September 30, 2008

  • Honestly, I'm not really well versed on the economy (so correct me if I'm wrong), but I thought I'd say a little about what will / might (you choose) happen, since the "bail-out" of Wall Street was rejected by the U.S. Congress.

    Banks stop making loans = Businesses who needs loans can't spend money to run their business = Businesses start laying off employees = People with no jobs can't spend money to keep businesses afloat = Businesses go out of business

    That looks like a pretty bad scenario right? If that $700 billion bail out plan was suppose to prevent that from happening, by allowing those banks to start offering loans again and avoiding that cycle, well maybe it should have been passed. Why didn't it get passed? Well frankly speaking, us taxpayers didn't want to have to be the one to "save" the institution that was screwing with us in the first place. So what, we got to just bend over and take it willingly, because the problem is much bigger than the chance of just saying "you deserve it?" Heck, maybe we don't need those banks anyways, as there are still other banks out there that aren't in trouble. So forget about the bail out plan after all? It's just so confusing isn't it?

    How did it even get to this point? Who is to blame? I've got a couple of fingers to point to. The stupid people who buy houses, even though they can't afford it. The banks who take advantage of those stupid people, by giving them loans that are designed to get much more money than is really affordable to them. The lack of regulation to stop banks from taking advantage of those stupid people.

    The whole thing just sucks doesn't it? It's looking like us taxpayers are pretty much going to have to be forced to bail out those banks. However, when we need help, who bails us out? It this bail out goes through, I'd
    really want to see some kind of compensation in the future.

    BTW, I hear this quote some times, "When the stocks are down, it's the best time to buy." uuhhmm, make it so?

Comments (5)

  • I'm actually not for the bailout.  This is what the US attempted to do with consumers on a smaller scale earlier this year with the economic stimulus package.  Which basically came out to this:

    What the govt expected:
     1) hand out $300 to everyone
     2) everyone will spend like a drunken sailor
     3) the economy will pick up

    What actually happened:
     1) hand out $300 to everyone
     2) everyone realized they owe loads to the credit card companies and they can't make mortgage payments so they just made an extra payment.  No spending spree
     3) economy still sux

    Now they're thinking the following:
     1) govt will make a new company/organization with $700 billion dollars ($300 billion to spend on whatever they want)
     2) new company will buy up the bad loan investments from banks
     3) banks have no more bad investments so they'll start lending again

    However I'm guessing it'll be more like this:
     1) govt buys up bad loans
     2) banks go "Whew... that was close.  Better not do that again"
     3) banks still won't lend money to anyone
     4) US depression

    I personally think we should just let the banks go out of business and the govt should start either lending directly to businesses or provide loan insurance to the banks still standing.  Our problem is banks are no longer lending money not that they are going out of business.

    Here's a couple of fun pictures to look at:

    http://www.wallstats.com/blog/wp-content/uploads/wallstatsbailoutmath.png

    http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html

  • Yeah, I agree with you here. Let those banks crash and burn for all I care. Like I implied, there are still other banks in good standing out there willing to give loans to customers in good standing.

    Also, that "economic stimulus" package has always been a joke that people just willingly ate up.

    off topic: Have you listened to "Dream Theater" yet? Might be a band you'd like.

  • Not @patrick005 - @patrick005 -
    Not bad.  I've actually been listening to Trivium lately and embarrassingly, Dragonforce (Journey meets Slayer indeed!).

    Anywho here's another fairly good explanation of what's going on: http://mises.org/story/3127.  I'm still waiting for the ending of Fight Club.  Mebbe it'll happen by the end of this year.

  • Just because a depression seems to be all in the news lately, here's an interesting experiment that was done during the depression that allowed a regional escape from the liquidity trap the congress is worried about: http://www.globalideasbank.org/site/bank/idea.php?ideaId=904
    Be careful though.  Central banking systems are threatened by this idea and they tend to have friends in govt to make sure it doesn't succeed. 

    The past couple years we've been seeing forms of product and service exchange happening.  Either a barter system like freecycle or a new currency like linden dollars and WoW gold.

  • Hey there's nothing embarrassing about listening to Dragonforce! =P

    I've got Trivium's Shogun ready to go for next week...

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