the bailout

[Krisqo]

How about we do this. Let everything run it's course. Sure people are going to loose their jobs and several banks/companies are gonna go under or be bought out. But isn't this what a recession is? Sure it's a bad one, but isn't that just because we were living the high life for the last 3-4 years and this is just like having our allowances cut or taken away for being bad.

No amount of aid is really gonna help. We just have to let the market stabilize itself. Housing has to hit bottom so it can start restructuring. September was the start and I personally think that October is either gonna be the same or just a little better in terms of market surges in all directions until the elections.

Personally I'm not following this too much. I rent, my job is doing decent business (actually better since the end of August) and I'm working on paying off the rest of my debt. Living modestly is a very good thing.

[dwchang]

In those cases, I think the rules need some massive reworking. Not going to happen of course.

that's actually one of the key points our lovely politicians (including our presidential candidates) are currently arguing about. republicans have for years pushed for deregulation and now democrats are calling them out on it.

Except a lot of this started when the very same Democrats wanted everyone to own a house and thus made it easier. In particular, they made it easier for Fannie May and Freddie Mac to give out loans to *everyone*. Even unsafe ones. Where'd that get us? Oh yeah...

This would be during the Clinton administration when the Democrats also had control of the house and Senate and laws just went through easy as cake.

...at the same time, I am not going to suggest it was ONE party's fault. No way. It's pretty much everyone's fault all the way from the two parties, Alan Greenspan, the Banks and even the actual Americans buying the houses. In short, we all screwed up.

How about we do this. Let everything run it's course. Sure people are going to loose their jobs and several banks/companies are gonna go under or be bought out. But isn't this what a recession is? Sure it's a bad one, but isn't that just because we were living the high life for the last 3-4 years and this is just like having our allowances cut or taken away for being bad.

No amount of aid is really gonna help. We just have to let the market stabilize itself. Housing has to hit bottom so it can start restructuring. September was the start and I personally think that October is either gonna be the same or just a little better in terms of market surges in all directions until the elections.

Personally I'm not following this too much. I rent, my job is doing decent business (actually better since the end of August) and I'm working on paying off the rest of my debt. Living modestly is a very good thing.

First off, no that's not a recession. A recession is two consecutive quarters with no (or negative) growth. I'm not saying we're not in one (we won't know until more reports are out), but your definition of it is incorrect.

And if you let it run its course, as others (and myself) have pointed out, it doesn't just end with the banks going out of business (a few is quite an understatement). The dominoes will continue to fall and most likely, many Americans (possibly including you) will feel the affects as well.

I also disagree that no amount of money will help (only time will tell). The bailout money is to be used to buy the toxic debt off the banks so they can take them off the books and feel more confident and lend again. If they lend again, the economy will start to grow again. If we *don't* do this, they will remain paranoid and we'll continue down our economic downward spiral. Then again, there's no guarantee this is even enough, but yeah...

In short, we're trying to prevent more damage from being dealt. Running its course is what got us where we are right now (well in the last few months where five major banks went under b/c we waited).

[CodeZTM]

How about we do this. Let everything run it's course. Sure people are going to loose their jobs and several banks/companies are gonna go under or be bought out. But isn't this what a recession is? Sure it's a bad one, but isn't that just because we were living the high life for the last 3-4 years and this is just like having our allowances cut or taken away for being bad.

No amount of aid is really gonna help. We just have to let the market stabilize itself. Housing has to hit bottom so it can start restructuring. September was the start and I personally think that October is either gonna be the same or just a little better in terms of market surges in all directions until the elections.

Personally I'm not following this too much. I rent, my job is doing decent business (actually better since the end of August) and I'm working on paying off the rest of my debt. Living modestly is a very good thing.

x2'ed to the maximum power

After seeing how miserable my parents are with immodest housing and stuff, I totally plan on living modestly. I'd love to just rent, but my parents expect me to have an 8 story house with a ranch and double-tier pool. O_O Regardless, I'm pretty sure I'll rent until I make enough money to really invest in a house. I want to leave something to my kids after all. :O

As much as I think Sukanai went overboard, he does have a good point. We shouldn't spend money that we don't have unless absolutely necessary (like with housing and junk). For example, let's not go out and buy "mega super duper big screen tv" when we're hawked up in debt and other money issues.

[dwchang]

As much as I think Sukanai went overboard, he does have a good point. We shouldn't spend money that we don't have unless absolutely necessary (like with housing and junk). For example, let's not go out and buy "mega super duper big screen tv" when we're hawked up in debt and other money issues.

People on here seem to fundamentally misunderstand how lending and mortgages work. I imagine your parents own a house and are paying it with a mortgage and I'm willing to bet they're responsible people right? As dwp said, if you had no mortgages and only people who had the money (in their very hands) buying houses, I'd be willing to bet < 5% of the US population would own houses.

Lending works b/c you have a credit score and a risk value. If you have a stable job with good pay, they calculate how much you pay each month and give you an interest rate based on your risk/credit score. If you're a good responsible person who pays their bills (which includes NOT maxing out your card on frivolous purchases), they lend you the money. Why wouldn't they? You've proven you are responsible with money and are 'good for it.' You have a stable job after all.

The banks are not *supposed to* lend to you if you're not able to pay them back. That's bad business. What went wrong is that they did. They lent a lot of bad loans and now we're feeling the repercussions of it.

*No one* has said that folks who aren't responsible enough to own houses should. We're saying that it's stupid to assume that folks will have cash on hand to buy houses. They pay off their loans responsibility like it's supposed to be done. People with massive credit card debt shouldn't be buying houses. No one has said otherwise.

Hell let me pose it another way. Based on what others are posting here, you must not support student loans for tuition then? After all, the students don't have the money to pay for it on hand right? What irresponsible spending!

People who spend on frivolous things = bad and shouldn't get a loan.
People who are responsible and have good credit should.

Also I find it highly amusing that folks *support* paying rent. You do realize you're not actually owning anything by the end right? Rent is pretty much the stupidest form of housing you can be in. If you can buy a house, you should. You actually own the thing then and can sell it. You have equity. With renting, you own nothing and are literally giving your money away with no return later. By that logic, we should all live in motel rooms. I wonder why no one does that then?

I know it's coming across as condescending, but the fact people are posting that really shows me that many of you have a lot of misunderstandings about money and the economy.../SOAPBOX

[godix]

As a kinda side note, no one really seems to understand how this is all going to be paid for. AFAIK they're basically just creating some cash for this which is why they can claim taxes won't be raised and so on. Instead it'll drive up inflation. So we'll still pay for it, we just won't pay the government directly.

[Sukunai]

It's because I understand the concept of not spending money I never had.

you do realize, 99% of American citizens wouldn't be able to afford to buy a house until they are near retirement? would it be wiser for them to just rent until then and not gain any equity?

You do realize that 100% of those 99% likely SHOULD be renting if they don't have the income.

Uhm...wut?

Yeah let's completely destroy the housing market and have NO houses then. After all, no one can afford them. Mortgages and loans work b/c people *are* capable of paying them back and thus can own houses. I am not denying that the recent crisis is due to folks overestimating, but that has nothing to do with the basic principle of lending and mortgages.

By your own logic, almost no one would own houses and by supply and demand, no one would even want to build a house to sell since no one can afford them.

This is beyond retarded and you seem to lack some seriously fundamental principles behind lending and mortgages and yet seem to lecture people otherwise. I guess just about every homeowner in THE WORLD (not just the US) is an idiot.

Wow I rarely get to see such worthless shit like that opinion.
I don't exist just to put money in someone else's pocket.
Mortgages clearly don't just defacto work or you would have this entitled mentality driven mess in the first place.
If people lived by the assumption you couldn't have it if you couldn't pay for it, the entire credit system wouldn't exist, and the entire process and mindset of buying something you can't have wouldn't be there either.
Wed wouldn't have people constantly buying crap they don't need.
We wouldn't have people using credit cards for stupid non essential purchases, and society wouldn't be mired in debt.

I have 3 credit cards, currently as of today one has 100 bucks on it, and that's gone on the 20th. I own everything in my home. Every last f*cking article.
Meanwhile, my brother sits in a home that is likely 100k more expensive than was necessary. And in the winter you can't stay warm in his place unless you look like you are dressed for outside.
Clearly I know how to live within my means, he does not.

Retarded, no but you are deluded. You live in a world that only wants to make things to sell, just so someone has a job making the things to sell when the truth is society doesn't necessarily need all those things nor does it even need you or your job.

Wake up time. If you refuse to get a grip, reality will in time do it for you.

[Sukunai]

People mention supply and demand, and it sounds like they almost understand the terms. Almost. But not really.

This is what SHOULD happen.

People refuse to buy a home with a mortgage. This becomes progressively more and more severe. Then people stop paying for things with credit cards. This becomes progressively more and more severe. Add cars to the list. This becomes progressively more and more severe.

Rapidly the market realizes people just can't afford to buy things. They cost too much.
Think only the 5% will have homes" think again. Where do you think the rich get their money from anyway, out their butts? They make money selling to schmucks with money.

Calling a house 100k 200k 300k they're just numbers. My dad bought the family home for 11k. Many years later he sold it for 136k. He didn't make a profit. It was the same home. It looked the same as the day he built it. The trees were different though.

If people stopped buying on forms of credit, and only bought with cash in hand, they would need to massively drop the prices to reflect the fact that no one was buying anything. If the US made prices plunge, the rest of the planet would HAVE to join them. Who's going to buy a Toyota when you can buy a Ford for half the price.

On my average month, I have several hundred dollars OVER my basic needs.
That's because I am not spending several hundred dollars a month paying off debt I was able to avoid.
I could of course stash away 2-300 bucks a month and in say 10 years time had the wad of cash to my son and tell him "here, go buy a house". In 10 years time he'll be 24 and I am sure it would make a big difference. That's called doing without. People need to try it.

[CodeZTM]

@dwchang: Uh. I know how basic economy works. I think you misunderstood what I was saying. I was saying that

1) Don't spend money of stupid things when more important issues are at hand. For example, don't buy the big screen if you can't pay for your own food or bills, and then have to take out a loan. >_< I wasn't saying don't go out and buy a house if you can't pay for it right then and there. That was what I was pointing out as "going overboard".

2) Yes, my parents own a house and are paying it with a mortgage. And no, fundamentally, they're not responsible people when we're talking about money. They spend money on stupid things that we could do without and could have paid off their house a hell of a lot faster than if they didn't. More so my mother than my father, however (although he does in fact buy stupid crap). There's a different between frivilous and downright "outside the means".

3) Where in any of that did I or anybody else say that student loans were bad? Student loans and buying a house are two totally different things. If we didn't have student loans, then I'm sure not many people would go to college, then we wouldn't have the doctors/lawyers/politicians/technical occupations would we? People can survive on renting if absolutely necessary, but without student loans our nation would basically get screwed over royally, because I'm certain the number of scholarships wouldn't increase, and we don't have a ton of people rich enough to afford it for four years or however long it takes them to finish :O

4) Also, *supporting* rent isn't necessarily a bad thing. Some people just choose to live that type of lifestyle. Not to mention that not everybody has the money to own a house. IF you don't have a college degree, and are working a minimum wage job about 6 days a week, I seriously doubt that you'd have the income to pay off a house, let alone even make a down payment. Pfft. Those people (in most cases) don't have enough cash to pay for rent itself, let alone food or other commodities. "Nickel and Dimed: On Not Getting By America" proved that alone. Hell, my job probably wouldn't pay rent if I got kicked out of my home, and I get more than minimum wage. O_o

[dwchang]

A BUNCH OF NONSENSE

By your logic, all banks should go away. How foolish of...THE ENTIRE FUCKING WORLD to use them for hundreds of years. All those on Wall Street and anyone with a business degree or in banking sure is an idiot...right?

I give up.

You fundamentally don't understand how the economy, lending or credit works and honestly, people misunderstanding things are one of the causes why the economy goes into the shitter. You may not contribute directly, but your lack of knowledge and hell, complete ignorance of the system leads to the uninformed opinions and misinformation.

The economy works (or fails) b/c of people's knowledge and perception of it. You sir, are not helping.

GOOD DAY

@Code

I know you're not saying no Student Loans, but what I'm saying is that student loans are similar to Mortgages in that a responsible person who pays their bills and has credit should be 'good for' both. That's how lending works.

The banks loan money to a student b/c in a few years they'll have a job and will pay it back (and with interest...i.e. PROFIT). The same holds for people buying homes. It's in the banks best interest to lend the money and get it back WITH INTEREST. It's in their best interest to lend to responsible people who will pay them back.

In short, I'm saying student loans, mortgages or any loans work b/c of responsible people paying banks back. The two are related. I am by no means advocating people getting loans for on frivolous things. Things like an education and A HOME are not 'frivolous' and without banks and lending, our country would be well...retarded. No country is like that. Why would they all follow these simple things about lending?

In any case, you at least seem to understand most of this while Sukankai does not and apparently believes LENDING = I AM LIVING BEYOND MY MEANS AND AM RETARDED so I'm not as frustrated . I can at least have a discussion with you...

SRSLY

[downwithpants]

If people stopped buying on forms of credit, and only bought with cash in hand, they would need to massively drop the prices to reflect the fact that no one was buying anything.

Actually, the wealthiest 5% or realty companies would buy all of the houses and rent them out to the remaining 95%. without moneylending, it would be pretty much impossible for anyone not in that wealthiest bracket to buy a house at that point. a 200k house would remain a 200k house because the wealthy are willing to buy them at that price so they can rent it out. there's still demand for houses even if 95% of the population can't afford it.

if we only bought what we needed, we would be living in the stone age. all we "need" is shelter, warmth, food, water, air, and sex. there'd be no need for technological development.