# The Price of Bailing Out Wall Street Investment Institutions



## hunter9494 (Jan 21, 2007)

http://finance.yahoo.com/tech-ticker/ar ... GSPC,BAC,C

worth a listen....


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## DecoyDummy (May 25, 2005)

Not to "down play" this whole thing.

But as a for instance ... I believe the Federal Government made a bunch of money on the old Chrysler "bail out". Chrysler paid back the loan plus interest.

In this case ... as for AIG ... the Government owns 80% of the company and AIG has to pay the loan portion back in two years. Assuming that happens the Fed gets it's money back with interest and can sell off the stock ... the Federal government looks like Superman. Of course if AIG "****s the bed" on this deal then it's a loser all the way around, but it might not be bad if it works out like the Chrysler deal did.

Buying bad paper on housing loans is a little tougher to make out on ... the property must be held til the market allows for sale at prices that avoid hidious losses ... as I said , it's a little tougher deal, but no one other than the Federal Government is capable of pulling that off in any (so called) reasonable way.

Just a sideline point of view with a slight positive twist to it


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## Robert A. Langager (Feb 22, 2002)

I think it is a crock. Those who got rich, stay rich. Those who got screwed, stay screwed. Those of us in the middle (tax payers), foot the bill.


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## Plainsman (Jul 30, 2003)

Robert A. Langager said:


> I think it is a crock. Those who got rich, stay rich. Those who got screwed, stay screwed. Those of us in the middle (tax payers), foot the bill.


I agree and the banks need to be tough on loan applicants again. It's when they tried to be "fair" with everyone that we got in trouble. Many of those people bought beyond their means with no intention of keeping their contract. We are a victim of a lack of dignity today.


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## hunter9494 (Jan 21, 2007)

all the loose lending legislation (that allowed Freddie and Fannie to participate) was enacted under the Clinton administration, the abuse crescendoed during Bush's term.
i will try to access the evidence once again and post it, but the "new rules of fairness" were enacted by Clinton and his team of socialists.


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## DecoyDummy (May 25, 2005)

Hopefully everyone understands (and I believe you all do) That I do not imply with my above post that the situation is acceptable.

Hopefully this results in some lessons learned. I do however believe as long as we have folks in Washinton D.C. legislating to aquire votes rather than legislating to keep America safe, financially solvent and strictly defending the rights granted to the People via the Constitution we are in trouble.

The people (themselves) are the only ones who can protect themselves from these problems and they do so in the voting booth.

It's just too easy to keep voting themselves money (in one form or another) just as Ben Franklin and his comrades feared some 220 years ago.


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## hunter9494 (Jan 21, 2007)

and once it begins, in earnest, it will be a self fulfilling prophecy.


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## DecoyDummy (May 25, 2005)

hunter9494

It HAS begun "in earnest".

We are witnesses to what the Founders feared.


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## hunter9494 (Jan 21, 2007)

i concur.....


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## goodkarmarising (Feb 8, 2008)

x


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## zogman (Mar 20, 2002)

A man's got to know his limitation.............

In 1969 we bought our first house for $18,500 we both looked at, really wanted and were encouraged to buy one for $22,000 We did our own math and knew we just could not afford it. Now a days there are so many goofy loan products no one knows what the heck you are getting into.


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## hunter9494 (Jan 21, 2007)

most people know, they just don't care........they figure if they can get the loan, they must be capable of making the payments....stupid.

many high schools have added a required finance class for kids, so hopefully the next generation will have a chance to understand their limitations, no matter what their loan officer advises.....


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## hunter9494 (Jan 21, 2007)

well..........today was all about the bailout plan.......the piss fight is on between the repubs and dems over executive pay rates, and could jeopardize a quick financial solution to buying up all the bad paper by the fed....this is what it has come down to, gridlock between parties and the taxpayer left to try to figure out what is next on the financial highway to hell......

the Arabs even said they saw no opportunity to support the banking institutions or invest in them, as they could not trust the solvency or value of any of them going forward.....they suggest their interest is in real estate in the US, something that they could depend on as having some value, no matter what happens.

folks, if we lose the confidence of our foreign investors one of two things will happen: 1) they will just stop buying our treasuries at auction or 2) they will demand much higher rates of return.....either way, our economy would be screwed.........

we are tittering on the edge here (as our leaders play politics) and the government is trying to preserve confidence and avoid panic.....


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## R y a n (Apr 4, 2005)

hunter9494 said:


> we are tittering on the edge here (as our leaders play politics) and the government is trying to preserve confidence and avoid panic.....


Ohh no we are not! Just listen to other folks on here! They'll tell you otherwise!

I was told just that about a week ago... hmmm... has a familiar ring to it.

:lol:


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## Plainsman (Jul 30, 2003)

R y a n said:


> hunter9494 said:
> 
> 
> > we are tittering on the edge here (as our leaders play politics) and the government is trying to preserve confidence and avoid panic.....
> ...


I don't think you understand what either of us are saying. We may be on the edge. If people don't run around like a bunch of frightened grade school girls we will be safe. If everyone falls for the panic you were trying to instill last week (just like the Washington liberals) then we could be in trouble. Example: preserve confidence and avoid panic.

See Ryan last week I seen you as the problem for the economy. Your were being chicken little and trying to convince everyone the sky was falling. I on the other hand was trying to keep people calm. Have you noticed the stock market go up? We both know that trouble will benefit the liberals even though the problem begin under Clinton when they made house loans easier. One of his boys slipped and told the truth last week. Look for that on another thread. Here it is for you:



> he had a clip of Robert Reich (Clinton secretary of labor) and he slipped and told the truth. He said it was the democrats and Clinton that demanded of the lending companies that to be "fair" they had to make loans easier so poorer people could have better homes. He admitted that it was the beginning of the problems we see today.


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## Springerguy (Sep 10, 2003)

It started with the subprime loans but the loan defaults are increasing within the non-subprime as well. I live in a suburb about 35 miles west of the Twin Cities - lived here since '96 and watched my home value go from $145k up to somewhere around $250k or more. What many homeowners were doing was refinancing their homes and pulling out the equity in the form of cash (to buy expensive toys or home improvements). Now that the market has dropped 25-35% many of these homeowners are upside down - owe much more than the house is worth. And they are starting to figure out that they can just walk away. It just ticks me off when I hear about the gov't not only bailing out the corporations but the homeowners as well. I guess the lesson here is too not take a conservative approach - like my wife and I did, never pulled out any equity. 
And the subprime debacle wasn't about being "fair" to potential homeowners - it's more about corporate greed. Many of these companies, like AIG, couldn't buy enough packaged subprime loans, with the higher interest rate.......resulting in a higher return on equity. Simply put, reporting a higher return meant higher stock price, larger bonus, etc. - all through corporate shortsightedness. Until executives are held accountable for the risk they take this will continue - either way the sr. leadership wins via a generous severance package or performance bonus.


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## hunter9494 (Jan 21, 2007)

i agree with most of what you said....BUT, even you were not tempted to "roll the dice" with the neighbors.......hell, you would have to be stupid to risk your house on the ruse that prices would soar and never collapse!

sure this gig was encouraged, but if you make 100K and think you can live in a 500K home, you should go back to econ 101.....the responsibility laid with borrower and lender both.......


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## R y a n (Apr 4, 2005)

hunter9494 said:


> i agree with most of what you said....BUT, even you were not tempted to "roll the dice" with the neighbors.......hell, you would have to be stupid to risk your house on the ruse that prices would soar and never collapse!
> 
> sure this gig was encouraged, but if you make 100K and think you can live in a 500K home, you should go back to econ 101.....the responsibility laid with borrower and lender both.......


H94 that is rather simplistic. Where do you live? I'd like to look up the housing statistics where your point of reference is coming from.

In my neighborhood, (Bellevue/Redmond WA), those numbers are common place. Everyone here who is into a home makes a combined income of between $120,000-$250,000 a year. The average home out here is around $610,000, with the average first time home buyer price of $475,000. That $475,000 home is a 20 year old "fixer upper" with no yard. That house normally last 72 hours on the market with multiple offers tendered. The only affordable housing below this level is a 45 minute + commute in 2 directions.

You simply cannot get into a house for less, and that is given that you are putting 20% down, as that is what others are doing to "get in the game".

Now. Given all of that, how do you expect someone like me to get in? I'm like alot of young professionals out here. We are all "stuck" if we want to get a decent place. There are no alternatives, lest we get jammed into a tiny condominium for $350,000 hoping that the condo market doesn't soften.

That is why we have folks making bank out here who are still living in apartments.

Those types of loans were the only thing getting young people into homes out here. It sounds all pie in the sky easy to you, and it seems like astronomical numbers that are getting thrown around, but you need to see the market in other parts of the country before you make a broad assumption that it is foolishness 101 going on all over the place.

It isn't as black and white as you'd like to believe it is...

here's my reference as I know noone believes my "facts" anymore :eyeroll: http://seattlepi.nwsource.com/local/365 ... ing06.html


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## Plainsman (Jul 30, 2003)

It doesn't make any difference if it is someone making 100K buying a home for 500k or if it's someone making 250k buying a home for 2 million. The thing is they are buying beyond their means. What makes people just starting out think they deserve the same thing as someone who has worked 40 years? Maybe they should save for ten years then look for a home, or buy a cheaper home and upgrade in a few years. It's like when I retired some of these college kids came to work expecting the same pay as someone who was at the end of their career. They need to get real. 
They also need to stick with a contract when they sign on the dotted line, not expect everyone else to pick up the tab for their stupidity.


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## R y a n (Apr 4, 2005)

Plainsman said:


> It doesn't make any difference if it is someone making 100K buying a home for 500k or if it's someone making 250k buying a home for 2 million. The thing is they are buying beyond their means. What makes people just starting out think they deserve the same thing as someone who has worked 40 years? Maybe they should save for ten years then look for a home, or buy a cheaper home and upgrade in a few years. It's like when I retired some of these college kids came to work expecting the same pay as someone who was at the end of their career. They need to get real.
> They also need to stick with a contract when they sign on the dotted line, not expect everyone else to pick up the tab for their stupidity.


To be clear I agree with you Plainsman. However you also have to look at market realities. Homes out here don't exist for $250,000. Given that, you either save more and put down a bigger downpayment, you apply for first time home buyer to help bring the payments into range or you sit in an apartment biding your time.

Many young folks out here did "upgrade" as the price of their first property skyrocketed 30% in 3 years. I wish I would have had money back then to make it happen. Many of my friends did. They now sit in a home worth $500,000 on $1800/mo mortgages, because of the equity gained on their first home. Homes out here are bubble proof, as we live in one of the 5 places in the country.

People just starting out don't think that they deserve anything. You need to lose that mentality. It simply isn't true.

The problem that exists in America is that inflation has surpassed wages. A salary that seemed reasonable just a few short years ago, won't even make ends meet anymore. period.

I think alot of you make huge assumptions that simply aren't there. There is a mentality to "talk down to" younger people, and make claims that are very stereotypical. You might make that claim for young adults in college, but the young adults 5+ year out don't have the same mentality as Generation X (ME generation). That generation has the "ME" mentality of entitlement.

I've looked at the numbers and read the articles concerning this. I'll see if I can find the apples to apples comparison that took wages, inflation and home costs all into account. Younger folks nowadays are really getting the shaft.

I've asked it here before, and don't think anyone took the bait. I'll ask again now:

Concerning your own personal balance sheet, financially speaking, 
"Is buying a home an asset or a liability?"

Is it wise to buy a home if you have to pay a substantial mortgage?


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## Plainsman (Jul 30, 2003)

> People just starting out don't think that they deserve anything. You need to lose that mentality. It simply isn't true.


It isn't a mentality. We were watching the presidential debate when about a dozen of us were working in Nebraska. I was complaining about taxes, and these kids were angry that I made as much as I do. They could see no reason that I would make more than them. There were eight younger adults. Four had been out of college three to five years, two had just graduated after summer, and two were still in college working on their bachelors degree. They thought they worked just as hard, but didn't put much value on experience. They thought that at that time although I had 28 years experience we all had bachelor degrees. Heck they were perhaps working harder physically, but college didn't teach them what they had to know on this job.

The walls were thin where we were staying and I could hear them complaining into the morning hours. I could give you a dozen more examples and you know what? All the complainers are always far left liberal who think the world owes them. Conservative young people work their behind off. I watched it for 36 years.

You made another assumption.


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## zogman (Mar 20, 2002)

> Posted: 22 Sep 2008 22:16 Post subject:
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Plainsman, you hit the nail on the head. All of us have seem many examples of what you describe in many diffent professions.
From cement finisher to engineer, from office assistant to lawyer. The young and restless want to be paid as much as the 25 plus years of experience. They just don't get it. Must be what the liberal profession drill into them.


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## Plainsman (Jul 30, 2003)

> They just don't get it. Must be what the liberal profession drill into them.


Yes, and thankfully it is only those with liberal attitudes. I think I have relayed this story before, but when I was working on a construction crew to work my way through college the liberal attitudes were hard to take. For example one young fellow who was a sociology major had said that in class he had learned how to work the system. He laughed at us for being concerned about a job after we got out of college. He said he was going to take five years off after college. He was going to let welfare take care of him while he traveled and seen Europe. He figured his parents (mom actually) could cash his checks. After that he would look for a job. The big problem I had with it is he didn't look at it as screwing the government he looked at it as us fools paying his way around the world. At least that is what he said to us directly. He said he had to work with his hands to get through college, but that after college anyone who did was a fool. Tough guy to listen to run his mouth every day.

So again Ryan it isn't an attitude as you would assume.


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## LuckCounts (Aug 8, 2008)

Loans have been too easy to get. The credit card companies offer too much credit to those that will never pay them and no one cares. Why? Because government will always be able to stick their hands into the pockets of those individuals that did things right in their life financially. I lived in a small apartment for the first years of my marriage, with hand me down furniture. When a home became availabe (a sale within my family for $8,000) I purchased it and lived with a 13 inch tv, no cable, and just a couple of pieces of hand me down furniture. We sacrificed and saved for 5 years and put a down payment on my current home and paid it off in 5 years. Within that time there were many sacrifices to get us on solid financial footing. Now, how many young people live without cable or satellite television, access to the internet and it seems like everyone has a couple of cell phones. Let alone, how many have homes that they are not going to pay for? It's going to be my responsibility to pay for someone else's default? Not only that, there was a recent report on the condition of the homes that were defaulted on. They were trashed, and the report said it was an ugly trend. Not only do they default on the loan they have such little respect for property that they fill the need to tear it apart as some sort of vindication for losing it.


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## MSG Rude (Oct 6, 2003)

zogman said:


> > Posted: 22 Sep 2008 22:16 Post subject:
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Both of you are dead-on. I couldn't agree more. And with the thinking of some people, that the government should go and bail out these company's of ill-repute, things will never change.

Where was the government when I was young and stupid and "wrote checks" I couldn't afford? Nobody came to me with a blank check. But you liberal minded ostertriges with your head in the sand are crying out for the government to step in and bail out these company's that KNEW they shouldn't be lending this money out, are making me sick! If they were getting their money from these people do you think there would be a stink about this..no! Do you think the Republicans would get any CREDIT for this, no! But because they were greedy, as most of you liberals and Dem's are, we, as a whole, have to pay for this and you put the blame on big, bad Bush and the Republicans.

You make me sick with your hand wringing and wailing. Now I have to pay for someone else's home too...thanks.


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