I'm sure that there are lots of people out there who understand this whole $700 billion dollar bailout business, but I'm not one of them. Here's what I do know (and you can correct my ignorance with nice comments, i.e. don't call me stupid):
1. Our financial industry, particularly our lending agencies, are strapped for cash
2. They got this way from making risky loans (adjustable rate mortgages) to people who were screened well enough
3. All of this money that was now in play was thrown around in an effort to make more money (insert the word 'greed' here).
4. When these mortgage rates increased, people couldn't pay their monthly mortgage and many foreclosed on their loans.
5. Now these banks are out of their money and the housing market is in a crisis.
6. All of this - and I know my viewpoint is incredibly simple - trickled down to effect almost all areas of the financial market and, BAM!, we've got a mess.
So the solution that the financial industry gave was to bail them out of this mess. If I'm not mistaken, they caused this fiasco so I'm not so excited about getting them out of it. Depending on who you read or listen to, the sky is falling and we're heading for another Great Depression if we don't do something or we'll be okay, it just will take some time.
Count me as one who really doesn't know what to think. My gut tells me that, if you make your bed, you need to sleep in it. But at the same time I don't want to see people suffer and lose everything they've worked so hard for (my retirement account right now is worth enough to buy maybe a couple of pizzas...not really, but it's taken a huge hit).
As a follower of Christ I want to have compassion on those in need. In this situation, those in need created this mess for themselves. Now more than ever I wonder what Jesus would do in a situation like this.
4 comments:
Being someone with a mortgage banking background... and one who can attest that there was once litterally a mortgage program for any and everyone, I am feeling much better about today than yesterday. I have one major fear from all of this and that is liquidity of credit.
The day businesses can't borrow money to make payroll and continue opperations is a worse day than the stock market falling 777 points.
I am glad to see the markets rebounding today. I think it is somewhat possitive that the country didn't take on another $700 billion dollars in debt.
Wall street is always up and down... but if the government does anything they have to make sure the credit markets remain stable and liquid.
People loosing thier jobs as small and medium sized businesses failed and not getting paid in the masses would be a bad bad day.
Hey Sterl,
You're right, there are many more details you could use to explain the current situation. I think you are almost right on target in the step-by-step breakdown. I think two other notes that might be worth including in your analysis are the imprudence of the government and the greed of the people who took out the mortgages.
The blame falls on 3 different groups:
1. The companies who did the irrational lending and investments trying to make a quick, easy buck.
2. The government, who has done a horrible job educating citizens on personal finance in school, and in general, by encouraging them to do whatever it takes to buy a home. (I don't think regs were really the issue)
3. The PEOPLE who, greedily, took out these mortgages instead of saving money; perhaps thinking that Real Estate would continue to quickly appreciate and who kept leveraging their homes to buy expensive SUVs and eat out all the time.
It'll be interesting to see what happens.
Back in the 90's two important things happened. First, there was a push from the president that everybody should own their own home. Second, the president signed into law a tax break on capital gains from the sale of a home. So, more people got home loans, who probably shouldn't, and more people invested in real estate to flip it without the tax burden.
It took 10 years to catch up with us...and add all the other stuff and you've got a mess.
I think they should divide the $700B among adult tax payers so we can pay off our mortages and credit cards.
Anyway, you're stupid.
Thanks for the input, guys. Of course, I knew all of those things that you wrote I just didn't want to come of as, well, a know it all.
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