Termyn8or
Posts: 18681
Joined: 11/12/2005
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I would like someone to tell me why it is necessary.
Let's assume the bailout happens, that money does not go to the People nor even the banks, it goes to huge underwriters. It keeps afloat the system by which we got here. Having underwriters, or guarantors might be a better term, is on the surface a good thing. Let's dig a bit deeper. If a bank is gambling with their own money they are likely to be more careful.
I just tried to find out the actual prime rate, but the internet ran me around in circles. Let's just assume at some point in time it is or was 5%. So they lend you money at 7% and the 2% is their spread. If they need money, they borrow it, using your collateral as their own. This is called fractional banking and has been going on for a long time.
What if they only used their depositors' money and loaned it out at 7% ? Well first of all they make 3½ times the money per loan, but they can't write as many loans. However, as people pay their loans, the money is gradually returned and can be loaned out again. Their business would grow at a slow, but steady and solid pace.
Because of a naturally produced money supply, loans would be harder to get, but they would have been all along. This would not have fueled inflation, and the housing price bubble which is simply a manifestation of induced inflation.
As long as house prices were on the rise, they could be fairly secure that the collateral would be worth what is owed, should someone go into foreclosure. They got to the point where it got easier to get a house loan than a credit card. All because there was faith in the collateral.
So they wound up causing an artificial inflation, and everything looked good. Everyone almost could get the American dream, their own home. It looked really good for years, even though problems mounted for at least a decade.
So why was there not a bailout a few years ago when it would've been alot cheaper ? Why didn't they see the dark cloud for the silver lining ? Why is it for years and years the banks kept giving houses to welfare recipients, and who knows who, some with unverifiable income ?
Why does the plea come now, did all these foreclosures happen in the last few months ? I can guarantee that they didn't. Why did they wait until now ?
There is only one explanaition, it was a plan. What one has to understand about high level greedy financiers is that they don't need a conspiracy. They will act independently in almost the same way. They were taught the same things and figured out the various ways to get over on the system.
So the bailout happens, and two years down the road we need another couple hundred billion. Who cares, we are important, they can't let us fail. Gamble with someone else's money, that's what they did. Now they have lost it all and come crying for more.
So in trying to fullfill the American dream, they have turned it into a nightmare.
Let's say the bailout does not happen. Just how bad is that ? I still onder why it is so urgent, Freddie and Fanny can't pay the rent or what ? Liquidate, just like any other business would. None of this bailout helps the People. It doesn't help those already in forclosure, and it is very unlikely that it will help people get loans they shouldn't get either, because if they don't make some serious rules, the same thing will happen again.
If they don't make ARMs and mortgages with introductory rates illegal on any collateralized loan, they are extremely remiss in their duty. I mean this bailout or not.
Another sad fact of the matter is they operated under the assumption that wages increase, which was true in the past. If they don't know enough about economics to know this, they do not belong in control of the situation. My own Uncle was trying to sell me one of his houses, I told him I couldn't afford the payment. He said "It might be rough right now but over the years your income increases, rent would increase, but a house payment stays the same". Good selling point back then, I still didn't bite because I figure if I lose the house in the interim, I still lose. It was simply too expensive.
My income did increase, but that is not true of everyone. They can tell you all they want how personal income has gone up and it is a bunch of crap. The income distribution is different now. The top earners (that is the wrong word) are making more. The suits are making more. The working Man is making less. My neighbor used to make $58,000 a year, he now makes about $21,000. This is for the same semi-skilled job, the same amount of hours, and yes his house payment has stayed the same.
What of everything else ? Even if his income had stayed the same he would have lost. When he bought that house people were saying "If this keeps up, we'll be paying two bucks a gallon for gas !". His house is in foreclosure.
This guy is a good neighbor. Not perfect, we have been in a couple of fights actually, but nothing serious. He has keys to my shed as he keeps his lawnmower in there. When we mow the grass or he mows the grass we do both yards, there is no fence. Mutually we agree if an outdoor party spills into the other yard, it is no problem.
The olman is retired and is getting to know the computer a bit, and he sometimes looks at the foreclosure lists. He was surprised to find this guy's house on it, as being IN foreclosure now. Not for that much money either. My neighbor does not have internet access, he has a cell and no landline otherwise I could get him free access. And I would.
But the point is, what if he doesn't know ? All it takes it for him to miss one letter, and usually by the time the certified mail comes it is too late. If I bought him out for the taxes, before it goes to auction, first of all I could let him stay there, second of all I think it will pick up in value eventually.
Now am I a profiteer ? Think about all these people, the banks bailed out so now prices are cheap. They got tax money so they can sell for pennies on the dollar. Someone stands to make alot of money in the coming few years.
Now if a lowlife like me can figure it out, what do you think people who really know the business will do ?
Now, if the loan guarantors fail, they do not pay off, therefore the collateral remains in, or reverts to the primary mortgage holder (I hope I got that terminology right). The local bank, even an NA type bank, they are more local. They have local depositors and customers, and now they are stuck with all these properties.
What Hunky said resonates with this, do those banks want those houses empty ? To be vandalised, rented out surreptitiously or have the plumbing and wiring stolen ? Well if they were stuck with it, they might care. Those houses still exist, why not take the best ones, the ones that need the least repairs, fix them up and rent them out ?
It could be rent to buy, actually something similar. Just rent it, later when you can afford more we talk about you buying it. Look at all the advantages. There is income coming in. That should not yet be applied to the debt load, that should be applied to getting more of these houses rentable. Increase the income, then work on reducing the outgo.
There are going to be alot of people renting with all these foreclosures. In an average married couple, they worked hard for years to get up the down payment. Now they are losing the house, if you have any pity, there's a good place to put it, but for reading the fine print they would've been fine.
Some people just are not that smart, does that mean it is OK to take advantage of them ? Which brings us to why now ? Why wasn't the bailout alot cheaper a few years ago ? Why did they wait ? The only answer is that there are going to be opportunities for those with the means to take advantage. That means them, the suits.
If I got control of your kids' schools and did not teach them anything, and was the banker as well, I could be like scrooge. An userer. That, it appears to be what has happened here.
Scrooge was actually not as bad as our current high rollers. They manipulate the stock market to their advantage, by buying and selling when it might not make sense to some, but they make money. They learned from the Hunt brothers, who if they had started dumping silver a month earlier, would have made money.
To understand the whole game you have to understand the concept. It is now beyond making money on money. More like making money on money on money. You know a certain company is going to get some contracts, so before that happens you buy up a bunch of their stock. You also know that it's a single contract deal. When word of the contract gets out, you have already inflated the price and people buy. raising the price further. Then you do a controlled dump, you let out some shares, then you let out the motherload after demand has increased. Dump it now. That seems to be legal for some, but not for others.
You can even let the sheeple have a few quarters of decent earnings, if you're so inclined. You got your's, and that is all that matters. That is the way today. And there is no reason you can't do it again and again. That's how to get really rich, but you have to be really rich first. See how that works ? (for them)
So go ahead, dish out that 700 B on a silver platter, they'll have it up to a trillion in notime. Come on, we know who we are talking about here, don't we ?
T
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Why the bailout at all ? - 
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