Bailout Deal In Doubt

BAILOUT DEAL IN DOUBT

I happened to catch the interview with Newt Gingrich, on NPR yesterday.

He opposes the bailout.

You can read or listen to the interview here;

Gingrich On Why Bailout Plan Is 'Just Wrong’
npr.org/templates/story/story.php?storyId=94900671

Jim

I heard him on the radio going home. I didn’t understand his proposed solution though.

If you read these two articles, we were (are) very close to a melt down:

How close was the financial system to melting down?

Why we need a bailout, even if not this bailout

I tend to run with the idea that when your neighbor’s barn is burning down, you rush to help him put it out and show up the next day to rebuild it. You worry about setting up new fire regulations later.

Both Parties are getting heat and are upset at the speed of this. The speed and the content of this makes both sides worry which says quite a bit about the rushed legislation. We have done similar rushed legislation in the past 8 years and we do not need another one with no strings attached or oversight. :eek:

In principle, I’m oppossed to the Bail Out. My gut instinct is we let the financial markets fix themselves, if some go **** up, then so be it.

If we do bail them out, then yes, some things need to be fixed.

From what I got from Newt Gingrich is that he’s was essentially saying, do not use taxpayers money to bail out the financial organizations. Let them fail. Yes, its going to be painful, but not as painful if the government has to borrow, $700 billion, which the taxpayers have to pay back, and the financial institutions fail anyway, which he believes they will. If this happens, the government will also be bankrupt, and have nothing left to keep the country going.

My understanding is as follows:

There will be no money for repairing the infrastructure, social security, Medicaid, education and the military budget will be shredded. At this point, we would be worse off if we let the financial institutions fail, but the government still has the means to support the institutions and people, that it is obligated to support.

Remember, FDR’s solution was to use government money to spend the country out of the depression. If the US government is bankrupt because of the bail out, this option will not be available.

As Gingrich said something to the effect of, “the pain if I’m wrong will be less than if I’m right.”

Jim

I seriously doubt this will go away without Paulson and Bernanke getting their way.

In the meantime, the taxpayers are furious…(those who read the news anyway) and the Congressional phone and fax lines are quite busy today with those expressing their rage. Only problem is, I don’t believe we have any real representation in Congress anymore. Their constituency appears to be, not the taxpayers, but big business and the international financiers.

I like what Karl Denninger has to say:

fedupusa.org/

and here’s another interesting note, but I’m afraid it’s David against Goliath (AGAIN!) We the People Foundation have brought a federal lawsuit to stop it (not that our judiciary will seriously consider it):

wethepeoplefoundation.org/PROJECTS/AIG/AIG-Complaint-9-18-08.pdf

I’m furious and apparently the rest of the world is furious (and I don’t blame them)

The thing is I’m not sure this will work either, and I think wouldn’t the money (if we were going to use, helping people directly like on student loans for students, and helping people with their housing prices. I’m terrified about what could happen with this.

The other concern is if Nancy Pelosi gets her agenda into the bailout plan.

She essentially wants the government(the taxpayers) to pay off the mortgages of those who are in default.

Jim

Of course she does! Socialism in action! The big question is, of course, at what cost?

She essentially wants the government(the taxpayers) to pay off the mortgages of those who are in default.

What about the guys not in default? Can we get those paid off to?

JIm- I didn’t see the Newt interview, do you agree with his premise?

That sounds rather extraordinary - do you happen to have a source for that claim?

Well, I’m not an expert on the economy, but I always liked Newt Gingrich. In fact, he had more to do with the surplus in the budget during the 90’s, than Clinton. In fact, he kept Clinton in check, when it came to the spending programs he wanted to put in place.

Even with my limited knowledge of economics, I tend to lean a little with Newt, because as he says, we’re probably going to end up with the taxpayers getting the bill for the bail out, and it will still fail.

What they don’t get is, Americans are losing their jobs. Our manufacturing base has been shipped to China and India, and engineering is going there even faster than manufacturing did. Soon, we will be a service economy. We will produce little and design even less. So the bail out will be a temporary delay to the real big economic bomb to drop.

Jim

What about those without mortgages? Do they get a check?

“It’s clear that the administration has requested that Congress authorize, in very short order, sweeping and unprecedented powers for the Treasury secretary,” the House speaker, Nancy Pelosi of California, said in a statement. “Democrats will work with the administration to ensure that our response to events in the financial markets is swift, but we must insulate Main Street from Wall Street and keep people in their homes.” nytimes.com/2008/09/21/business/21cong.html

Understand, that the bail out plan is for the government(US Taxpayers) to take over bad mortgages, but keep the people who made them, in their home. At some time in the future, as the economy picks up, the government is suppose to be able to sell those mortgages to private banks, written under more leaning terms for the home buyer.

Essentially, the taxpayers are taking over mortgages of people, who had no business buying a home, or for whatever reasons, failed to make their mortgage payments.

Jim

What about those without mortgages? Do they get a check?

That’s a good question, lived in the same house 32 years (long enough to pay it off) will Pelosi send me a check? :ehh:

Whats fair is fair.

The more I think about this bail out the more I’m inclined to recall an old sayin we have in these parts, “it looks good, but smells bad.”

And at the same time, preserving the profit of those who had no business making the loan in the first place.

True.

There was and will be lots of deception on this.

Last month a woman in Boston, had her mortgage foreclosed. She was on TV looking for the city to help her stay in her home, and saying how she was hustled by the real-estate agent and the mortgage broker. People were flocking to her side in hopes to help this poor woman out.

Problem was, the woman was a real-estate agent, not some poor unsuspecting person who was taken advantage of, and this wasn’t the only property she owned. End of story.

Its stories like this that make the skeptical even more skeptical.

Another recent story, in the poor section of Boston, a woman and her family and neighbors, have changed themselves to the house she lives in. The bank foreclosed and she’s refusing to leave. Now, the story goes that when she and her husband bought the house, the mortgage payments were $1800, per month. On their salary, both work as laborers, this was very tight. But they went ahead and signed a balloon mortgage. The payments went up to $3000 per month.

Now, I don’t know about anyone else, but I was always able to calculate if I could afford a mortgage payment or not. At $1800 per month, even with my good paying job, I would barely meet that sort of mortgage. How is it that these people ever thought they could make the payments even when it was at $1800?

My guess is, they were in a crummy apartment, and figured, we’ve got nothing to lose. If we can’t make the payments, so be it. We’ll either get help or lose it. But we’re no worse off than we are now. Plus, they must’ve been assured that as real-estate values would increase, they would eventually have equity in the home, they could refinance and get a fix rate mortgage.

Of course it didn’t work, but after living in a house, they’re not about to go back to the apartment life-style that they had before, without a fight. They’re hoping the government bails them out.

Jim

Well the experiment of giving mortgages to unqualified people has proven to be a failure. Imagine that.

But if felt good at the time, and I’m sure kept many politicians in power and lot longer then they deserved, because everybody moving in a house they couldn’t afford was a good way to buy votes.

I’m not sure where Barney Frank (he’s the chair on the related committee) is from but he needs to be run out on a rail, as well as everyone else on that committee whether it be dem or repub.

Oh, okay. So the government winds up owning the house. I was under the impression from your prior post that the government was buying the house on behalf of those who defaulted, so that the defaulter was getting some kind of windfall property ownership.

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