Posted by admin on Nov 25, 2008 in
Uncategorized After thinking about this for awhile I can see the need for a bailout. I’m just not sure who should get it. The auto companies want one, wall street wants one, home owners want one. Heck, I think everyone wants a bail out. With that said, who should get one?
Looking back at the last great depression, the government grew to a huge size. It basically put programs in place to employ everyone that needed to be employed. There were government agency that paved roads, planted crops, made dam’s, and built anything they could. It was a huge bailout. Everyone got a piece of the action.
Looking at the modern bailout, I’m not sure people need to be employed by the government. Putting money into companies that create or hold jobs seems to be the right way to go. The automotive companies employee a ton of people. Their suppliers employee even more people. So if they fail, those folks go on the unemployment line. Nothing gets built or sold why those people are on unemployment. So does it make sense to give money to the auto companies. It is a definite maybe. If the money goes to creating and maintaining job’s in the United States. If the company takes the money and continues to build plants in Asia and closes them here, they should not get a dime. Possibly the government should just buy the auto companies and put them into receivership.
The wall street bailout continues to crack me up. What an utterly futile bailout. They want to free up credit they continue to say. What does that mean? The people who have good credit can continue to get it. People with bad credit will be less likely to get it. So how does it help anyone? I’ve said this before but it needs to be repeated. When did the stock market become a bank? It is a casino. If you put your money in your 401k and risk it. Then its gone. Now I know some companies contribute to your 401k via company stock. So if you had Ford or GM stock in your account, that could be bad.
I doubt wall street will go back to the same lending practices as before. With people in a worse financial situation, I don’t see the money going to them. Now the government makes a case that money will flow back into companies. What guarantee will there be that it will stay in the United States? None.
The oversight on all of these programs is a joke. In order to get any money each company should have to submit their business plan for congress and the public to review. If they don’t like it, don’t ask for money.
There is nothing in the latest round of bailouts that says anything about stopping foreclosures or helping the job market. Just that if the mortgage fails the government covers the debt. Oh yea. You can now get unemployment benefits longer. People want jobs, a home, and food. If money goes to some other purpose its wrong. I don’t particularly care if a CEO needs to fly coach instead of first class.
Tags: bailout
Posted by admin on Nov 13, 2008 in
Uncategorized 
CNN reported today that 85,000 more homes went into foreclosure last month. That number is likely higher if your throw bankruptcies into it. 279,561 families received notice that they were being foreclosed on. New lending is not the problem. Over the last few years millions of homes went into foreclosure. Many more foreclosures were stopped, but the credit of the people foreclosed on was trashed. So will the banks lower lending standards to allow those people to borrow again? No. So how is new money to lend going to help?
What I would like to know is how many families foreclosed on still have any income? My guess is probably 70% of the people are making some money and will be paying someone rent.
So let me ask this:
Why would a bank foreclose on someone and take a huge loss instead of re-evaluating the persons situation and adjust the loan?
I know. I’ve been there. Between the energy costs going up, medical care going up, and salary going down it was impossible to make our payments. Was the mortgage company willing to work with us? Sure if you consider a balloon payment after three months along with no guarantee they will re-adjust your mortgage working with you. When asked about the bail out and why they would choose to loose over 100k for there investors and make the tax payers pay, they responded they don’t care. I don’t see how a fixed rate loan with an extended term hurts them. But another empty house at a loss does not?
I have read hundreds of stories with the same general story line. Our government has backed away from buying bad mortgage assets and now wants to buy stock to help the idiots out.
Using the word idiots for educated banking professionals is a bit pathetic. When you are willing to take a loss and throw out a family you should be put in jail. The American thing to do is reach out a hand to your fellow American. At 85,000 a month you can’t keep peddling the sub-prime mortgage crap as the reason for the failure. A win-win situation is better. I would be all for the government covering the difference or an offset of the loss in revenue after an adjustment. As long as the loan wasn’t price gouging in the first place. Why should we the people foot the bill for a total loss because the bank is unwilling to work with its customers. Oh wait. Who is the customer? The customer is share holders and holders of the secruitized pool of mortgages. The debtors is just scum. We were customers when we were shopping for the loan. After it was given we are just debtors who owe.
A good for instance is my natural gas bill went from around $400 a month up to $1200 a month over three years. All because rates went up. Who gets blamed for the foreclosure….The customer who took the loan? The mortgage company who made it? But in the north you can’t live without heat. At 55 degrees inside all winter I can’t see doing better on conserving energy other than redoing the whole house insulation. So the banks and main stream media really don’t like to talk about all the reasons for the foreclosure mess. The fingers may start to point away from the banks.
In a good majority of the cases nobody is to blame, but collectively we are all to blame. When we watch our neighbors move out. When we watch our kids cry. The fact that we do nothing as a country but bill collect on our neighbors is sad. When we give billions to banks while kids get put out on the street is pathetic. While homes get over grown with weeds and set empty we continue to deal with homelessness is truly pathetic.
What can people do? Help your neighbor. If your a lawyer offer advice to your neighbor. If your a banker go look in the mirror and wonder if your next to be out on the street. Write and call your congressional representatives. We need to reach out to people.
Just like 9/11 when we said divided we fail. Divided on this topic will truly cause us to fail.
Tags: bailout, foreclosure
Posted by admin on Nov 12, 2008 in
Uncategorized Only in America can you loose a ton of money in the stock market casino and get your money back. Do I blame AIG for their bailout? Not really. If I was a CEO and in deep because I had little risk mitigation related to debt that was obviously going bad, I would ask for money. I would also love to keep my job as CEO with the promise to make it better. So let me ask these questions.
Will the bailout of AIG and others help the guy who lost his job and/or his home?
Will the bailout stop bill collectors from calling him/her every 15 minutes?
In the short term the answer is no. Then what about the long term?
I believe the answer is still no.
Every paper talks about a credit crunch. People can’t get access to credit. Alright lets take a look at this. People cannot get access to money that some loan shark bank is going to collect interest on. When did it become a sense of pride to be able to borrow 200k for a house. Then pay 600k over the life of the loan? Freeing up credit will short term help the economy but put people deeper in debt.
The first step on the road to recover is to stop using the credit. It should be a crime to put people into a situation where they have to finance a washing machine. Other countries do not work that way. Pride is owning that car with out a loan. Pride is looking at the house that’s 100% yours. Credit isn’t having something earned it’s having something borrowed with a fee added.
If a company pays all its bills, all its salaries, and has some money in the bank its doing good. When did it become required a company makes 100 billion in profit after expenses every year or else its doing bad. Companies blame the union, health care costs, and the economy when they don’t make 101 billion next year.
Companies say they have to send jobs over seas to get to the 101 billion mark (or what ever that number is). Boy, I sure want to cry a river on that one. When their product has saturated the market and nobody else will buy it, profits won’t go any higher, so they reduce cost. Not because the company is doing bad, but because the stock price will be effected. Who does that effect? CEO’s compensation is usually tied directly to the stock price not the USA unemployment rate. Shareholders are effected. The stock market has always been for at risk capital.
When did that change? Is the stock market now a bank? People put stocks into their 401k buy selecting options in their plan. Now retiree’s are effected. Wow. Were we blind sided by that. When was the stock market a guaranteed return on your investment?
So now were forced to reward companies for greed to save some retirement plans.
So what can you do?
Write your congress person and request oversight on the bailout. Also, stop supporting companies that take the money but there is no direct impact to the working class.
I’ll be having more rants soon. So stay tuned.
Tags: 401k, AIG, bailout