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What's Really Going On With the "Bailout"?

I'm reposting this to give out some facts about the "Bailout" (incorrectly named - It should be Rescue plan because it is SO misleading) The Bailout is in no way shape or form a negative thing. There are two very important distinguishing comments I have to make about this subject. THIS IS NOT A BAILOUT, the reason why this wasn't passed the first time it was brought in Congress was because it was sold to the public in a terrible way. The $700 Billion dollars are NOT going to be put to use to save more major companies and banks. Secondly, THIS IS NOT SPENDING. The money that the government has put forward to this idea IS AN INVESTMENT. The Idea behind the plan is to free up the credit market by buying the bad mortgages from all these banks and major corporations (as well as the individual investors) to alleviate the fear of lending among the banks. What's going on now is that no one can lend money because there is an unstable fear among the banks that believe that no one is capable, nowadays, to pay back their loans. The idea behind the INVESTMENT (Not Spending) is to free up this market so that people may loan again and expand their small businesses and to purchase a house perhaps. Now for the investment part of this question. This is Not Government Spending. This is taking the tax money of the people (approx. $2,000 per person in the USA) and putting it towards buying assets (The Bad Mortgages) to free up the markets. These assets ARE WORTH SOMETHING, they're not pieces of paper that will be worth nothing when the government purchases them. The idea is to get the money now to buy these assets, free up the markets, and when they are worth enough to sell back into the market the government will begin to sell them (They may even make a profit like the RTC did in the '80s). The money that the government makes is hopefully and purposefully going to be given back to the taxpayers in the form of tax relief. The whole matter is who needs the money, how much, and when. Wall Street is not getting a free pass from this, they will pay. The idea is to prevent the taxpayers from paying for their mistakes, and frankly the only way to do that now is to work with the Financial sector of the economy (specifically mortgages and the credit market) to allow the commonpeople to make loans. Without this government intervention I guarantee a nice old Depression, we all know how successful that was... And another thought. How did we get out of that Depression? Oh yeah, World War II, I hope that's not the only way to get out of Depression, another World War *sigh*. "The Banks will be tighter than ever with their money, and will not be any more likely to extend loans to the ordinary consumer than they are today. You said it yourself- "there is an unstable fear among the banks that believe that no one is capable, nowadays, to pay back their loans". Does this plan change that? No." There has to be a compromise between the excessive loaning of yesterday (i.e NINJA loans) and the restricted loaning today (i.e frozen market). You can't expect everyone to get a loan and I do believe that there will be more restrictions on getting loans but at the same time you cannot consider the countless people who loaned what they could not pay back a loan. The reason is because that produces incorrect statistics. The other day we believed that anyone and everyone could loan however much and whenever they wanted to. That has to change now and this is the unfortunate lesson we have to learn through the hard way. To go along with the faith of the financial institutions we have to take into account the human species. There are so many deceptive people in the world, let alone in the USA. You can argue that it wasn't these financial institutions that created this mess, I mean the source of these bad loans are the banks, to go beyond that we can track it individually to the people of the USA. The people who took out loans they could not pay. It's one of those group consequences in which the wrongdoings of one produces a group consequence unfortunately. Socialism, I prefer to think it's far from it. What the government is doing is investing tax money to stabilize the economy not to take control of the economy. So far all I have seen is attempts to take over businesses and liquidate them, no private enterprise has been taken over for government production, it's being liquidated. Without ANY government intervention we will all end up in a shit-hole, whether you invest or not.

Public Comments

1. Congress is loading it up with earmarks inorder to get the bill passed
2. The guys that ran Freddi Mac and Fannie Mae into the red need to go to jail - and maybe they should be accompanied by the folks that pushed them to make bad loans.
3. OK, but the PORK !150 billion in PORK! Congress are a bunch of parasites!
4. Sure, it takes the burden of these risky loans off the hands and books of the Banks. But, does it do anything to address the lack of faith the Financial Institutions have with the General Public? No. The Banks will be tighter than ever with their money, and will not be any more likely to extend loans to the ordinary consumer than they are today. You said it yourself- "there is an unstable fear among the banks that believe that no one is capable, nowadays, to pay back their loans". Does this plan change that? No.
5. Tommy, This is Socialism is what it is. The government is bailing out companies from the failures companies are reaping from their own poor decisions. How is that free enterprise ? When a company invest they take risk. The risk is that your choice of investments can bring on poor financial consequences. They are reaping what they have sown. Further more. The congress of the United States is there to represent the people. And the people have said NO to this bailout. You can play Freudian word manipulation games if you like by moving from calling it a bailout to a rescues plan if you like. The bottom line is. The Top dogs who placed us in this position to begin with are going to benefit from this. I am all for business and making money and a Ronald Regan Rush Limbaugh republican. But this is wrong. Regardless of what consequences those who want it believe it will avoid.