Yes, agreed, I understand that Americans overwhelmingly supported a bailout when the question is phrased thusly: "Would you approve of the Treasury Secretary spending 700 billion dollars to aid distressed banks if without that assistance weeping sores will develop on your face and groin?" 82 percent replied yes to this question. "Would you approve of a federal bailout of distressed financial firms if in the absence of a bailout Rush Lambaugh comes to your home and takes a dump in your master bathroom?" 92 percent of respondents said "Yes." The other eight percent were concentrated in San Fransisco.
Speaking of transparency, have the Fed force the banks to lift up the "kimono" and show us what those Tier-3 level assets actually are.
I'm not a macro-econmics whiz, so I'm having a hard time connecting the dots to figure out why having a few I-bank failures results in a total economic meltdown. This debate has been raging for the last week now, but I haven't seen a good explanation for how this will happen... just a bunch of heavy handed warnings from folks I'm not inclined to take their word for it. I'm not saying you're wrong. This is actually an appeal to anyone who can explain or has seen a well-written article that can explain, step by step, dot by dot, how having a couple bank failures will result in the total collapse of the American & world econonmy. Cause if it's anything short of that, like a recession or even a depression, I say bring it on and we'll deal with it and get on with our lives like we always have.
you already have your answer - the truth is always in the tactic when they're telling the truth, they give you logical facts when they're lying, they give you heavy handed warnings without facts
You are right I do not get it. Yes "I can see a line of people willing to buy all the cars from local dealership" and poor dealership cannot find money to finance all willing buyers. Who are this financial intermediaries going to stick the bill to? Without consumer any financial system or intermediary is useless. The credit eventually will go to people with poor credit. By the way when did you get your Masters in Economics?
700b is not even close to enough. The security in CA and Fl has already been compromised 20 to 50%. loans for second homes are very hard to get - non conforming loans have an interest rate of 9%. million dollar properties take 250,000 dollar incomes plus 20% down... they will get crushed. Almost all junior liens written in the last 3 years are now worthless. I will bet those add up to more than 700b. So what will happen. The banks will dump their seconds from FL and the seconds from CA (which are almost entirely non recourse to the borrower) on the tax payer. The hold to maturing price of those assets is currently 0-8 cents on the dollar at most. Most collection attorneys will not buy the ones form CA. So 700 b gets dumped on the tax payer. Credit markets still frozen because we still have 3 - 10 trillion of future bad debt left. 700b might fix san diego and orange county loans... But probably not.
I'm with Landis. It's a necessary evil. Too bad it got to this point, but something had to be done. Get more educated folks.