General Category > General Discussion
$700 billion bailout
briann:
--- Quote from: Dr. Dan on September 25, 2008, 02:00:13 AM ---i'm not completely sure...however....let me konw if i'm wrong.
By bailing out a failing company, the Govt is purchasing it at a low price. If the govt owns these companies and they improve, the profits go to the US govt. If the profits are high then it will pay off any govt dept instead of raising taxes.
If these companies improve a lot and the govt sells it back to the private sector at the right time, then money will be instilled in the govt and all will be well...
On the down side, these bailed out companies go belly up, our taxes increase..
--- End quote ---
Yes. your mostly right. BUT, The bailout WONT be to buy companies... it will be to buy the companies troubled assets (IE their Mortgage Backed Securities that are NOT yet in default... but which represent negative equity.... (Ie 100,000 loan, for a house thats now worth 80,000)..
They will NOT pay 100,000 for this loan... they wiill instead pay for the market price of the securities... which will employ something called a reverse auction.
And yes... in the long run.. many economists beleive that this will be a good investment for the government... but that is debatable
All in all... if the bailout DOES NOT occur... the banks WILL collapse... and the holders of the deposits of these banks will NOT be able to get their $$ from FDIC, since it will simply be too massive to try and save the deposits... when the news of this hits the street, everyone will pull their $$ out of the banks...causing the other banks to run dry on reserves... cause them to collapse... and wala!!!! you have a depression... where no one trusts the banks... and its next to impossible to get a loan for anything... and the economy will completely hault.
briann:
--- Quote from: jaime on September 25, 2008, 02:39:28 AM ---I am so angry I want to leave the USA. I can't and won't bail out these crooks and I will not live in an Obama nation. It's that simple. We didn't get a loan last week with top credit scores that we needed [there are a few more still pending,] to run our business.
--- End quote ---
Thats just the tip of the iceburg. If the banks collapse... NO ONE ANYWHERE will be able to get loans. Its that simple. No banks will be able to loan... because everyone will have withdrawn their deposits in the panic that ensues. This is the Definition of a depression.
But this will happen worldwide... and it already is. When there is a bank panic here... it quickly spreads to other countries. This wasnt such a big issue in the past... but it is now.
White Israelite:
--- Quote from: briann on September 25, 2008, 02:43:45 AM ---
--- Quote from: Dr. Dan on September 25, 2008, 02:00:13 AM ---i'm not completely sure...however....let me konw if i'm wrong.
By bailing out a failing company, the Govt is purchasing it at a low price. If the govt owns these companies and they improve, the profits go to the US govt. If the profits are high then it will pay off any govt dept instead of raising taxes.
If these companies improve a lot and the govt sells it back to the private sector at the right time, then money will be instilled in the govt and all will be well...
On the down side, these bailed out companies go belly up, our taxes increase..
--- End quote ---
Yes. your mostly right. BUT, The bailout WONT be to buy companies... it will be to buy the companies troubled assets (IE their Mortgage Backed Securities that are NOT yet in default... but which represent negative equity.... (Ie 100,000 loan, for a house thats now worth 80,000)..
They will NOT pay 100,000 for this loan... they wiill instead pay for the market price of the securities... which will employ something called a reverse auction.
And yes... in the long run.. many economists beleive that this will be a good investment for the government... but that is debatable
All in all... if the bailout DOES NOT occur... the banks WILL collapse... and the holders of the deposits of these banks will NOT be able to get their $$ from FDIC, since it will simply be too massive to try and save the deposits... when the news of this hits the street, everyone will pull their $$ out of the banks...causing the other banks to run dry on reserves... cause them to collapse... and wala!!!! you have a depression... where no one trusts the banks... and its next to impossible to get a loan for anything... and the economy will completely hault.
--- End quote ---
Looks like war may happen in this country quicker than we think.
jaime:
--- Quote from: briann on September 25, 2008, 02:50:37 AM ---Thats just the tip of the iceburg. If the banks collapse... NO ONE ANYWHERE will be able to get loans. Its that simple. No banks will be able to loan... because everyone will have withdrawn their deposits in the panic that ensues. This is the Definition of a depression.
But this will happen worldwide... and it already is. When there is a bank panic here... it quickly spreads to other countries. This wasnt such a big issue in the past... but it is now.
--- End quote ---
It is spreading around the world. That I heard today on the news. I missed a lot of other stuff going on being away from the t.v. but I did listen to East Coast talk shows where a senator called in. he attended the mtg. with Paulsen and the others. I didn't hear the senator's name but he had a strong NY accent, but could have been from anywhere. i posted it around this board under some different threads. he was pretty outrageous in his resolution of this chaotic mess.
George:
--- Quote from: briann on September 25, 2008, 02:43:45 AM ---Yes. your mostly right. BUT, The bailout WONT be to buy companies... it will be to buy the companies troubled assets (IE their Mortgage Backed Securities that are NOT yet in default... but which represent negative equity.... (Ie 100,000 loan, for a house thats now worth 80,000)..
They will NOT pay 100,000 for this loan... they wiill instead pay for the market price of the securities... which will employ something called a reverse auction.
And yes... in the long run.. many economists beleive that this will be a good investment for the government... but that is debatable
All in all... if the bailout DOES NOT occur... the banks WILL collapse... and the holders of the deposits of these banks will NOT be able to get their $$ from FDIC, since it will simply be too massive to try and save the deposits... when the news of this hits the street, everyone will pull their $$ out of the banks...causing the other banks to run dry on reserves... cause them to collapse... and wala!!!! you have a depression... where no one trusts the banks... and its next to impossible to get a loan for anything... and the economy will completely hault.
--- End quote ---
It's not just about it being a good investment (which it isn't) it's about the morality. Government just prints more money and does whatever it wants. 94% of all Americans oppose this bailout yet the politicians are stealing their money. Millions of Americans can't even afford health care or higher education because they're overtaxed. The government has created a situation where there's less and less incentive for intelligent wealthy people to work harder because of the progressive tax and at the same time welfare bums have no incentive to work because they can leech. This is both immoral and unproductive. This is tyranny.
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