The best remedy for this is to stop this bail out mentality that has engulfed this country. We can take our medicine now or later. My votes for now....

I think this Great Depression II talk is BS.

[Taxman71]

You know, if we eliminated credit and only used cash, this would not be a problem. Do you ever see the illegal drug and prostitution industries go into recession? Heck no.

[Penguin]

Do you ever see the illegal drug and prostitution industries go into recession?


I sure hope not! :texan:

[tommieharris91]

You know, if we eliminated credit and only used cash, this would not be a problem. Do you ever see the illegal drug and prostitution industries go into recession? Heck no.

OK, so if we do that, how would one go about getting a 30-year fixed rate mortgage? How would one go about getting a loan to start a business?

And the why the illegal stuff never falters is because you never hear about it faltering when it does.

[jkjsooner]

[I][SIZE=1

this is why I want to throw something really hard when I hear liberal pundits sarcastically asking conservatives "so, now you're socialists!? How does that feel?"

:confused: :mad:


Hey, I'm not fan of the democrats in this whole situation either. All they want to do is prop up the housing market while also creating affordable housing. Maybe someone can explain that logic. I'm also not a fan of Dodd or Frank. They've taken their share of filthy money as well.

I think both sides share a ton of blame here. They both were living up the "wealth effect" created by the housing bubble, both were happy to take credit for the increased ownership rates, and both turned a blind eye to the problems on the horizon.

Anyway, you didn't do a very good job of stereotyping me.

[jkjsooner]

The thing about regulation is that we might just not need it anymore. It would be too little too late at this point.

Bankers learned their lessons during the Great Depression. Unfortunately, I think they're all dead now and we just had to learn the same lesson again - with a little more financial complexity introduced this time.

[Partial Qualifier]

dude I agree with you and I wasn't trying to stereotype yaz'. Just pointing out that in fact somebody DID try to apply better regulation and oversight to Mae & Mac, years ago.

[Vaevictis]

Bankers learned their lessons during the Great Depression. Unfortunately, I think they're all dead now and we just had to learn the same lesson again - with a little more financial complexity introduced this time.

My grandfather is constantly saying that one of the worst things to ever happen to the USA is the MBA.

[OklahomaTuba]

Why is this even called a bail out??

These are asset backed securities the gubment is gaining. Sounds like a decent investment to me.

[OklahomaTuba]

My grandfather is constantly saying that one of the worst things to ever happen to the USA is the MBA.

Jefferson once said Banks were more dangerous than standing armies.

[Viking Kitten]

Why is this even called a bail out??

These are asset backed securities the gubment is gaining. Sounds like a decent investment to me.

But won't the government have to turn around and unload those assets to recoup that investment? And if a bunch of foreclosed houses suddenly gluts up the market, won't that cause the price to drop below what we the taxpayers will have paid for them?

People keep pointing out that if the loans right themselves, taxpayer will make money on the deal, but realistically, how likely is that to happen?

[JohnnyMack]

But won't the government have to turn around and unload them to recoup that investment? And if a bunch of foreclosed houses suddenly gluts up the market, won't that cause the price to drop below what we the taxpayers will have paid for them?

People keep pointing out that if the loans right themselves, taxpayer will make money on the deal, but realistically, how likely is that to happen?

Yeah they're buying the property cheap, but how realistic is it that the major chunk of what they buy has much upside? The glut of housing they're talking about is in places like Vegas, Phoenix & Florida where they were building condo after condo after condo. These weren't primary residences, they were "investment opportunities" for people who thought they were smart. So now we own them, who in the hell is gonna buy them?

[Vaevictis]

But won't the government have to turn around and unload them to recoup that investment?

No, the government can hold them to maturity. The nice thing about being the government is that they don't really have to liquidate things to shore up a balance sheet.



And if a bunch of foreclosed houses suddenly gluts up the market, won't that cause the price to drop below what we the taxpayers will have paid for them?

People keep pointing out that if the loans right themselves, taxpayer will make money on the deal, but realistically, how likely is that to happen?

It all depends on the price paid for the securities. If we buy them at what have been recent prices, it'll be fine. If Paulson decides to use this money to prop up the prices and decides not to be a smart buyer, it won't be.

[stoopified]

Well, we can all go seek our fortune in Bolivia if it keeps heading south. It worked for Butch and Sundance, right?Yeah,I hear they struck it rich in LEAD. :)

[olevetonahill]

Well, we can all go seek our fortune in Bolivia if it keeps heading south. It worked for Butch and Sundance, right?

You saying you want me to Neg em there ?

[royalfan5]

You saying you want me to Neg em there ?
Not exactly.

[olevetonahill]

Not exactly.

My bad :O

[jkjsooner]

Why is this even called a bail out??

These are asset backed securities the gubment is gaining. Sounds like a decent investment to me.

The companies will offload the very worst of the securities onto the government. We will be paying for massively overpriced houses whose value was probably derived from some type of fraud.

[GottaHavePride]

Yeah,I hear they struck it rich in LEAD. :)

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Finest organically grown, free-range lead there is!

[soonervegas]

I have a question. Let's say the government holds on to these mortgages and securities until they truly become assets. Who is going to get the return on investment? Is the government going to pocket it or are they going to be writing every American a check for putting our rears on the line?

[Taxman71]

Those mortgages will never break even, much less turn a profit. If they were money-makers, the execs would already sold them to their bro-in-law for 50 cents on the dollar before the bailout.

[pergdaddy]

I especially love that "we are operating in the 21st century under 20th century regulations".

OK, what the F**K have you been doing for the last 8 years?

Somehow, when this is all said and done, I bet it's Clinton's fault.

[DBrown]

While we're at it let's see if we can get some money for a stadium upgrade!
Surely we can sneak that in somewhere!