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| Bailout? Credict Crash? | |
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| Topic Started: Sep 30 2008, 02:54 PM (188 Views) | |
| Mopey | Sep 30 2008, 02:54 PM Post #1 |
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I'm Still Among You
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If anyone has been watching the news. I watched it for like 1 hour yesterday and still don't know whats going on. I know the Asain and Pacific stock market crashed or something like that, don't know the story so can someone please tell me whats going on. I watched CNN. |
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| Malach | Sep 30 2008, 04:12 PM Post #2 |
The Gas Master
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End of the World, make me hate Republicans even more |
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| cartoonorbit4life | Sep 30 2008, 04:50 PM Post #3 |
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New Member
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it did not get passed congress rejected it weird i know this as i live in the uk |
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| Mopey | Sep 30 2008, 05:01 PM Post #4 |
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I'm Still Among You
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Someone explain to me what's going on. I heard these idiots on tv but they didn't tell me whats going on. It's confusing. |
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| Tails | Sep 30 2008, 05:30 PM Post #5 |
Psycho
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Two majopr banks are crashing and bush basically screwed it up worse. |
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| Mopey | Sep 30 2008, 05:39 PM Post #6 |
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I'm Still Among You
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explain to me what Bush did? How did he make it worse? |
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| Ðãrk_Ångê£ | Sep 30 2008, 05:59 PM Post #7 |
Girl Power!
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I don't even understand it all... I will ask my mom for you and I'll post it... I work for the Wall Street Journal... I will post articles for you too. |
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| Slim | Oct 1 2008, 12:36 PM Post #8 |
Senior Member
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A bunch of banks went bankrupt and so to bail them out,the government was going to give them $700 billion dollars. However the banks went bankrupt on purpose to get more money.Therefore I am so glad and happy that the bill was rejected. |
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| Mopey | Oct 1 2008, 12:47 PM Post #9 |
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I'm Still Among You
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Ok thank you slim, thats what I wanted to here. What about this Blame Game between Obama and McCain? |
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| Malach | Oct 1 2008, 01:07 PM Post #10 |
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The Gas Master
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I can tell you this. I have lost close to $50K in money and worth since 2000. There is Bush and his crooked economic policies right there. |
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| Frozen Ice | Oct 1 2008, 05:03 PM Post #11 |
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CZC VIP
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The greed and curruption from wall street CEO's was 1 of the things that led to this crisis but also the deregulation policies of Mccain/Bush and many Republicans have been pushing. Something like this is going to happen if no one is regulating the market, if the government doesn't then who will? no one so people will just go crazy being greedy and corrupt knowing the government won't do anything.If we had regulation or the government checking these Companies then this probably wouldn't have happened. Idk what this blame game really is since John Mccain has been against regulating the markets for 26 years now hes switched to supporting regulation. Obama has nothing to do with the crisis, hes been in favor of regulation for a long time. |
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| Ðãrk_Ångê£ | Oct 1 2008, 05:30 PM Post #12 |
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Girl Power!
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A simple step-by-step explanation of the $700 billion bailout 1. What is the problem exactly? One word - credit. Banks and lending institutions are very reluctant to lend money to anyone, including each other. Unlike the Great Depression of 1929, where the problem was liquidity (the availability of cash on hand), this economic crisis hinges more on banks being unwilling to make loans. 2. Why is that a problem? Credit allows out economy to grow. Let's use your family car as an example. The average American can't afford to pay cash for a $20,000 car so they get a car loan to buy it. Now let's say the average credit score in the United States is 620 (which is considered "good") but banks are unwilling to lend money to anyone with a credit score less than 720. Now the average American can't buy a new car, which then spills over to General Motors and Ford. They sell fewer cars, which leads to layoffs and plant closures. They also cut contracts with suppliers, like Pretty Products for floor mats. These suppliers, in turn, have to layoff workers and close plants. Now the laid-off workers can't afford to shop for groceries or Wal-Mart items, and sales drop at retailers. The economy starts a tail spin downwards, banks are unwilling to lend money and the economy starts grinding to a halt. 3. Why are banks unwilling to lend money? What caused the problem? Two words - real estate. Let's over-simplify again. Say for example a bank has $2 million to make loans with. It says it will use 50 percent to make home loans and 50 percent for other loans (car, business, credit cards, etc.). So it makes $1 million dollars in real estate loans, each worth $200,000, for people to buy five homes at 6 percent interest. The bank then bundles these five loans and offers to sell it to an investor who is looking to make 5 percent on his investment. The bank keeps 1 percent to pay employees and other bank expenses. The investor buys the mortgages and gives the bank $1 million dollars. Thus, the bank has a new $1 million to make loans with. Now, let's say one of the five borrowers goes into default and stops paying. Now instead of making $60,000 in interest per year, the interest is now only $48,000. The investor is unhappy because they aren't making what they were promised. The banks in the past would usually seize the property and regain the money buy selling the house. They now offer a new loan with the proceeds of the home sold to someone who will pay. However, compound the problem with real estate properties falling. In our example, the bank has lent $1 million to buy houses. But as real estate prices drop, the bank now owns five properties that are only worth $800,000. So if they had to sell all five properties, they would lose $200,000. Then compound that with the subprime problem, where loans were made to people who should not have received them in the first place. These people were buying homes which were too expensive for them. If they borrowed money with an adjusted rate, and when their payment shot up after two or three years, all of a sudden their house payment makes up nearly 66 percent of their income. They default because they can't make their payment. They couldn't refinance because they owe more than the house is worth, and they don't qualify because they shouldn't have qualified in the first place. That's a cotton-picking mouthful, but it is a complex problem. So now the banks have these bad mortgages that they cannot package and sell, thus, they have no more money to lend, and they are reluctant to lend any more money because they are running short on cash to lend. 4. What does the $700 billion bailout do? What the government does is come in and buy these loans from the bank, giving them the money needed to make new loans. Since no one else wants to buy them, the government becomes a "rich Uncle Sam" and buys them. They use taxpayer money to buy these mortgages and that is why there is some fuss on Capitol Hill. It is costing every American taxpayer in the United States about $5,800. So if you are a family of two taxpayers, you now owe the U.S. government about $11,600 in taxes to help fix this credit crisis. No, you will not get a bill from the government for this amount. But less of your tax dollars are available for other programs like the military, roads and schools, and the government may need to raise your taxes over a 10-year period to make up the difference. The last time the government did this was the Savings and Loan Crisis of the 1980s when they created the Resolution Trust Corporation (RTC). 5. Are there drawbacks by doing the bailout? Yes. By making $700 billion available to the economy, you are now increasing inflation pressures. Inflation is too much money chasing to few goods. And if you increase the amount of money while the amount of goods remain the same, inflation follows. I have heard conservative estimates of 7 to 12 percent inflation in two to three years from now due to the bailout. Ouch! It also decreases the value of the dollar overseas, which we have seen effects oil prices. 6. Does it solve the problem? Yes and no. Yes, it gives banks more money to lend, but if home prices continue to fall, it does not solve the problem of a deteriorating mortgage environment. The government needs to also offer incentives to home buyers. Increasing interest in home ownership will stabilize housing prices and help solve the problem. But it certainly staves off a complete collapse of the U.S. economy, much like what happen in Russia in 1998. I hope this oversimplified explanation helps you understand where we are at. There is no comfortable landing on this crash, but hopefully we have managed to keep from breaking every bone in our financial bodies. |
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| Slim | Oct 2 2008, 01:14 AM Post #13 |
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Senior Member
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Please people this isnt about Republicans or Democrats,this is about greedy,rich bastards that have screwed our economy and are trying to take the country down with us.Nancy Pelosi is a disgrace.I have heard rumors of prices being raised on everything you buy.If our country keeps going this way then we will soon become like France.And this has nothing to with presidential candidates,its thieves and greedy CEOs. |
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| Malach | Oct 2 2008, 11:50 AM Post #14 |
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The Gas Master
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Who were empowered by Bush deregulating banks, credit card companies and mortagage companies. Don't get me started on the MORTGAGE HELL I went though this year, becuase of deregulated mortgage lenders. Seriously, becuase of that I lost at least $30K never mind the value of my house losing $25K, my 401K's going down the tubes, and the price of everything pretty much doubling. Tell the hundred of middle class people coming to my workplace everyday seeking help, which they never had to do previously. McCain want to deregulate them even more, that is why I WILL NEVER VOTE FOR HIM. |
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| Slim | Oct 8 2008, 01:40 AM Post #15 |
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Senior Member
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Better that than Radical Islam taking over. |
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1:03 PM Nov 27
