what do you think about the bailouts??

[joseney21]

previous bailouts equal to roughly 500 billion dollars, this number may go up as assets find their true market value. the new bailout being proposed is between 500 billion - 1 trillion dollars, again this number may change as assets find their true market value. in total anywhere between 1-1.5 trillion dollars of bad investments will be dumped on the taxpayer (you and me) in order to save banks, investors and other financial institutions from the poor choices they've made over the past decade.

is it really necessary?? who does it really benefit??

 

[jhale]

I was thinking about this yesterday, if it prevents a great depression scenario from happening again then I'm for it. However there should be some caveats geared towards those that work at the companies being bailed out. The huge bonuses, salaries, golden parachutes, perks etc, many of the employee's receive should be curtailed, as we would in effect be paying their mortgages now. Why should the management of a failed company continue to live well off while people are barely making ends meet?? There has to be culpability somewhere is all I'm saying. I hope our lawmakers have taken this into account.

 

[georgelc86]

The rich are getting richer and the poor are getting poorer.

 

[qy7400]

The bailouts were needed, especially for NYC. Loose these big companies what you loose are tax revenues for the city/state (from salaries and bonus). Reports indicate that for every Wall Street job there were 2 ancillary jobs created. Real Estate prices drop as the supply is flooded with available space; this would apply to both residential and commercial property. What the bail outs did was keep people employed, keep the city tax revenue going; the lost revenue would more than likely be made up in tax hikes and loss of city jobs (NYPD, NYFD, Sanitation, government and teachers). Restored a little confidence in our economy, markets did bounce back after the announcements. Pensions and retirements regained a little, think Enron here with how many people lost large chunks of their retirement package.

While all the details have yet to be announced, I believe Monday, one area that should be addressed is board salaries. While I don’t care that the CEO of Lehman was paid 22 million I do care that this guys not only still getting this pay but a performance bonus of 4.3 million? This is a problem; the correct way to compensate these guys is base salary but higher performance bonus via stock they must hold for a year. I’ll stop since I’m getting off the topic.

So to answer the questions of whom this helps and needed? It helped all of us in one way or another and was a necessary move.

 

[tonep]

When a company goes into chapter 11, the performance bonus should be considered a debit that gets paid only after onther debits are paid.

 

[NYreefNoob]

bail out ? you mean tax hike down the road for people to make that money back up, personally the effect all this has done effected me to a degree also, glad i am not a home owner at this time, but it really would put the housing market in check, not for nothing but i am not from ny, well am now for the last 5 yr's and i still cannot get over the cost of housing here compared to the midwest, nothing really offered here that too me triples or more the cost of housing, if these ceo's got nipped on their million dollar bonus's ,and the government quit over paying employ's that do nothing { sitting yesterday watching road crew 10 worker's 1 working } and learn to shop better before entering government contract's and over paying someone so they get their kick back} even though i do feel for those that have bought a house in the last 10 yr's here that will be effected the most by what your house is worth, it really doesnt matter if you dont plan to move

 

[inkblue]

i cant beLieve we are baiLing out the same peopLe who charge us a TON of monEy for insurance that tHey can deNy in the meantime, CEOs waLk away with miLLions.

puRe BS

 

[joseney21]

The bailouts were needed, especially for NYC. Loose these big companies what you loose are tax revenues for the city/state (from salaries and bonus). Reports indicate that for every Wall Street job there were 2 ancillary jobs created. Real Estate prices drop as the supply is flooded with available space; this would apply to both residential and commercial property. What the bail outs did was keep people employed, keep the city tax revenue going; the lost revenue would more than likely be made up in tax hikes and loss of city jobs (NYPD, NYFD, Sanitation, government and teachers). Restored a little confidence in our economy, markets did bounce back after the announcements. Pensions and retirements regained a little, think Enron here with how many people lost large chunks of their retirement package.

While all the details have yet to be announced, I believe Monday, one area that should be addressed is board salaries. While I don?t care that the CEO of Lehman was paid 22 million I do care that this guys not only still getting this pay but a performance bonus of 4.3 million? This is a problem; the correct way to compensate these guys is base salary but higher performance bonus via stock they must hold for a year. I?ll stop since I?m getting off the topic.

So to answer the questions of whom this helps and needed? It helped all of us in one way or another and was a necessary move.

IMO jobs would end up coming back when times get better, if they were truly necessary to begin with. those big bonuses earned would help during a rainy day if saved.

about the drop in real estate prices, i think it would help your average responsible joe (myself included). i've been sacrificing for a long time, living under my means. then the time came to buy a house for my family, to my surprise i had much to learn. i can't afford a house at todays prices, not because i don't make enough or don't have enough saved but because home prices are outrageous. lax lending standards of the past decade put in so many new buyers into the housing market that it totally screwed up everything (more buyers =higher prices, supply and demand). the thing is that a lot of these people had no business buying homes to begin with but the govt pushed hard to allow the maximum number of people to take out mortgages and totally ignored the fraud that went on for the past decade.

in the end home prices falling just makes them more affordable for everyone, keeping them artificially inflated through bailouts just keeps home prices up in the stratosphere.

of course this is going to restore confidence in the economy, it sends a message that all will be rosy again, mistakes will be forgiven. but the fundamental problems still haven't been adressed.

about the pensions and retirements....this is going to sound stone cold, so brace yourself. i could care less...sad but true. i've stayed out of 401ks and the likes because it all sounded to good to be true (totally not an educated decision). knowing what i do know now i would still not put any of my money into the stock market for my retirement, i have a better chance at saving money and trying to start a business. it sucks that the taxpayer will have to also keep stocks artificially inflated to pay for the retirements of the older generation...didn't they know there was risk involved in investing??

i'm not even going to go in depth about compensation for ceos and workers of these institutions. a few words come to mind, scam, fraud.

this helps with confidence in our economy in the very short term, but screws us royally over the long term...

what will the consequences be, that are soooo bad, if this bailout doesn't take place?

 

[joseney21]

maybe i've been reading too much mish...i need to go out to the park with the kids and relax, lol

i am genuinely affraid of what lies ahead....

 

[marrone]

This comes down to something that Donald Trump said, when the banks were about to default on his properties, and that is the rich and powerful will always get bailed out, whether by the the banks or the government. The banks and government will always work something out, rather then have someone default on large amounts of money. They'll usually throw even more money to try and make it work then have something default. In the case of the small home owner, well when things go bad they're usually left out in the cold.


The real problem was that the real estate market keep growing up at a much high rate than people salaries were. The bottom was eventually going to fall out and people were going to get caught. Also there were people buying houses that never should have been allowed to. The house was either just at or beyond their financial means. This never should have happen and just made matters worst when rate went up, which for a lot of people increased their mortgage payments beyond their means.

The area that really needs to be looked into is the people that appraised houses and approve loans. It seems that there was no control and it was just a stamp process.

As for AIG, well I work in the insurance industry and I'm pretty familiar with them. AIG got caught in a couple of areas, first they owned mortgage investments, which when people started to default become worthless. To make matter worst AIG insured the mortgage investments. So not only were they out on the investment but they had to settle for other companies loses. They got caught in a big circle jerk.

AIG was bailed out partly because they employee a lot of people, something that the government is well aware of. Considering all the jobs that have been lost in the investment bank sector the government didn't want any more job loss. Also AIG book of business, outside of the financial guaranty, was pretty good. So by loaning them money it lets AIG operate their business and gives them time to sell off assets, which if they didn't have the money would be forced to sell them off at fire sale prices.


In the end big companies & rich people don't pay taxes but they do donate money to politicians. Everyone else pays taxes and gets stuck with the bill. Basically we're now paying for people mistakes, most of who made large amount of money when times were good.

 

[joseney21]

we'll be paying big time!

i remember when they bailed out bear and the govt and the media made a big deal about how much the taxpayers would be on the hook for. i don't see half that noise now and the amount the taxpayer may be responsible for just multiplied 100 fold.

wouldn't the removal of such a big company like AIG just create more room for others to grow when things get better?? i don't see the net loss. some people may be out of a job for a while but if the job was truly necessary it will return, whether with a new company or the same company, if the job wasn't truly necessary should we be shoring up companies just to keep people employed with taxpayer money? how long will that last?

 

[marrone]

The problem is in order to write all the insurance business, that AIG writes, a company would need a large surplus to do so. Now some other companies could pick some of it up, or a even a new company could be capitalize and pick up the business, but most don't have the surplus to do it. Also the costs of insurance would probably increase too.

Also if AIG became insolvent the states would have to take it over, and then we still have to pay for it.

In the end it was probably a good thing that the government saved AIG, even though we're paying for it. It will let them sell off parts of their business in a timely fashion and with their continuing operating they should be able to pay off the loan. But we're paying for mistakes that highly paid people made.

 

[reefman]

two theories:

1.) These companies took hugh risk n reap in the rewards in the beginning, n when its time to pay the piper, chapter 11. so we get stuck with the bill.

2.) This is a plan in which a group of very rich n powerful people thought of to manipulate the market to rake in billions before this administration loses power.

 

[joseney21]

sometimes i feel the same way reefman, like we're being played... the mistakes made were so obvious and so deep they almost seem intentional.

 

[Thatguy96]

They say that the tax payer's will get there money back from all these bailouts, but I highly doubt that.

 

[joseney21]

i don't see how it could work out like that. banks used to require some downpayment (20%) to give you a loan for a home. that number isn't realistic for the prices of homes today, assuming that's what banks would go back to after the beating they got for playing with fundamentals.

even if they approve the bailout banks will not be lending to the same amount of people they've gotten used to lending to in order to keep the supply and demand equation somewhat balanced. with the smaller buyer pool homes will continue to drop in price, for several years assuming the bailout slows the drop (see Japanese housing bubble http://randolfe.typepad.com/Documents/real-estate/wp04-16bk.pdf.)

what will banks do when it's time to pay back these loans if they haven't made up the money?? file for bankruptcy?? ask for more bailouts??
excluding inflation the taxpayer is already destined for a loss.

 

[joseney21]

the way i see it there are only two ways to get out of this mess...

let home prices drop and deal with it (might get really really nasty), eventually things will get back to normal (someday hopefully)

inflate our currency and wages to the point where home prices are back in healthy balance with wages. historically i think that has been Loan to value = 2.6 x yearly gross income after 20% down...it might be off by a little i have to research that.

 

[jhale]

if home prices drop so do property taxes, then the schools and other services are in trouble, not that they aren't already.

 

[joseney21]

taxes drop (lol)?? they can raise them to make up for the deficit. in fact i think we'll see big raises in taxes anyway to pay for this bailout if it goes through.

btw, it affects me directly. we're waiting on negotiations for our new (actually 2 years past due) contract and i'm not expecting much due to the deficit the city will be facing next year. can't wait to move to somewhere where the cost of living is cheaper. anyone have suggestions (better quality of life, cheaper cost of living)??

 

[jackson6745]

Mexico