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Thread: Bailout thought

  1. #1
    Senior Member kjrice's Avatar
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    Default Bailout thought

    I see billions+ (soon to be trillions) being spent of taxpayer money to help Big Finance, but I cannot help to think that there is a better course. Why not paydown residential mortgages $100k and allow them to refi at reduced rate of, lets say, 4%. That would reduce the cost of living for many by around $1000-$1200 per month. Also, that money goes directly back into the finance markets. In the long run, Big Finance doesn't make the most money possible, but the economy, as a whole, should stabilize. Think of it as watering a tree from the roots instead of soaking down.

    Ironically, the lemmings aren't seeing that the Democratic Party that termed "trickle down economics" as bad voodoo are the same promoting it.
    A lot of people are afraid of heights. Not me, I'm afraid of widths.

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    Quote Originally Posted by kjrice View Post
    I see billions+ (soon to be trillions) being spent of taxpayer money to help Big Finance, but I cannot help to think that there is a better course. Why not paydown residential mortgages $100k and allow them to refi at reduced rate of, lets say, 4%. That would reduce the cost of living for many by around $1000-$1200 per month. Also, that money goes directly back into the finance markets. In the long run, Big Finance doesn't make the most money possible, but the economy, as a whole, should stabilize. Think of it as watering a tree from the roots instead of soaking down.

    Ironically, the lemmings aren't seeing that the Democratic Party that termed "trickle down economics" as bad voodoo are the same promoting it.
    That's a really bad thought - rewarding those whose spending habits got out of control.

    This whole thing is a mess - A POTUS that spends like a D, a Treasury Secretary that is a D, A head of the Fed whose ?????, A D controlled Congress that vastly profited from the uncapped spending habits - soon to be more D's, that want this out of the way in an R Administration so they can avoid the blame.

    There is nothing like a setback or two in life to make people aware of their surroundings. People learn very well from bad experiences.
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    Senior Member Hoosier's Avatar
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    How about allowing people to use pretax dollars to pay down personal debt. The banks would get their money, and people would get out from under some debt. Also people who don't pay taxes would get their fair share. The effects would be slower, but longer lasting.

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    Senior Member kjrice's Avatar
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    Marvin the people really getting screwed are those that have excellent credit, work hard, and pay bills on time. Now, the immediate reward goes to those that have been scamming Americans for a decade or more and executive greed. The quicker people can break even on a home the quicker they can sell and start the cycle again. As it stands, it is better for most that are upside down to just walk away. Save the $2-3k per month mortgage and try again in 7 or so years. Meanwhile, you rent a distressed home for $1k per year and pocket the remaining $1-2k per month. Now times that by 7 years and that is a hefty downpayment.

    My guess is it would take more like $10trillion for a true bailout. Now we are just dragging out.

    At first thought, I like the pre-tax debt payment. A tiered approach is good.
    Last edited by kjrice; 11-25-2008 at 12:03 PM.
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    Senior Member Julie R.'s Avatar
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    Quote Originally Posted by kjrice View Post
    I see billions+ (soon to be trillions) being spent of taxpayer money to help Big Finance, but I cannot help to think that there is a better course. Why not paydown residential mortgages $100k and allow them to refi at reduced rate of, lets say, 4%. That would reduce the cost of living for many by around $1000-$1200 per month. Also, that money goes directly back into the finance markets. In the long run, Big Finance doesn't make the most money possible, but the economy, as a whole, should stabilize. Think of it as watering a tree from the roots instead of soaking down.

    Ironically, the lemmings aren't seeing that the Democratic Party that termed "trickle down economics" as bad voodoo are the same promoting it.
    Actually, legislation that was supposed to do just that was passed last summer. Banks are supposed to have a fiduciary duty, now a law, to protect their customers (secondary mortgage market and investors) if a mortgage holder got in trouble, but could still pay some of the mortgage. Many banks in fact set up loss mitigation depts. to deal with these kinds of customers by making what's called loan adjustments.

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    Senior Member kjrice's Avatar
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    Quote Originally Posted by Julie R. View Post
    Actually, legislation that was supposed to do just that was passed last summer. Banks are supposed to have a fiduciary duty, now a law, to protect their customers (secondary mortgage market and investors) if a mortgage holder got in trouble, but could still pay some of the mortgage. Many banks in fact set up loss mitigation depts. to deal with these kinds of customers by making what's called loan adjustments.
    Sure but they could still be upside down tens of thousands. Then have been getting credit dings and with no light in sight, how many just say "screw it" and walk away. Then everyone loses. With (an arbitrary number) $100k directly pays down a mortgage and still ends up in Big Finances hands. There is no "one best" way to get out of this mess. One way or another someone is getting paid that put us in this mess. Sure some knew better when signing these scam loans, but the majority didn't. Heck it was fueled by the Clinton administration, so it must be a good loan right?

    It is easy for folks like Marvin that seemingly have the perfect retirement to take a hardline. Most of me believes in a hardline approach too, as I built just before the explosion, but I do not know if that is truly the best approach to limit the fallout. Instead we are well on the road to a nationalized banking system. Government has really grown and the principals of the Constitution are being trampled.
    Last edited by kjrice; 11-25-2008 at 01:28 PM.
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    Senior Member Mistyriver's Avatar
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    I think a better solution is to renegotiate these loans that folks are paying high percentage rates to a lower fixed rate such as 5 or 6 percent or lower so then you will see more money in there pocket plus it is better for the banks instead of foreclosure and the homeowners would also save 1000 of dollars on interest in the long run. I donít think rewarding folks by paying 100k off their mortgage who bought more house than they could afford or took 100% or more equity out of their home to spend on other things is not the answer. They should still be responsible for paying their own debt.

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    Quote Originally Posted by kjrice View Post
    It is easy for folks like Marvin that seemingly have the perfect retirement to take a hardline.
    Our retirement is fine only because we don't have great expectations, mostly we don't expect someone else to lower their standard of living to raise our's.

    A small retirement (with no cola) from the company I worked for, SS for both myself & my wife, Government plans you have to join in order to protect your self & whatever my wife & I saved over the years & I invested, hopefully wisely. We bought & paid for what we could afford at the time. My wife is a real shopper & can spot a bargain. She hauls me along when we are buying the unusual as I can break things down in my head as to whether they are a true bargain.

    No fancy vacations, no 40 foot MH - just a bottom of the line travel trailer pulled by a Duramax (a luxury). We do go out to lunch regularly, but beyond that life is good by our standards but most would consider it rather quiet.

    How many of you believe it your duty to pay for your children's college education? We did not, & our children, 3 of 4 did it on their own. They are much more confident as adults, understand the value of a dollar & were ready to work when they graduated. That's why the hard line, we did it, it was not easy, why can't others?
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    Senior Member kjrice's Avatar
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    Others can do it, but that isn't necessarily about fixing this crisis now, since the gubment is already handing out taxpayer money to the elite corps. Also, the $100k isn't juts for "bad" loans. It goes to every homeowner. It is probably not the best idea, but I am fed up with this whole mess. And watch our money go to the Big 3 to reward them for poor business operations.
    Last edited by kjrice; 11-25-2008 at 03:59 PM.
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  10. #10
    Senior Member Hoosier's Avatar
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    Quote Originally Posted by kjrice View Post
    I see billions+ (soon to be trillions) being spent of taxpayer money to help Big Finance, but I cannot help to think that there is a better course. Why not paydown residential mortgages $100k and allow them to refi at reduced rate of, lets say, 4%. That would reduce the cost of living for many by around $1000-$1200 per month. Also, that money goes directly back into the finance markets. In the long run, Big Finance doesn't make the most money possible, but the economy, as a whole, should stabilize. Think of it as watering a tree from the roots instead of soaking down.

    Ironically, the lemmings aren't seeing that the Democratic Party that termed "trickle down economics" as bad voodoo are the same promoting it.
    I agree with Marvin this is a really bad idea. That would cost be huge sum. 100K per homeowner. How many homeowners are there in the US. How would you pay for it. The government is taking some ownership in the cooperations they are bailing out. Would they own a share of your home. I don't agree with the bailout, but that would be so much worse.

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