US goverment to buy bad debt

Discussion in 'Business & Economics' started by Asguard, Sep 22, 2008.

  1. Asguard Kiss my dark side Valued Senior Member

    yes because india would NEVER build nukes:rolleyes::rolleyes::rolleyes:
  2. S.A.M. uniquely dreadful Valued Senior Member

    Nah, we'd never nuke the whole world. Its not sanskara.
  3. Giambattista sssssssssssssssssssssssss sssss Valued Senior Member

    Internment in "emergency" camps, built by Halliburton and run by Blackwater security forces.:eek:
  4. milkweed Valued Senior Member

    I think the push to pass this 700 billion bailout is a rush job that wont solve the real issues. And I thought the rebate checks were a bad idea. We're gonna pay that back 4x (every man, woman and child in the USA) to fund this babysitting job.

    World wide depression/recession might not be a bad thing long term. Weed out the weaklings. Downsized governments. People tossing out the bums in November elections. This should end the war in Iraq and Afghanistan.

    Reality check time.
  5. Asguard Kiss my dark side Valued Senior Member

    i was very interested in one of the banking commitee members comments that all this will do is reward wall street while continuing the colaps in the real economy and the increase in homelessness. that isnt verbatum what he said by the way, thats my interpritation. the surprising thing was that i THINK this came from a republican:p

    im in two minds about the whole thing, SOMETHING has to be done to free up credit or our economy will be next. the temporary solution of keeping people in the workforce wont last forever and is already cutting into the grey nomads which is VERY bad for the country which relies on the tourist $ from them to keep running. especially with petrol prices being so high as well making travel in the country more expencive. with the drout on top of this the bush is really suffering

    however that will seem a TINY problem if this leads to a cut in china and india's economies. If they stop buying resorces we are REALLY fucked and i cant really see a solution for the australian goverment. no matter what they do they are not going to be able to fix it if we lose the resorce boom right now on top of this.
  6. joepistole Ordo Ad Chao Valued Senior Member

    This is not the final solution. But it is a major step in the right direction. People in the United States are pissed at Washington. That is why you see congressmen throwing their temper tantrums and trying to act tough. It is all an act meant to appease the anger of the American electorate. As soon as the spotlight is off, they will go back to their same old ways. They are tired of being ripped off by the upper classes.
  7. Diode-Man Awesome User Title Registered Senior Member

    Well I say lets do the 700 billion, but lets make the economy last and figure out a plan so we have a recession and not a bust. What do you think on solutions?
  8. Carcano Valued Senior Member

  9. Billy T Please use Sugar Cane Alcohol Fuel Valued Senior Member

    The toxic paper is trash because the mortgage under it may not get paid. Sticking Uncle Sam (really Joe American) with this posion is not a solution.
    The forclosures will just continue, throwing more homes on the market , depressing prices more, wipping out more positive equity some still have, wtc.
    Obviously what is needed to to reduce the foreclosures, that means more of the mortgages need to be paid. let use the 700 billion more intelligently. - guarantee the payment of the mortgage for most trying to keep head abouve water despite the reduced purchasing power of their salaries Republican false "trickel down" economics and GWB's deregualtions have produced. If the banks knew the mortgages were not trash, but guaranteed, then package of them would cease to be toxic and they could be held on the books as real assets (or sold as there would be buyers).

    What needs to be done is to pay for the administration / examinations of the "I really am trying to pay" debtors without more tax burden on Joe American. - I suggest new "excess bonus and parachute tax." For example, in Lehman alone last year $5.7 billion in bonuses were paid. The top 5 investment US firms paid to their London branch (or all non US branches?) people alone 197 billion pounds in bonuses and special incentives - that is almost 300 billion US dollars. Let's take back 95% via this new tax all the bonus + golden parachutes everything over the salary of a Supreme Court judge paid in the last decade. If they cannot pay imediately, we take a note on their house (or houses etc.) with interest high enough to make them try hard, like Joe not to lose their house as part of the payment.

    I am pissed at the fat cats screwing Joe. He is the foundation of the economy, not the writers of these new "no money down," "Lier loans", "ARMs with balloons" etc mortgages and the multitude of "derivatives" built on them to drive the leverage up to 32 times assets.
    Last edited: Sep 24, 2008
  10. Asguard Kiss my dark side Valued Senior Member

    you know billy, i was thinking about that. some of the solutions that were floated as fixes for the housing crisis here could be used to stablise the housing market in the US. it would mean the goverment loses money, basically buying the houses from the banks and giving them away almost on really low loans with almost no interest.

    in the US case the difference would be that there would be no restrictions on onselling the houses because the point of the thing would be to get people back into the housing market and stablise prices
  11. milkweed Valued Senior Member

    Solutions? Simply put, let the market bear the cost. Let the feds keep investigating and put involved criminals on trial,

    Over and over we keep seeing these same magic numbers tricks protecting the fat-cats and leaving the average joe paying the bills. Chechni, the farm crisis of the 80s, What was the name of that investigation of the Clinton and the land deal that went no where? The S&L issue with Charles Keating, up to Enron and Worldcom. The average joes wages are falling and you think that throwing money at wall street is gonna change the peoples inability to pay off debt? You think that raising government debt is going to free up money for the economy? Homes were GROSSLY over-valued. Tis nothing more than a market correction (long over due).
  12. milkweed Valued Senior Member

    Well that convinced me for sure. NO BAILOUT!
  13. Billy T Please use Sugar Cane Alcohol Fuel Valued Senior Member

    The US government does not need to lose money while fixing the current economic mess; certainly not the 700 billion dollars it will lose under Paulson's plan.

    This ex CEO of Goldman Sacks’s plan to help GS and others holding toxic loans, by transfer of them to Uncle Sam, just sticks Joe American with the toxin but is no anti-dote for the poison.

    Here is the anti-dote:

    The government goes to EVERY foreclosure auction and buys the house, which Joe cannot afford, if it would otherwise sell for less than the mortgage. Joe is granted up to one year with deferred interest bearing rent. During that year, Joe must find a home (house, apartment or trailer) he can afford, at least to rent. Then, when opportunity exists to sell at or above the auction price paid,* Uncle Sam sells the house at market price (which should be more than the price US paid at the auction, if this plan is working. - Keeping price of houses from falling every month as they are now, and will continue to fall under Paulson's plan, which only aids the banks, not the real-estate industry.) When Joe gets back on his feet, out from under some of his debt, he begins to pay his deferred months (<13) of rent and the interest, over 5 years if need be.

    U.S.'s money buys real assets (the house) not toxic trash. Even the banks are helped as they know the foreclosure sale will cover the mortgage so this is an anti-dote to the toxic poison they now hold. I.e. from POV of the banks, not one piece of this paper is worth less than face value. Everyone knows this so, it becomes a marketable security. If the bank needs more liquidity, they can sell it and make new loans.

    Paulson's plan is focused on making sure Goldman/Sacks etc. does not take a hit (That would wipe out his pension when he leaves government "service.") This plan is focused on Joe American - tries to get him into housing he can afford and keep him off the streets while he finds it, with a long term profit to U.S.
    *US may need to be a land-lord, renting for a few years.
    Joe remaining more than year in his house as "rent to buy" is best option, if Joe can afford it. Mainly because then the renter will not damage the house. - That is hard to control. -It is very tempting (to a transitory renter) to sell the dishwasher etc. during the last month of the rental contract, if he is planning to move to another house. That renter can always claim it was broken and did not bother to tell Uncle Sam. - "I just discarded it as the repair man said it was not worth fixing." etc.

    Second reason "rent-to-buy" is better is it eliminates the sales commission the real estate agents would take and other title transfer expenses. (US got title cheaply at the auction. - No one can claim US does not own the house, even if not recorded at the local court house etc. but it should be. The county can contribute by making no charge to US for recording in land records as this plan helps hold up their assessment based taxes on the house.)
    Last edited: Sep 24, 2008
  14. Asguard Kiss my dark side Valued Senior Member

    why sell billy?
    your going to have 1000's of homeless people needing housing trust houses. why not keep the house and set up a rent to buy scheam like the state goverments do here.

    no they wont get the full market value but the person has there house and the goverment gets most of the money back
  15. Billy T Please use Sugar Cane Alcohol Fuel Valued Senior Member

    I was still editing when you posted (to correct the possible, but unintended, impression in original that U.S. was to sell soon after buying at auction). That would not take houses off the market, which is essential to make the prices at least stablize, if not recover. (do not want them to recover much as they were falsely over valued). - See foot note I added while you were posting (and before I read your post).*

    Your idea of rent to buy is good addition, mainly because then the renter will not damage the house. - that is hard to control. -It is very tempting (to renter) to sell the dishwasher etc. during the last month of the rental contract if planning to move to another house. Renter can always claim it was broken and did not bother to tell Uncle Sam. - "I just discarded it as the repair man said it was not worth fixing." etc.

    I do, however, want to get Uncle Sam out of the rental business as quickly as possible, but not at a loss. -Renting is not the object of government except in communistic systems.
    *later by edit: I have now modified post 53 to add the rent-to-buy concept as part of the footnote. I will sepately soon post suggestion to US voter readers that if they link my plan mor than Paulson's they copy post 53 and send today to their Congress reps.
    Last edited: Sep 24, 2008
  16. Asguard Kiss my dark side Valued Senior Member

    my god you missed the point:(

    i hate to tell you but goverments DO act as land lords, they are called housing trust homes (mostly if not always owned by state goverments here i will admit)

    the difference between a housing trust lease and a commertial lease isnt just the cost (oviously as its social housing its very much subsidised), but also what you can do with the house. The goverment knows that the chances of people in housing trust every getting out of there is low so they have alot more control over there houses than a normal renter does. for one thing they cant be evicted (except if they dont pay the rent or they cause problems but i will go into that some other time), they can paint the walls and house however they want ect.

    however there arnt enough of these houses to go around and the goverment doesnt have bottemless pockets to give houses away so what they decided to do was introduce a rent to buy scheam where by the rent is slightly higher and acts as a morgage.

    this means that the person has there own house and the goverment has money to go and buy MORE houses.

    no commertial rent, no kicking people out into a caravan (you know the fact that americans would even concider a caravan adquate permadent accomidation sickens me)

    i wonder how long it will take your country to realise that your colapsing MUCH faster than the "socalist" countries and that maybe actually giving a shit about the cannon fodda of your companies and treating them as humans with a right to at least a basic standed of living, food, water, stable acomidation, health care, electricity and education might actually improve the productivity growth of your stagnant country
  17. Carcano Valued Senior Member

    Its more of a BUY OUT than a BAIL OUT.

    The government is NOT handing out something for nothing.
  18. milkweed Valued Senior Member

    It is the government handing out my future tax money, without any penalty for the morons who put the loans out there. No one forced any of these banks, finance corps, etc to issue these loans but now they are crying the blues (long after they cashed their paychecks) and want the next 5 - 10 -15 years worth of my tax money so they can keep playing cards with the future.

    Lookie at all the familiar names from the past resurfacing in this mess. It was called a bailout then, and its still a bailout now.

    Fool me once, shame on you. Fool me twice, well you know the rest.
  19. Roman Banned Banned

    Bailouts only encourage more of this risky behavior in the future (which isn't that risky if you get a bail out). The investment bankers knew that they only had to hold onto the bad debt long enough before Congress came and bought it.

    Oh well.
  20. iceaura Valued Senior Member

    Yes they are. They are handing out hundreds of billions of dollars for bubble value of houses - leveraged fictitious value, value originally padded to real assets by scam, then multiplied through deceptive marketing of dishonestly packaged derivatives.

    And they are doing it without even getting an equity interest in the entities being rescued, or a restoration of regulated behavior in that market, or even a restoration of essentially embezzled monies skimmed off by top execs directly involved.

    That is the very definition of handing out money for nothing.

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