The House Passed it...

[FrogPond]

Here we go...

[BARCHASER]

I wonder if there will be any transparency to this. Will they post lists and amounts of all those people who are getting hundreds of billions of our dollars? Probably not.

I suspect there is an 800 pound bailout gorilla in the room that nobody wants to talk about. There has been brief comments in the back pages of the Wall Street and the Economist about foreign governments/hedge funds/sovereign funds who bought heavy into these RE junk bonds. But mostly it has been kept quiet.

I imagine those folks are unhappy campers and may have mentioned that they expect to be made whole. If they are not made whole maybe, just maybe, they wont be so enthused about financing our 10 million dollar national debt, particularly not at a measley 3% interest.

[Bloom]

I was so happy to see them take care of the wooden arrow manufacturer, vital to our over-all economy.

[husker]

humbug.....freaking fat cats......oh wow is me...i lost a billion of my 2 billion.....lame....they need more tax breaks and more money to lose this snt going to do squat......except keep the rich from losing like they did...


who is going to protect joe 6 packs from losing his job or his house because of the fat cats making money hand over foot the last 3 years and now crying wolf...

do u trust bernake?...who is he?...he is a fat cat who ran 1 of the companies thats complaining how bad it is.....

bernake got paid 29 million from that company in 2006

[Just_learning]

boooooooo!!!!!!

[husker]

what is transparency?

i do not understand that?

[FrogPond]

Oh good they saved wall street...Dow currently up 62.

[Hogmaster]

I'll represent the contrarians.

Yeah!!!!!!!

If this frees the credit markets so that commerce can flow better then it is a good thing, no matter what we think about fat cats being bailed.

Collateral damage on the credit front freeze is a little-understood but HUGE potential much-larger-than 800 Billion pound Gorilla that could wipe out incredible numbers of small businesses.

What happens when a large business can't get short term credit to pay its obligations? They don't pay their suppliers. When the suppliers don't get paid? They can't pay their suppliers. When those suppliers can't get paid? They can't make payroll. When they can't make payroll? Businesses fold.
Unemployment skyrockets.
Confidence goes down further, and people and business don't spend and invest.
Vicious spiral.

Look, I hate the fat cats getting away with a bunch of bad paper. But if the bailout isn't done, I believe the damage would be far worse. And hopefully it won't be a totally bad "investment".

I hate the earmarks too, but that is politics.

Up with Rum!

[FrogPond]

Hog-
I see that side, and have experienced it with my fathers small business... Still feels like we are letting people off the hook. Sure hope it is appreciated...

[thetruth]

Originally Posted by Hogmaster

I'll represent the contrarians.

Yeah!!!!!!!

If this frees the credit markets so that commerce can flow better then it is a good thing, no matter what we think about fat cats being bailed.

Collateral damage on the credit front freeze is a little-understood but HUGE potential much-larger-than 800 Billion pound Gorilla that could wipe out incredible numbers of small businesses.

What happens when a large business can't get short term credit to pay its obligations? They don't pay their suppliers. When the suppliers don't get paid? They can't pay their suppliers. When those suppliers can't get paid? They can't make payroll. When they can't make payroll? Businesses fold.
Unemployment skyrockets.
Confidence goes down further, and people and business don't spend and invest.
Vicious spiral.

Look, I hate the fat cats getting away with a bunch of bad paper. But if the bailout isn't done, I believe the damage would be far worse. And hopefully it won't be a totally bad "investment".

I hate the earmarks too, but that is politics.

Up with Rum!

holy jumpin up and down martha. you are going to confuse this whole thing by bringing in facts and reality.

[lingslayer]

Watch closely for the person that says:
"We've got to stop the blame game and finger pointing and move on."

There are politicians and business people that need to go to jail over this. Whether due to greed or ineptitude, at the very least they need to lose their jobs. And no severance packages of any kind either.

I remember reading a lot of outrage on this site over Enron and WorldCom some years back. Where is the outrage over ineptitude in government and the businesses that "cooked the books"? Where are these people now and who are they working for? What committee(s) are they on etc?
Enron was a drop in the bucket compared to what this whole debacle is going to cost the country. $800,000,000,000.00 is just enough to keep things afloat.
Imagine what the total amount of lost $$$ really is.

Will we ever know? With the current leadership void in Washington DC I seriously doubt it. If we can find the right rug to look under we may find it,... Eventually

[Kootenay]

Originally Posted by FrogPond

Oh good they saved wall street...Dow currently up 62.

And dropping

[CATCH AND EAT]

look for losses at the end of the day. Horrible bill with typical pork from the house. Those that added the pork should be ashamed and made public for the **** of the American economy. These people make me sick. Let the chips fall, and fail if they will. It was the wrong thing to do and only half of what it will eventually take to bail things out. It is not over and now the recession deepens further, the dollar faulters even more and anti-trust laws will be pushed by the wayside. Knuckleheads.

[husker]

Originally Posted by thetruth

holy jumpin up and down martha. you are going to confuse this whole thing by bringing in facts and reality.

heres the facts.....this is a enron type thing.....i sell u bad paper then u sell it back.....

except 1 guy decide to stop playing and then he said...oh pumpkin.....

everytime they sold the paper....somebody got more money....

crooks......


and if we are running on to much credit maybe everyone needs to live within there means like grandma told ya.....


this credit flowing thing isnt going to help......unless we the U.S. goes BK on the rest of the world....

bailing out all the fat cats is purely against all of our principles.....

remember bernake made $29,000,000 in 06 from his company that is in the center of the debacle. of course its in his interest to protect them

[Joe C]

This ought to last a few months at least.

guess we still get christmas presents this year

[Snapset]

The vote changers just sold their souls to maintain the status quo. Enjoy the ringside seats as you witness the accelerating fall of the American empire.

[Dullhook]

Here are a couple of thoughts to consider:

1. Don't ever let your dog guard your dinner.
2. Don't ever let congress guard your money.

[MsOutdrs]

Anyone know where one can read the bill in its entirety so we don't have to rely on the media to interpret?

[FrogPond]

Originally Posted by MsOutdrs

Anyone know where one can read the bill in its entirety so we don't have to rely on the media to interpret?

All 451 pages of it here.

[MsOutdrs]

Originally Posted by FrogPond

All 451 pages of it here.

451 pages???? Shoot...doubt my attention span will last that long but thanks.

[FrogPond]

just for kicks I searched through the document...I find it odd that "section 119 Judicial Review and related matters" is missing from the document...interesting.

Well, there went accountability...

[husker]

the orginal document.....had the line about nobody could be charged with a crime.....its probably still in there somewhere

[MsOutdrs]

Originally Posted by Snapset

The vote changers just sold their souls to maintain the status quo. Enjoy the ringside seats as you witness the accelerating fall of the American empire.

Are we the "Rome of the millenium"?

[byebyeducky]

1. Can someone help me understand how in the same bill that costs $700 billion, you have tax cuts? Where is the $700 billion going to come from?

I don't get the logic, if you can call it that.

2. I am so excited to know that our economy is going to be "saved" I am trying to figure out why the phone isn't ringing here in the office today. I guess people haven't got the news yet.

3. I personally have more fear of the corruption and this backwards bill passing than if they would have let failures be failures.

Lastly, I keep hearing people say "you don't understand it" "it is much deeper than that" etc. I wish they could jump down off thier high horse and explain all of thier great knowledge and this great bill to "simple minded" folk like me.

[El-Kabong]

Originally Posted by byebyeducky

1. Can someone help me understand how in the same bill that costs $700 billion, you have tax cuts? Where is the $700 billion going to come from?

I don't get the logic, if you can call it that.

2. I am so excited to know that our economy is going to be "saved" I am trying to figure out why the phone isn't ringing here in the office today. I guess people haven't got the news yet.

3. I personally have more fear of the corruption and this backwards bill passing than if they would have let failures be failures.

Lastly, I keep hearing people say "you don't understand it" "it is much deeper than that" etc. I wish they could jump down off thier high horse and explain all of thier great knowledge and this great bill to "simple minded" folk like me.

I believe if you look in the bowels of this stinky bill you will find that the debt ceiling was raised by another 1.5 trillion dollars or so. So like all recent govt. spending, it is being borrowed! Must be kinda nice to have a credit card that you can just increase the limit on anytime you need it and not have to worry about paying back.

As to how this happened? Google Ponzi scheme

[fishnlady]

I just heard on the news that some of the "pork" in this bailout is for the rum industry in Puerto Rico.

[byebyeducky]

Originally Posted by El-Kabong

I believe if you look in the bowels of this stinky bill you will find that the debt ceiling was raised by another 1.5 trillion dollars or so. So like all recent govt. spending, it is being borrowed! Must be kinda nice to have a credit card that you can just increase the limit on anytime you need it and not have to worry about paying back.

As to how this happened? Google Ponzi scheme

Are you saying that this is money borrowed from other countries? So soon the USA (if not already) can be owned by another country just like Anheuser-Busch? Could this be a new form or modern way of war/control?

[Chromaflage]

And wooden arrows. Look here: Wooden Arrows and Rum

Originally Posted by fishnlady

I just heard on the news that some of the "pork" in this bailout is for the rum industry in Puerto Rico.

[El-Kabong]

Originally Posted by byebyeducky

Are you saying that this is money borrowed from other countries? So soon the USA (if not already) can be owned by another country just like Anheuser-Busch? Could this be a new form or modern way of war/control?

There are 2 choices

1) borrow from someone else like we have been doing for a while now - I have heard that oil companies have a lot of money nowadays
2) start printing more money and cause run-away inflation

[Smoked Salmon]

Truly astonishing.

Rather than add substance to the bill that would prevent this catastrophe from ever reoccurring, they help out some constituents.

To see how your "representative" voted, look here.

I know who I'm not voting for next time around, do you?

[BARCHASER]

They want inflation. The only way they can pay back all this debt is with cheaper dollars. They do this after every war. Ramped up inflation to pay back WWII and Vietnam debts. This one has an added ingredient.. pay for a war AND a bailout. But just a variation on the same theme that governments have always done when there is too much debt.

This whole thing makes me puke.

Originally Posted by El-Kabong

There are 2 choices

1) borrow from someone else like we have been doing for a while now - I have heard that oil companies have a lot of money nowadays
2) start printing more money and cause run-away inflation

[Lured In]

Originally Posted by Hogmaster

I'll represent the contrarians.

Yeah!!!!!!!

If this frees the credit markets so that commerce can flow better then it is a good thing, no matter what we think about fat cats being bailed.

Collateral damage on the credit front freeze is a little-understood but HUGE potential much-larger-than 800 Billion pound Gorilla that could wipe out incredible numbers of small businesses.

What happens when a large business can't get short term credit to pay its obligations? They don't pay their suppliers. When the suppliers don't get paid? They can't pay their suppliers. When those suppliers can't get paid? They can't make payroll. When they can't make payroll? Businesses fold.
Unemployment skyrockets.
Confidence goes down further, and people and business don't spend and invest.
Vicious spiral.

Look, I hate the fat cats getting away with a bunch of bad paper. But if the bailout isn't done, I believe the damage would be far worse. And hopefully it won't be a totally bad "investment".

I hate the earmarks too, but that is politics.

Up with Rum!

Hog...I hear ya, but if you are really concerned about the employees of America, I say take the $700B and put it in the unemployment insurance fund and let the burning ships on Wall Street sink. That way the funding goes to those affected and not to those responsible.

This will not 'fix' anything.

Many of the provisions of the bill include not only individual tax cuts, but also industry (the wooden arrrows for kids industry?), incentives for alternative energy and new taxes on carbon emmissions. (Don't ask me what they have to do with the financial 'crisis'.)

Last thought....Keep in mind that if mortgage lenders are legislatively pressured into reducing anyone's notes, it is the same as selling a house for less. Say bye-bye to your equity if that house is next to yours.

[Hogmaster]

I understand it is going to be ugly any way about it.

But I have to comment on the idea that credit shouldn't be needed for business to work.

A typical scenario is this:

A business that sells widgets to the tune of 300K/month has 25 employees. By the time the business covers payroll, taxes, rent, raw materials, transportation, communication, IT services and so on, it is a good viable business to be able to turn a 7% net profit.

For a 300K/Month that is 21K.

Now lets suppose that the buyers of those widgets, because of many reasons including market slowdowns and lack of credit Place orders for 20% less goods, and then they don't pay for 60 days for what they have ordered.

What happens?

The widget business suddenly sells 260K of widgets. They are now under their profit break-even, so reduction in expense is the only answer. In order to reduce expense, variable expense items have to be cut. Raw materials might be an expense cut, but depending on the type of widget, that will either not amount to a whole lot or will have downstream impact on the widget raw material supplier. Rent and many other items aren't really cutable, but employees are - even if the business doesn't want to lose good employees.

If credit is available, the business could borrow on a line to keep those employees on the payroll if they believe the slowdown is a temporary condition. If it is not available, they have no choice. In fact, it may even snowball (much) worse. Maybe they no longer have enough money for payroll. Maybe they can't pay taxes. Maybe they can't pay rent.

It happens. The typical business never has had enough money laying around to cover things like this or they would not be a competitive business. They are taking that 7% profit and trying to grow by investing in new widget jigs and new employees or new healthcare cost increases anticipated the next year and so forth.

Cuts are made, but then when the slowdown ends, production capacity and inventory is not up to the potential for business health to return. Because the business barely survived, it can't ramp up. It has no money to invest. The down cycle lasts longer as many (most) businesses are under the same constraints.

And a whole lot of people are out of work.

The point?

Just because a business has to take short term loans to survive, it does not mean the business is a credit risk. Cash flow in business, especially small business, is a finicky proposition. If credit isn't available or is prohibitively expensive, what goes from profitability to bankruptcy is a constant possibility.

And again, a business will not be able to get credit if it can't demonstrate to a lendor a high probability of being able to repay. Banks loan money to businesses that are profitable. They aren't investors. They don't "bet on the come" like Angel investors often do.

[BARCHASER]

Yup. I'm retired now for six years but I was an OCC Bank Examiner for 35 years. The last "credit crunch" occurred in 1989-1990. Bank Examiners were at least partially blamed for being too tough on banks. Some of this was fallout from the S&L debacle.

Anyway, at the time, it was a credit crunch that was in the news a lot. Since I was working in banks everyday I was very close to the whole situation. Banks did restrict credit but they did NOT stop loaning money.

Loan Agreements and underwriting were tightened up, banks asked for more collateral, things liked personal gurantees of the owners, lower advance rates on operating lines secured by inventory/receivables, cut back on unused lines of credit committments etc. The same kinds of things were done with consumer credits, plus higher credit score cut offs, cutback on credit card lines etc.

In general, they tightened things up because there was a recession and the banks did have growing rates of defaults, non-accruals etc. It got a lot tougher for middle market companies to get coml paper, but most could albeit at higher rates.

But money was still available you just had to be a better credit risk. But this one, they make it sound like armageddon. I dont know if its really that bad. Is it or are they just doing the old WMD, mushroom cloud thing in order to get support for the bailout?

I know there are a number of small business guys on this board, I wonder what they say.

[Jennie@ifish]

Let's pause for a minute and concentrate on the goodness of humanity.



Please, let's not turn this into a political thing or a fight, here on ifish.

It's a beautiful day. I can see it! It's raining, but it's beautiful!

HIJACK!

[Tilla]

Originally Posted by MsOutdrs

Are we the "Rome of the millenium"?

You think we were permanent or something?

Start here for a reminder:
http://www.lukemastin.com/history/

[kilchisfisher]

Not Rome. They lasted a long long time.

More like Spain once the free money from the gold they took from the New World dried up.

[maniacmikey]

Today kinda of reminded me of Forest Gump getting shot in the butt.


"they said it was a million dollar shot but the government must keep that money cause I ain't seen a cent of it"

[BARCHASER]

Some of those were great.

"Stupid is as stupid does." (This is a good one for todays news.)

"My name's Forrest Gump. People call me Forrest Gump."

"That's all I have to say about that."

Originally Posted by maniacmikey

Today kinda of reminded me of Forest Gump getting shot in the butt.


"they said it was a million dollar shot but the government must keep that money cause I ain't seen a cent of it"

[Bloom]

I just hope someone will be handing out pamphlets explaining it all to us while we're standing in line at the soup kitchen. I don't think this cloud has a silver lining.I don't see that we're being negative here, Jennie, we're just concerned and discussing it, as well we should.

We have no intention of bashing one another for expressing their opinions on this matter that concerns and affects every single American alive.

[happybrew]

My youngest is now two weeks old. Perhaps by the time she is out of the house the inflation this will cause will be in check. My oldest will certainly have to deal with it, as he will be 18 in just under two years.

I am fortunate to hold no substantial assets at this point, which would decline in value. My assets are my 8 kids who have prevented me from socking away any funds. My mortage will be paid off in less valuable dollars. My wages will increase, although not as fast as inflation decreases the value of my wages, and so my mortgage will be paid off in cheaper dollars.

Our nation will only be able to pay this off by printing more money, which will punish those who actually made and saved or invested money by decreasing its value. The people who drive our economy will be punished by this bill. While I will probably benefit personally for the reasons I stated above, I don't consider that a good thing. I don't wish to benefit off of the bad fortune of others, which is what this will entail.

My older children will hurt from this bill when they enter the job market and essentially make less in real dollars than what they would earn otherwise. They can look forward to their rent, their utilities, food,
increasing faster than their wages. They may not be able to move out....

But hey, perhaps they can get into the Puerto Rican rum business, or the Myrtle Point, Oregon arrow business. I hear they will be doing pretty well off of this.

happybrew

[BARCHASER]

Well said, very well said. In honest, human terms thats the best summary of this mess I have seen.

Originally Posted by happybrew

My youngest is now two weeks old. Perhaps by the time she is out of the house the inflation this will cause will be in check. My oldest will certainly have to deal with it, as he will be 18 in just under two years.

I am fortunate to hold no substantial assets at this point, which would decline in value. My assets are my 8 kids who have prevented me from socking away any funds. My mortage will be paid off in less valuable dollars. My wages will increase, although not as fast as inflation decreases the value of my wages, and so my mortgage will be paid off in cheaper dollars.

Our nation will only be able to pay this off by printing more money, which will punish those who actually made and saved or invested money by decreasing its value. The people who drive our economy will be punished by this bill. While I will probably benefit personally for the reasons I stated above, I don't consider that a good thing. I don't wish to benefit off of the bad fortune of others, which is what this will entail.

My older children will hurt from this bill when they enter the job market and essentially make less in real dollars than what they would earn otherwise. They can look forward to their rent, their utilities, food,
increasing faster than their wages. They may not be able to move out....

But hey, perhaps they can get into the Puerto Rican rum business, or the Myrtle Point, Oregon arrow business. I hear they will be doing pretty well off of this.

happybrew

[BCF]

My parable:

Once there was a man who drove fast and without caution. One day he drove his car into a tree and sustained an injury that if not treated he was surely going to die.

The treatment to save his life that day required a blood transfusion. The problem was that the blood was tainted with a fatal illness that might take his life in twenty years.

What would you have done???


BCF

[Hogmaster]

Everyone is dying.

Just a matter of when.

The corollary question is what will the remaining quality of life be for 20 years?

[retaliate]

As expected, dammed if you do...dammed if you don't, no finger pointing from me Jennie, there is no need, it does nobody any good, it simply needs fixed, move forward, not backwards. Our Children & Grandchildren are/will be the biggest loosers, maybe some good will come from this, maybe Home prices will fall to a affordable level for our Children, meanwhile many recent Home buyers will loose their shirts, early this year, my kid said he was going to buy a Home for $280,000, & was the best deal he could find, I told him not to do it, as it was not a good time to buy a Home, luckily he was able to back out of the deal, my Daughter still lives at home, & probably will for some time, the immediate future does not look good for her & her friends, it wasn't good before this latest Fiasco, it's worse now, & I don't beleive the worst is over yet, but eventually we will bottom out, & start the long steep climb up-hill, maybe our country will finally come together with some much needed Unity, it will make the climb much easier.

[BCF]

Originally Posted by Hogmaster

Everyone is dying.

Just a matter of when.

The corollary question is what will the remaining quality of life be for 20 years?

Isn't any life a better quality than being dead? Just a question.

Because for some it will be the same and maybe even better. For some it might be like living in a comatose vegetative existence, just waiting for someone to pull the plug.

Change is needed.

[RogueFishr]

Originally Posted by happybrew

Our nation will only be able to pay this off by printing more money, which will punish those who actually made and saved or invested money by decreasing its value.

Why is this being seen as an absolute debt, incapable of ever being paid off? They are not just printing up a bus load of money, and paying off a bunch of bad debt. This debt will be secured by real property. Granted the property value is obviously questionable right now, but it is real property (secured asset). If, they are buying this property at fire sale prices (or at least current value), they stand to make a substantial amount of money back on this investment. The feds have the staying power, to sit this out, where private business doesn't. We are not at the end all of real estate prices. They WILL go up again. When they do, this debt has the potential to paid back many times over.

Anyone listen to Buffet last week (Warren, not Jimmy)? He said our next round of billionaires will come out of this current mess. There is a lot of private money, waiting to start buying this debt. No one is going to make the first move though. The downward spiral needs to be stopped, and housing has to stabilize. Lenders need to start lending again, and get people back to work. It has to start somewhere.

I just don't see this as the end of the world, as many are. This bailout has the potential to be paid back many times over.

RF

[happybrew]

Originally Posted by RogueFishr

Why is this being seen as an absolute debt, incapable of ever being paid off? They are not just printing up a bus load of money, and paying off a bunch of bad debt. This debt will be secured by real property. Granted the property value is obviously questionable right now, but it is real property (secured asset). If, they are buying this property at fire sale prices (or at least current value), they stand to make a substantial amount of money back on this investment. The feds have the staying power, to sit this out, where private business doesn't. We are not at the end all of real estate prices. They WILL go up again. When they do, this debt has the potential to paid back many times over.

Anyone listen to Buffet last week (Warren, not Jimmy)? He said our next round of billionaires will come out of this current mess. There is a lot of private money, waiting to start buying this debt. No one is going to make the first move though. The downward spiral needs to be stopped, and housing has to stabilize. Lenders need to start lending again, and get people back to work. It has to start somewhere.

I just don't see this as the end of the world, as many are. This bailout has the potential to be paid back many times over.

RF

First of all, I am not among those who see it as the end of the world. I think that it will have a very significant inflationary effect because I doubt that the government will make money off of this. The reason private money will not buy the debt is because the actual value is unknown. If Warren Buffet says our next round of billionaires will come out of this, that means they will jump in when the risk has been reduced. It will likely be reduced because they will make deals which very steeply discount the value of those mortgages. I don't see them buying the debt for more than the government bought it for, otherwise they would be in there buying it today.

The government continues to take on very significant financial obligations, and those obligations will need to be paid. But how will they pay for their many obligations? Taxes will have a stifling effect on spending, and are politically unpopular. Government will ease taxes to keep voters happy whenever they can.

As an example, President Clinton vetoed the $500 per child tax credit passed by Congress and then put it in as a campaign promise in the next election. Why? Because taxes are a political hotbutton, and he wanted to gain the political advantage while denying it to the other side. It has advanced since then. My friend, and orthopedist, is taxed at a phenomenal amount. I have a slightly upper mid-range income. With the child tax credit and the number of kids I have I had zero income tax liability. To the contrary, the U.S. Treasury gave me $5000 because of the tax credit. That's right! They gave me 5k for having a bunch of kids, and didn't ask me for any income tax! That's just not right.

Now why do they give me money and target my friend the ortho? Because I am in an income bracket that makes up the vast majority of Americans. It is only a fluke for them that I have that many kids, but they wrote the law to keep a demographic with a large voter base happy and gain their votes. The upper incomes make up a much smaller percentage, and so there is no real political downside to taxing them.

Now we are in a recession. Last month 175,000 jobs were lost. Tax revenues will go down, and claims for benefits will go up. We are in a war on two fronts. We have a bunch of retiring Baby Boomer's retiring and entering the Social Security system. We continue to run budget deficits and now we have taken on another large financial obligation. Granted, the governement could turn a profit on the bailout, but I don't think that's likely. I think that's wishful thinking. It is the government, after all.

So how will the government likely meet their obligations? Taxing the population is political suicide. Cutting spending is political suicide. But monetarizing the debt is the perfect solution to a government that wishes to keep the voters. You can't pin any set of individuals down for inflation, not like you can for a vote on taxes or . So the money supply will increase, the value of money will go down, and their obligations will be met with cheaper dollars. It will be a hidden means of taxation. The people will pay, only they will pay through the devaluation of their dollars, rather than outright handing them over.

This is not to say it's gloom and doom. We will continue to be a prosperous nation. But there will be a price to pay until the economy adjusts. The rich will continue to pay, now the poor will have to pay, and much of the middle class will as well. Those who benefit will be those in stable occupations with stable housing and mortgages.

happybrew

[RogueFishr]

Originally Posted by happybrew

I think that it will have a very significant inflationary effect because I doubt that the government will make money off of this. The reason private money will not buy the debt is because the actual value is unknown. If Warren Buffet says our next round of billionaires will come out of this, that means they will jump in when the risk has been reduced. It will likely be reduced because they will make deals which very steeply discount the value of those mortgages.

I agree we are going to see an inflationary period. Private money has said it will step in, and I am certain it will be at fire sale prices. No reason to do it otherwise.

Originally Posted by happybrew

Granted, the governement could turn a profit on the bailout, but I don't think that's likely. I think that's wishful thinking. It is the government, after all.

Short of the government doing something absolutely absurd, like buying the notes at face value, I don't see how they can't make money eventually. From what I have read, (a draft of the 1st rescue plan), they plan to start buying in somewhat of a reverse auction. It will be a discounted price, and lenders will decide whether to sell or not. Lenders will still write down losses, as they won't be collecting face value on the notes. If this was virtually ANY business handling this, with the same staying power as the feds, the profit potential is huge. If the government can screw this up, and not make money, the entire country needs a revolution. I believe it is time (and has been) for people to start thinking about if they want to keep voting career politicians into office.

RF

[happybrew]

Originally Posted by RogueFishr

I agree we are going to see an inflationary period. Private money has said it will step in, and I am certain it will be at fire sale prices. No reason to do it otherwise.





Short of the government doing something absolutely absurd, like buying the notes at face value, I don't see how they can't make money eventually. From what I have read, (a draft of the 1st rescue plan), they plan to start buying in somewhat of a reverse auction. It will be a discounted price, and lenders will decide whether to sell or not. Lenders will still write down losses, as they won't be collecting face value on the notes. If this was virtually ANY business handling this, with the same staying power as the feds, the profit potential is huge. If the government can screw this up, and not make money, the entire country needs a revolution. I believe it is time (and has been) for people to start thinking about if they want to keep voting career politicians into office.

RF

I certainly hope they act as wisely as you suggest. However they do give me $5K when I file the tax return I am required to file by law, when I neither asked for nor need the money.

happybrew