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  • kenno
    replied
    It appears that things are continuing to get worse as 'Bail-Outs' are spreading world wide. Retirement accounts have been ruined for milions of Americans. I know one man that was 2 weeks from retirement, he had a big 401 account, it lost so much value in that 2 weeks he has withdrawn his retirement and has requested to keep his job. Wall Street is still floundering as is the rest of the world's economy. We are on the edge of a world wide depression, and perhaps increased military threats.

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  • TheUnboundOne
    replied
    Nitehawg,

    You wrote:

    TUO you wrote that Fannie and Freddie are "governmental bodies". I'm not sure what you meant by that, but Freddie and Fannie are private corporations which were backed by the federal reserve. Something called GSE's (Government Supported Enterprises).
    Perhaps I should have said "quasi-governmental bodies." Again, this is what Public-Private Partnership is all about. The public end pays and the private end gains, and it's all held together ultimately with government guns.

    And from what I've heard mostly on the radio, they were forced to make questionable loans by the .gov. Don't look in the banking regs., look in the civil rights legislation which set quotas for lending institutions to meet regarding loans to low income people (sometime in the mid 90's I believe).
    The Community Reinvestment Act was part and parcel of that whole scheme. It was put in to appease "civil rights" huslters to give them a tool to shake down banks by asking for loans on projects that lined their own pockets. And when those projects go awry or broke, the bank and the bank client/taxpayer is on the hook for it.

    There are also several other factors that have made this crisis worse too.

    First, there were Federal "urban renewal" projects from the time of the New Deal until around the 1970s which evicted poor people from their own homes and demolished them, while falsely promising to build new homes. This destroyed whole communities in some places and help make housing unaffordable for low-income people.

    Then, there was the coming of zoning regulations, building codes, land use planning, and other government acts which made the cost of housing go up so that people required mortgages.

    Also, the Federal and State governments own sizable chunks of land, (in places like Nevada and Alaska, sometimes as much as 90 percent of the State.) This also is a barrier to the development of cheap, plentiful housing.

    Then, of course, there are government schools. Miseducation of children drives so many social problems, including this one. If children weren't taught for 12 + years that it's better to feel good than to accomplish something, they would know that nothing in life is free, that everything in life has a cost, and that you cannot spend more than you take in forever. They would know the difference between an adjustable rate mortgage and a fixed rate mortgage. Most of all, they would know about the power of compound interest and use it to their advantage instead of paying it to someone else.

    And if they knew these facts of life, they wouldn't be suckered in by politicians trying to tell them otherwise with offers of welfare and government-provided housing.

    Leave a comment:


  • das
    replied
    Originally posted by Rustyshakelford View Post
    What ever hapened to free markets? The right to make it or fail on our own accord?
    Seems that only applies to citizens not corporations. I never thought I would equate America with France but here we are. Everyone is so worried about America becoming Facist they ignored that we have become a credit card nation.

    President Bush is the ultimate consumer. Can't afford something? Don't have a balanced budget instead just charge it! Feeling low or worried that the economy is sick? Send some cash out as 'rebates' so the nation can go shopping for some 'retail therapy'. When the bankers come knocking on the door just defer/dissemble and lie to duck out of the responsibility.

    The political parties are done for if they can't wean themselves from corporate sponsorship, favoritism and influence. I will vote against any incumbent who approves this bail-out (blackmail if you ask me) even if that means my vote is wasted on an independent/minor party candidate.

    Leave a comment:


  • nitehawg
    replied
    TUO you wrote that Fannie and Freddie are "governmental bodies". I'm not sure what you meant by that, but Freddie and Fannie are private corporations which were backed by the federal reserve. Something called GSE's (Government Supported Enterprises).

    And from what I've heard mostly on the radio, they were forced to make questionable loans by the .gov. Don't look in the banking regs., look in the civil rights legislation which set quotas for lending institutions to meet regarding loans to low income people (sometime in the mid 90's I believe).

    Now I don't have any kind of working knowledge on this subject, just what I read and hear, and right now I don't know who to believe. Will the credit market disappear if this "bailout" goes down? If it will it's unbelievably scary what that would mean to industry and people. No car loans, no mortgages, no commercial loans to buy raw materials to make products, all equal no jobs. I've also heard that none of the above is true. The US will continue to function just fine, with maybe some higher requirements to obtain loans, but not impossible. I think the truth is somewhere in the middle. I know that 200university economists signed a letter against the proposed bailout, but I don't know if they offered an alternative.

    Personally, I believe in free markets and the less gov the better, but on this I just don't know.

    Leave a comment:


  • Rustyshakelford
    replied
    Originally posted by das View Post
    Thanks TUO, I am breaking some brain sweat to understand this. What I want to know is why Paulson/Bernake/Bush tells us that by not saving CA and FL (85% of the mortgage defaults as I understand) from unethical mortgage practices, we will collapse the entire nations economy. How Pepsi or Dell are hurt by someone not paying their mortgage (yes even if it was a predatory loan) devalues their business is still a mystery.

    People tell me that it is because they cannot get loans but wouldn't that just slow down their growth not cripple the company? Ultimately, I feel that we have a gun to our heads to FIX this problem. After the rush to go into Iraq over WMD's I don't jump when Bush cries SCARE.

    I pray the citizens of the US are as ready as I am to say no.

    What ever hapened to free markets? The right to make it or fail on our own accord?

    Leave a comment:


  • das
    replied
    Thanks TUO, I am breaking some brain sweat to understand this. What I want to know is why Paulson/Bernake/Bush tells us that by not saving CA and FL (85% of the mortgage defaults as I understand) from unethical mortgage practices, we will collapse the entire nations economy. How Pepsi or Dell are hurt by someone not paying their mortgage (yes even if it was a predatory loan) devalues their business is still a mystery.

    People tell me that it is because they cannot get loans but wouldn't that just slow down their growth not cripple the company? Ultimately, I feel that we have a gun to our heads to FIX this problem. After the rush to go into Iraq over WMD's I don't jump when Bush cries SCARE.

    I pray the citizens of the US are as ready as I am to say no.

    Leave a comment:


  • TheUnboundOne
    replied
    Das, Many wise words here. I should hasten to add that FannieMae and FreddieMac are governmental bodies, not Capitalist entities. No Capitalist entity would willingly loan mortgages to people who didn't provide some kind of security or collateral to assure that they could make good on payment. They had to be subsidized to do so via the MacDaddies, and forced to do so via The Community Reinvestment Act.

    I should also add that under Capitalism, while property owners and businesses have the freedom to use their property as they see fit, they also have the responsibility to pay the financial costs of their decisions. When government extorts taxpayers to bail out stupid business decisions, that is not Capitalism, that is Public-Private Partnership or Corprativism, the historic economic policy of Fascism...And that is part of what is coming our way on a Hell-bound train.

    Whatever the future holds, the time to get ready is now.

    Leave a comment:


  • das
    replied
    I try not to claim any knowledge of what others think but I can see where you are coming from. Many people have given up or don't think about government at all. Can you blame them when they have been abusing tax payers since governments were formed.

    That they now want to regulate the economies banking systems because they are out of control is a laugh considering that in my life time I have NEVER seen a real balanced federal budget....if you consider all the unethical cost forwarding, borrowing from social security and other accounting tricks they use to cook the books. As an example who has had a gander at the cost of the Iraq/Afghanistan war? No one, because that is off the books.

    When the government can run its business I will have faith in them to borrow my future taxes to fix this problem. Heck they are not even pretending to try to fix this crises by cutting ANYTHING from the budget before the start raising taxes (borrowing is the same as raising taxes) much less testing their cure before they carve open the patient.

    At the end of the day I can't say AMERICA is the US Federal Government. In my heart the love I have for this country is a love of the people and our past. The institutions are not what make us great. If we must suffer an economic depression to remind the citizens that this is a government of the PEOPLE and for the PEOPLE, under God, then so be it.

    If we cannot awaken from this lethargy and reform how we choose our representative leaders I can only pray that we are all safe as the country cannot continue to fuel the economy with escalating lending and the resulting debt. Capitalism is the miracle of the 20th Century but to survive in the 21st we must face up to the Corporations, shadow banking, foreign energy dependence and antitrust issues.

    The proposed bailout plan of price fixing, privatization and Corporate Socialism cannot and must not stand.

    Leave a comment:


  • Rustyshakelford
    replied
    Americans are pretty much lulled into a sense of numbness. Why worry about it? The government bails out every failing business, so why would they not help little ole me?

    Is that not the opposite of what we on this site believe?

    Leave a comment:


  • das
    replied
    Well I see I struck a huge dud here, lol. According to CNN if the bail out is only 700 Billion, ignoring the 89 Billion already used in the bail outs for others and interest on the debt, each citizen is responsible for $2,340. Considering that only a third of the US citizens actually pay taxes my numbers are actually low.

    Leave a comment:


  • das
    started a topic Something to think about

    Something to think about

    I have been trying to get a handle on the current economic situation and the following is my feeble attempt to communicate what I understand. Please make corrections where I have erred. Again this is JUST ME and I am probably wrong but desperately wish to understand.

    Here is something to think about. The Federal Reserve (people who are empowered to regulate the US currency) say that the total amount of dollars in circulation currently is 263 Billion. Now that is just money that is being circulated so don't overly focus on that number as the Federal Reserve considers MOST of the dollars of the US economy simply as ledger entries between its member banks.

    Even then the vast majority of that 263 Billion dollars cannot be accounted for due to people stashing cash in their back yards and other contrarion behaviors such as drug lords hording vast cash reserves out of the country. For all intents and purposes the vast amount of money that we see invested in stocks, bonds and mutual funds exists no where but in the accounting books of a bank.

    Now the Federal Reserve was created by Congress in 1913 and is a corporation of stockholders (only available to the member banks) that are also corporations that are publicly traded stocks. As an agency of the US government the Federal Reserve is not subject to audits or outside oversight but they have not been audited by the US Congress since their creation. Essentially, with the exception of a single publicity trip to the main Federal Reserve in Fort Knox to inspect the gold deposits in a single vault, the world essentially takes what they claim as fact.

    When pressed the Federal Reserve admits that they have on hand only a small fraction of reserves in the form of gold and Government Securities. Government Securities are a promise against the governments ability to lay taxes upon its citizens in case you were wondering.

    There are twelve Federal Reserve banks in the US. They represent the tip of the pyramid of banking for the country and were created to balance the interests of the member banks and the centralized responsibility of government. The goal was to provide structure to protect banks against runs on their assets while providing some flexibility in currency to provide for the expansion and contraction of the value of the dollar in relation to other currencies.

    In common terms this system is known as fiat currency because it is no longer backed by hard assets but instead by the full faith and backing of the issuing government. If the government says the currency is worth so many loafs of bread then it is. Exchanging for hard assets such as gold or silver is no longer an option.

    The secret to how this works is that the assets of the government are not fixed. One dollar is not out of circulation when it sits in your pocket. When that dollar was authorized by the Treasury department the Federal Reserve actually created seven additional ledger dollars that are lent out to its member banks for use as loans. These loans are what fuels economic expansion but are backed by nothing more than the promise of the government to lay taxes upon its citizenry.

    Assuming that all the money actually in circulation was held by US citizens (the actual percentage held by the our citizenry is to sad to share) the total economy of the US is $877 each for a little over 310 million citizens. In other words that is the AVERAGE amount of money each of us has to our name that if we each had to hold in our hands the money dollars in circulation.

    Those citizens have promised to cover our nations 4 Trillion dollar national deficit (not counting interest...over 10 Trillion with interest).
    For the roughly 100 million citizens who pay taxes each year that works out to $100,000.00 each and every tax payers has been committed to owe the foreign banks that have lent the US government money to pay for its programs and expenses. Let me say that again.

    In concrete terms that is 4 Trillion divided by 100 million tax payers or $40,000. Each person who PAID taxes (not just filed and received a full refund). The current average annual US salary is stated at $50,000 or roughly $24 dollars an hour. That works out to 42 weeks of work we owe foreign lenders who have loaned the US government in exchange for Government Securities.

    Now to get a grasp of the personal value of bailing out the banks (coincidentally many of whom are members of the Federal Reserve) let us take the 1 Trillion dollar cost of buying all their debt and divide this by the 100 million tax paying citizens of the United States and we will see that it will cost BEFORE INTEREST $10,000 per person.

    Again using the average annual salary of $50k per that equates to 417 hours of work assuming we only work 40 hours a week and take ONLY the Federally mandated holidays of leave. So lets call it 10.5 weeks or 2.25 months of labor.

    Therefore to bail out the US banking system from the sub-prime mortgage disaster will cost every tax paying citizen of this country 52.5 weeks of work we owe to the foreign investors backing the US government. That is an awesome number but again doesn't take into consideration the INTEREST on that debt that is being predicted to push the total debt to over 11 Trillion dollars or more than doubling the work each tax payer owes.

    As the Gregorian calendar is complicated by leap years it is easier to use the mathematical average of 1 year = 52.177457 weeks. 105 weeks of labor divided by the mathematical year is 2.01236331 years. Lets be generous and say two years of labor.

    As a comparison let us consider that when the United States was created a common form of paying the enormous expense of transportation, housing and food to the new world was a contractual form of debt bondage (slavery) called indentured servitude. A contract between two parties (worker and owner) to pay these expenses in exchange for a fixed amount of labor.

    Historically this contract varied based upon the skill level of the labor and the popularity of settling in the New World but on average was three to seven years. As the ongoing expenses of these workers usually ended up being an additional debt owed to the owners this practice was considered immoral and eventually outlawed in the US.

    I must confess I see no difference between owing foreign investors two years of labor with the US government being the work supervisor and the slavery of indentured servitude. What do you think?
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