Bailout, American economy, and failing businesses

[hohto]

Just a note that bailouts will not affect taxpayers.

 

 

 

You're one positive thing...

 

 

 

http://www.foxnews.com/story/0,2933,392422,00.html

 

http://www.usatoday.com/money/economy/h ... plan_N.htm

 

 

 

+ Many others you could find within 30 secs of googling.

[acenator]

What most people are forgetting is that these two companies were started by the government (can't have something started by the government go under, you know). Add this to the fact that the people in charge of them were corrupt (at least one was, not sure about the other; oh, and the one that was/is corrupt is now a "cheif advisor" to the new head of one of the two companies #-o ), the fact that people are dumb and didn't think about whether or not they were going to be able to make their payments #-o , the fact that the government has been bailing out so many companies lately that people seem to expect to get bailed out, and the fact that these companies were partially controlled by the federal government from the get-go :roll: and this is what you get.

 

 

 

Oh, and I think I heard something about some rule saying they had to give these people mortgages even though they shouldn't have. Kind of like the FHA, but on a much larger scale.

 

 

 

Also, these companies have been donating to Democrat (as in the political party) organizations and candidates, too. Reverend Jackson's Monochrome Coalition, for example. I wouldn't be surprised if they've even been giving money to Obama's campaign.

 

 

 

These two (and why'd they need two, anyways?) "companies" (remember, started and partially owned by the government; now completely owned by the government) should never have been started in the first place and the people who got the loans that are now defaulting never should have signed the contracts.

 

 

 

Heck, I might as well go ahead and front the idea that letting them go bankrupt might have been a good idea since it would have shown people how stupid they were for getting such loans and because the economy would've recovered soon enough (did you know that there was a stock market crash in 1889 that was actually worse than the one in 1929? You just never hear about it because the government did nothing and the economy rebounded within like 3 years. How long did FDR take to get us out of the Great Depression? Oh, wait, WWII probably helped mroe than any other factor ;) ).

[Quoi_Tu]

What most people are forgetting is that these two companies were started by the government (can't have something started by the government go under, you know). Add this to the fact that the people in charge of them were corrupt (at least one was, not sure about the other; oh, and the one that was/is corrupt is now a "cheif advisor" to the new head of one of the two companies #-o ), the fact that people are dumb and didn't think about whether or not they were going to be able to make their payments #-o , the fact that the government has been bailing out so many companies lately that people seem to expect to get bailed out, and the fact that these companies were partially controlled by the federal government from the get-go :roll: and this is what you get.

 

 

 

There was a lack of regulation combined with a drop in investor confidence that has put the two companies into so much financial trouble. The companies were created by congress, but they are not controlled by it. (Think Federal Reserve) Well, Freddie Mac has been a private company the whole time, it was just helped out by congress to stop Fannie Mae's monopoly on the secondary housing market.

 

 

 

 

Also, these companies have been donating to Democrat (as in the political party) organizations and candidates, too. Reverend Jackson's Monochrome Coalition, for example. I wouldn't be surprised if they've even been giving money to Obama's campaign.

 

 

 

Huh? What's the relevance?

 

 

 

These two (and why'd they need two, anyways?) "companies" (remember, started and partially owned by the government; now completely owned by the government) should never have been started in the first place and the people who got the loans that are now defaulting never should have signed the contracts.

 

 

 

They were started so people could buy houses. If they were never created, most people in the US would be renting.

 

 

 

Heck, I might as well go ahead and front the idea that letting them go bankrupt might have been a good idea since it would have shown people how stupid they were for getting such loans and because the economy would've recovered soon enough (did you know that there was a stock market crash in 1889 that was actually worse than the one in 1929? You just never hear about it because the government did nothing and the economy rebounded within like 3 years. How long did FDR take to get us out of the Great Depression? Oh, wait, WWII probably helped mroe than any other factor ;) ).

 

 

 

The stock market crash in 1929 did not cause the Great Depression. It was a symptom of it. Stock market crashes happen periodically. One of the latest ones was the "dot-com bubble burst." Did you know we went into a recession after WWII? It didn't last very long, but it took a while to recover. War does not help the economy. Just so you know, Hoover tried the laissez-faire approach to the Great Depression (he didn't have much of a choice since that was his platform) and clearly that didn't work.

[Ginger_Warrior]

Ok its the lesser of two evils bailing out, we dont want another dustbowl incident, but this should never have happened.Hopefully this is the kind of lesson which puts peopel off for good but the boom and bust economics with the high high high's and the low low low's can overcome peoples common sense.

 

That's the system we live in. It works in peaks and troughs. To some degree (I have every faith these were actually the words of an aide putting words in his mouth, because he's a decent and honest enough man naturally), Gordon Brown was a fool to say he'll bring an end to it.

 

 

 

War does not help the economy.

 

It did for the US. Except for the Lend-Lease scheme in which it lost millions to aide the Allies in Europe, it undoubtedly aided the US economy. War creates jobs.

[Quoi_Tu]

 

War does not help the economy.

 

It did for the US. Except for the Lend-Lease scheme in which it lost millions to aide the Allies in Europe, it undoubtedly aided the US economy. War creates jobs.

 

 

 

War creates jobs with no return. The positive economic aspect of WWII was the US production of weapons for allies. That was good for the economy. The US entering the war was good for the specific industrial sectors involved, but bad for everything else. The military is a money pit and although we sadly need it, it doesn't make us any money unless we sell our military research or products. When we entered the war, we sold less and used more, which gave us less return on the products we created. In theory, if countries stayed in a constant state of warfare, everyone would be employed and the economy would be stable with a very slow growth. Hmm, that sounds like a book I read... :)

 

 

 

Jobs aren't the only variable to a good economy. In the 1920s, a little less than half the population wasn't working (read: women, children) and the US economy was booming.

[hohto]

It did for the US. Except for the Lend-Lease scheme in which it lost millions to aide the Allies in Europe, it undoubtedly aided the US economy. War creates jobs.

 

 

 

War time economy helps certain industrial areas and gives a great opportunity for many public sector cuts. During certain times the private investions may temporary boost the economy, but a war without a clear victory costs more than it gives in a long ruun.

 

As a whole it however is not benefical unless you end up into the same kind of situation as USA after WW2: basically their homesoil was saved while pretty much the whole Europe was being "repaired".

 

 

 

If we go for the US helping Europe, it works two ways with Marshall aid for example: the aid helped the countries that could take it but it tied the countries to USA both politically and economically. Organizations such as OECD (former OEED) were there for a reason and so were many other things such as toll tariff changes, subventional (is that a proper word for this context?) trades and making sure that the communists wouldn't get into power at France or Italy where they had quite a lot power. It wasn't only humantiarian aid, it was also a way to ensure the american political and economical power in the post war Europe.

[assassin_696]

Interesting times!

 

 

 

Indeed, I'm glad i'm old enough to be able to someway understand and take an interest, but young enough not to be affected too much.

[acenator]

So a company created by Congress became a Monopoly? Why didn't they take them to court (or wherever that whole thing was decided) and split the entire thing up like they did with Microsoft? I sense a bias in favor of government-created (and partially-owned) things.

 

 

 

A lack of regulation? Maybe people should have just looked at their annual income before signing their contracts. Not everything is the fault of the company, you know. And investor confidence? If investors aren't investing in the company, then that should be a good sign the company is doing something bad for itself. And don't tell me the whole housing market crash thing was the reason for it. My grandpa's been getting investors to help him out for the past 3 years. The housing market crash forced him to temporarily downsize a few things, but he's still getting investors to help him out same as before (and, yes, he is in the mortgage industry).

 

 

 

The relevance is that the Democrats are more likely to support the government bailing them out when/if they go under. Just something to think about.

 

 

 

As for people renting without them, if they were renting before, then they probably weren't in a position to buy before either. This is evident now that all these mortgages have gone south. Just let the market do its thing and people will do what's best for them; get the government involved and people will start thinking that the government will give them money (that was taken from taxpayers' pockets) and, in this case, that assumption was right.

 

 

 

I know they happen periodically. My point is that the recoveries tend to be much faster when the government stays out of it. Also, Hoover did NOT try the laissex-faire approach. He did exactly what Congress is doing now; he started bailing out companies that would have otherwise gone under. And WW2 did help the US economy in the respect that it gave people jobs and money to spend on things from other companies. After it was over, there was a short recession that the government didn't do anything about and it recovered fairly rapidly. Back in the 1920's it was customary for the woment to stay home and look after the children and the economy was obviously able to support that.

[Saru Inc]

What most people are forgetting is that these two companies were started by the government (can't have something started by the government go under, you know). Add this to the fact that the people in charge of them were corrupt (at least one was, not sure about the other; oh, and the one that was/is corrupt is now a "cheif advisor" to the new head of one of the two companies #-o ), the fact that people are dumb and didn't think about whether or not they were going to be able to make their payments #-o , the fact that the government has been bailing out so many companies lately that people seem to expect to get bailed out, and the fact that these companies were partially controlled by the federal government from the get-go :roll: and this is what you get.

 

 

 

There was a lack of regulation combined with a drop in investor confidence that has put the two companies into so much financial trouble. The companies were created by congress, but they are not controlled by it. (Think Federal Reserve) Well, Freddie Mac has been a private company the whole time, it was just helped out by congress to stop Fannie Mae's monopoly on the secondary housing market.

 

 

 

 

Also, these companies have been donating to Democrat (as in the political party) organizations and candidates, too. Reverend Jackson's Monochrome Coalition, for example. I wouldn't be surprised if they've even been giving money to Obama's campaign.

 

 

 

Huh? What's the relevance?

 

 

 

I think the relevance was that that's why they were in financial trouble, because they were donatiing money. It may not have been a factor at all though.

 

 

 

These two (and why'd they need two, anyways?) "companies" (remember, started and partially owned by the government; now completely owned by the government) should never have been started in the first place and the people who got the loans that are now defaulting never should have signed the contracts.

 

 

 

They were started so people could buy houses. If they were never created, most people in the US would be renting.

 

 

 

Heck, I might as well go ahead and front the idea that letting them go bankrupt might have been a good idea since it would have shown people how stupid they were for getting such loans and because the economy would've recovered soon enough (did you know that there was a stock market crash in 1889 that was actually worse than the one in 1929? You just never hear about it because the government did nothing and the economy rebounded within like 3 years. How long did FDR take to get us out of the Great Depression? Oh, wait, WWII probably helped mroe than any other factor ;) ).

 

 

 

The stock market crash in 1929 did not cause the Great Depression. It was a symptom of it. Stock market crashes happen periodically. One of the latest ones was the "dot-com bubble burst." Did you know we went into a recession after WWII? It didn't last very long, but it took a while to recover. War does not help the economy. Just so you know, Hoover tried the laissez-faire approach to the Great Depression (he didn't have much of a choice since that was his platform) and clearly that didn't work.

 

 

 

Nice, good job studying history huh. :thumbup:

 

 

 

Ace knows what he is talking about, trust me. Yes, 1929 Crash did not cause it, but also, YES WWII got us out of the Depression, not the New Deal, no matter how pwnage FDR was. And also, Hoover's hands were tied, he couldn't pass anything, because in the "lame duck" period when FDR was elected but before he took power (back in those days, before a certain Amendment, I can't remember which) the new president was not in office until uuhh march->may-ish. So Hoover knew anything he passed that could help the Depression, FDR would cancel, and thus just wasting money. And also, don't infer everything, Ace in no way implied it started the Great Depression.

 

 

 

Now to Fannie Mae and Freddie Mac, well... I remember when I thought they were restaurants back in the day. XD XD

 

 

 

I agree with Ace also, the gov't should have let them bombed, to teach people a lesson, but on the flip side, that would have screwed over too many people.

 

 

 

And you guys know that they were always Federal Institutions?

[Quoi_Tu]

So a company created by Congress became a Monopoly? Why didn't they take them to court (or wherever that whole thing was decided) and split the entire thing up like they did with Microsoft? I sense a bias in favor of government-created (and partially-owned) things.

 

 

 

They were fixing a problem they were partly responsible. They split the market instead of the company.

 

 

 

A lack of regulation? Maybe people should have just looked at their annual income before signing their contracts. Not everything is the fault of the company, you know. And investor confidence? If investors aren't investing in the company, then that should be a good sign the company is doing something bad for itself. And don't tell me the whole housing market crash thing was the reason for it. My grandpa's been getting investors to help him out for the past 3 years. The housing market crash forced him to temporarily downsize a few things, but he's still getting investors to help him out same as before (and, yes, he is in the mortgage industry).

 

 

 

He downsized because there were fewer investors willing to buy as many mortgages? Because that would be a decline in investor confidence. And I meant a decline in investor confidence in the secondary housing market in general, not just Fannie Mae and Freddie Mac.

 

 

 

As for people renting without them, if they were renting before, then they probably weren't in a position to buy before either. This is evident now that all these mortgages have gone south. Just let the market do its thing and people will do what's best for them; get the government involved and people will start thinking that the government will give them money (that was taken from taxpayers' pockets) and, in this case, that assumption was right.

 

 

 

The majority of the people rented in the early 1900s. Very few had the money to buy a house, so the only way to buy a house was to get a loan from the bank. However, banks only had so much money they could loan out, which made it hard for the average family to get a loan. Companies like Fannie Mae bought up mortgages from banks (creating the secondary housing market), which allowed banks to create more loans. This allowed the average family to buy a house no longer leaving home ownership to the wealthy.

 

 

 

 

Nice, good job studying history huh. :thumbup:

 

 

 

Ace knows what he is talking about, trust me. Yes, 1929 Crash did not cause it, but also, YES WWII got us out of the Depression, not the New Deal, no matter how pwnage FDR was. And also, Hoover's hands were tied, he couldn't pass anything, because in the "lame duck" period when FDR was elected but before he took power (back in those days, before a certain Amendment, I can't remember which) the new president was not in office until uuhh march->may-ish. So Hoover knew anything he passed that could help the Depression, FDR would cancel, and thus just wasting money. And also, don't infer everything, Ace in no way implied it started the Great Depression.

 

 

 

Now to Fannie Mae and Freddie Mac, well... I remember when I thought they were restaurants back in the day. XD XD

 

 

 

I agree with Ace also, the gov't should have let them bombed, to teach people a lesson, but on the flip side, that would have screwed over too many people.

 

 

 

And you guys know that they were always Federal Institutions?

 

 

 

I swear I don't know that much about history, this just happened to coincide with one of my classes.

 

 

 

That was my poorly done point; Hoover did little to help the Great Depression because of politics. I never said that WWII didn't bring us out of the Great Depression.

 

 

 

Fannie Mae and Freddie Mac own half the secondary housing market. If they went under, a lot of people would have lost their houses and we could have easily slipped into a very bad recession.

[dusqi]

Now the US government has bailed out AIG with an $85Bn loan...

[magekillr]

Now the US government has bailed out AIG with an $85Bn loan...

 

 

 

Thank God. They're the largest insurer in the country. If the government stood by and let these companies fall like dominoes we'd be going into a depression very soon.

 

 

 

If they intervened from the get-go, these problems could be avoided...

[Quoi_Tu]

Now the US government has bailed out AIG with an $85Bn loan...

 

 

 

Thank God. They're the largest insurer in the country. If the government stood by and let these companies fall like dominoes we'd be going into a depression very soon.

 

 

 

If they intervened from the get-go, these problems could be avoided...

 

 

 

The sad thing is they've been watching the housing market decline for over a year now.

[magekillr]

Now the US government has bailed out AIG with an $85Bn loan...

 

 

 

Thank God. They're the largest insurer in the country. If the government stood by and let these companies fall like dominoes we'd be going into a depression very soon.

 

 

 

If they intervened from the get-go, these problems could be avoided...

 

 

 

The sad thing is they've been watching the housing market decline for over a year now.

 

 

 

Barack Obama tried passing legislation in 2006 to avoid it, or at least combat it.

[acenator]

So a company created by Congress became a Monopoly? Why didn't they take them to court (or wherever that whole thing was decided) and split the entire thing up like they did with Microsoft? I sense a bias in favor of government-created (and partially-owned) things.

 

 

 

They were fixing a problem they were partly responsible. They split the market instead of the company.

 

Partly responsible? More like fully responsible. They created the company, gave it the funds to get started, and gave it a very big edge by making it tax-exempt. Just the tax-exempt part spells a monopoly in the makings. Then, to top it all off, their solution to the monopoly was to create another company on the same level spending more tax-money getting it started while still partially owning both and taking up the same piece of the market. Smooth.

 

 

 

 

 

 

 

A lack of regulation? Maybe people should have just looked at their annual income before signing their contracts. Not everything is the fault of the company, you know. And investor confidence? If investors aren't investing in the company, then that should be a good sign the company is doing something bad for itself. And don't tell me the whole housing market crash thing was the reason for it. My grandpa's been getting investors to help him out for the past 3 years. The housing market crash forced him to temporarily downsize a few things, but he's still getting investors to help him out same as before (and, yes, he is in the mortgage industry).

 

 

 

He downsized because there were fewer investors willing to buy as many mortgages? Because that would be a decline in investor confidence. And I meant a decline in investor confidence in the secondary housing market in general, not just Fannie Mae and Freddie Mac.

 

He downsized because they weren't writing any mortgages. The banks and investors were there to back him as he tried to write mortgages while also buying another mortgage company and starting negotiations to buy his own federally chartered bank (a deal he's just closed, I believe).

 

 

 

As for the secondary market in particular, I'll deal with that along with the next quote.

 

 

 

 

 

 

 

As for people renting without them, if they were renting before, then they probably weren't in a position to buy before either. This is evident now that all these mortgages have gone south. Just let the market do its thing and people will do what's best for them; get the government involved and people will start thinking that the government will give them money (that was taken from taxpayers' pockets) and, in this case, that assumption was right.

 

 

 

The majority of the people rented in the early 1900s. Very few had the money to buy a house, so the only way to buy a house was to get a loan from the bank. However, banks only had so much money they could loan out, which made it hard for the average family to get a loan. Companies like Fannie Mae bought up mortgages from banks (creating the secondary housing market), which allowed banks to create more loans. This allowed the average family to buy a house no longer leaving home ownership to the wealthy.

 

Okay, so the secondary market bought mortgages from banks to give the banks more capital with which to write more loans so that more people could "own" houses. They then use these mortgages as bonds or securities to sell to investors. So they buy them, "package" them, and then sell them to these investors who then treat them kind of like currency that, historically, generally gains value.

 

 

 

It seems to me that this whole thing was a mess from the start. You got people who can't afford mortgages getting them, people selling these mortgages to get capital to write more, and people investng in them thinking they can only gain value. That's a disaster waiting to bow up if I ever saw one. And now it has. House values declined and it blew up in everyone's face. And to think this entire things was started back in 1934 with the introduction of the FHA, the initial move by the government to enter the housing business.

 

 

 

 

 

 

Nice, good job studying history huh. :thumbup:

 

 

 

Ace knows what he is talking about, trust me. Yes, 1929 Crash did not cause it, but also, YES WWII got us out of the Depression, not the New Deal, no matter how pwnage FDR was. And also, Hoover's hands were tied, he couldn't pass anything, because in the "lame duck" period when FDR was elected but before he took power (back in those days, before a certain Amendment, I can't remember which) the new president was not in office until uuhh march->may-ish. So Hoover knew anything he passed that could help the Depression, FDR would cancel, and thus just wasting money. And also, don't infer everything, Ace in no way implied it started the Great Depression.

 

 

 

Now to Fannie Mae and Freddie Mac, well... I remember when I thought they were restaurants back in the day. XD XD

 

 

 

I agree with Ace also, the gov't should have let them bombed, to teach people a lesson, but on the flip side, that would have screwed over too many people.

 

 

 

And you guys know that they were always Federal Institutions?

 

 

 

I swear I don't know that much about history, this just happened to coincide with one of my classes.

 

 

 

That was my poorly done point; Hoover did little to help the Great Depression because of politics. I never said that WWII didn't bring us out of the Great Depression.

 

 

 

Fannie Mae and Freddie Mac own half the secondary housing market. If they went under, a lot of people would have lost their houses and we could have easily slipped into a very bad recession.

 

It seems we are entering one anyways. I'm hearing that the stock market is dropping like a rock now. Too bad the government's so involved or we might have been able to hope for a 1889 repeat where the economy just picked itself back up again rather than slowly dieing as the government tries to save it.

 

 

 

And, again, Hoover tried doing what Congress is doing today. He tried saving large companies in order to keep jobs in tact and the money circulating (companies pay employees, employees buy things from companies, etc.).

[jackattack]

Now the US government has bailed out AIG with an $85Bn loan...

 

 

 

Thank God. They're the largest insurer in the country. If the government stood by and let these companies fall like dominoes we'd be going into a depression very soon.

 

 

 

If they intervened from the get-go, these problems could be avoided...

 

 

 

The sad thing is they've been watching the housing market decline for over a year now.

 

 

 

Barack Obama tried passing legislation in 2006 to avoid it, or at least combat it.

 

 

 

 

 

Too bad it's been in the Banking Committee forever and the only cosponsor is the other Illinois Senator. And I think all it would have done is increase the jail sentence for fraud.

[fastortoise]

Have fun paying those bailouts in tax money, Americans :lol:

[Ginger_Warrior]

Have fun paying those bailouts in tax money, Americans :lol:

 

When you get out of Student-land where everything gets payed for you and start living in the real world, maybe you'll start to understand these things. Nationalising them is a better option than letting them collapse while other banks have got money invested in them.

[Latinoking]

Whoopie, United States Government to the rescue.

[assassin_696]

Now the US government has bailed out AIG with an $85Bn loan...

 

 

 

Thank God. They're the largest insurer in the country. If the government stood by and let these companies fall like dominoes we'd be going into a depression very soon.

 

 

 

If they intervened from the get-go, these problems could be avoided...

 

 

 

I agree, Henry Paulson made a mistake by letting Lehman Bros fail, it sent out the wrong message to the market. We're balancing on a knife edge at the moment, if it tips the wrong way the consequences will be disastrous.

[magekillr]

Oh look, Washington Mutual was at $42.00 a share this time last year. Now they're at $2.00 a share, and the company is up for sale to the highest bidder:

 

 

 

http://www.msnbc.msn.com/id/26744628/

 

 

 

They're dropping like flies, and it's the Administration's fault for not stopping predatory lending and hedge funds.

[fastortoise]

Have fun paying those bailouts in tax money, Americans :lol:

 

When you get out of Student-land where everything gets payed for you and start living in the real world, maybe you'll start to understand these things. Nationalising them is a better option than letting them collapse while other banks have got money invested in them.

 

Understand what? That the government disregarded all the signs of these collapses for two years and now bail them out with money they don't have? Of course bailing out an insurance company which nearly everyone in the US are leaning on is better than letting it collapse, but they could have prevented it.

 

 

 

And there's no need to attack me personally, by the way :roll:

[mrpez]

edited first post to include other businesses such as Lehman Brothers, AIG, and Merrill Lynch.

[Saru Inc]

Have fun paying those bailouts in tax money, Americans :lol:

 

 

 

 

 

Would you still be singing that tune if Germany was still kicking your [wagon] and we didn't come to the rescue? Twice? Laugh suure, but be grateful.

 

 

 

/Thread

 

 

 

 

 

And fyi guys, this may have been already said, but I'm not sure, but Fannie Mae and Freddie Mac were always Federal.

[mrpez]

im just going to throw a discussion starter out there, maybe you guys will be interested:

 

 

 

as the federal government starts to bail out large companies such as AIG and Fannie Mae/Freddie Mac, a two-sided debate arises. while some feel that it is important for the government to help enormous companies such as these out of bankruptcy, others feel the government is gaining too much power in the economy (for example, their 80% stake in AIG now).

 

 

 

how do you feel?