The difference with the bailout is that the money going to the banks will allow them to lend money again directly to busineses, people buying cars, students and many others. With the trickle down economics, the wealthy get all the benefits, and supposidly will invest the money, which will expand buisness and create more jobs. All it has created is a wider gap between the rich and everyone else.

How do you legislate against human nature. that is the real underlying problem. Emotional reactions to fear and greed and social proof cause these bubbles every 20 years like clockwork.

If I can’t pay my rent for a few months I don’t get a pass, I don’t get my rent reduced and I certainly don’t get forgiven a single dime I am delinquent. What I get is EVICTED.

So why should I(and other taxpayers who were smart enought to know that we were priced out of the housing market) step in a bail out “homeowners” who’ve been collecting tax credits and deductions on their homes for years now when I have recieved zilch in similar tax relief? It hardly seems equitable.

We don’t really know what the intrinsic value is. The current market value is based on panic, so the assets may very well be priced with assumptions of much higher default risk and lower recovery in case of foreclosures. I heard on CNBC – and yes, it is only one analyst’s opinion – that these assets are valued as if the foreclosure rate is 50% and there is no recovery at all i.e. if foreclosed houses are sold for $0. In reality the foreclosure rate is about 25% and there is some recovery.

The question is how the government will price them. If they are priced at current market value, there’ll be no help to banks. If they are priced at 100% of original mortgage values, the government will lose. But it is possible to find some amount e.g. 50 cents on a dollar or whatever that would both help the banks and give government a chance to make money in the long run, or at least recover most of the money.

I don’t think you know what you wish for. Are your money all in gold coins under the mattress? Do you realize that after the crash of 1929 it took till 1954 for the market to rich the same level. Would your 401K handle it? How about your job? Do you realize that it took until World War Two for the economy to show signs of life. Not to mention that World War Two mightn’t have happened if not for the Great Depression, but I guess you don’t give a damn about millions dead if you can welcome it. Yours is such callous message, it’s just difficult to fathom that somebody can think like this. There’ll be a whole generation of young people who cannot get education because they cannot get loans; there’ll be older people who’d lose their life savings… But I guess you believe it wouldn’t affect you, and you are willing to sacrifice others so they follow your ideals, right?

“There is every kind of social safety net for the poor in place nowadays, none of which was in place for the ‘29 crash. People will be fine.”
And where would the money for this safety net come from? You got it – the government i.e. taxes. But with fewer people employed, fewer people pay taxes i.e. bigger government debt or printing more money. This would cost a whole lot more in tax dollars than any bailout. I certainly lost more than my tax share of the bailout in the last few days. What about you?

Not to mention that the US isn’t the only country which will be affected by it. Just like the Great Depression’s effect on Germany may have contributed to Hitler’s rise to power, we don’t know what the effect of another economic disaster will have on other countries. Or would you welcome World War III as well?

“Nation of whiners…”
May be. But things like the Great Depression normally transform whiners into very angry people and not at all nice. Go to any third world country or even Eastern Europe and see if hardship makes people nicer.

As to Dave Ramsey’s plan, as much as I would’ve loved to have no capital gains tax, I am not sure it would have the desired effect. In my case, it may actually prompt me to sell some stocks quicker to take advantage of it while I can. Also, while I do like some of his ideas in the plan, I don’t think it would help unfreezing credit markets quickly enough to avoid hurting businesses and municipalities. Also as people said, I am not sure that rewriting at 6% will make homes more affordable. Nor is it at all clear if Dave Ramsey’s plan will be any cheaper.

I don’t think the bailout is cure-it-all. But getting rid of some of these assets may rid the banks of some uncertainty that caused them to be afraid to loan money to one another. Also, raising insurance limit to 250K may stop runs on banks which in face of freeze in interbank loans may cause even better banks to collapse.

BTW – while there is debate in bailout, we’ve lost 1.2 trillion in the stock market the other day.

There is a fixation on the bailout being the cure all. It won’t – in fact the medicine could be worse than the illness.

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