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10/01/2008 01:09:08 PM · #226 |
| Heh! Why does that make me think of those class action lawsuits for billions of dollars where the average share/stakeholder gets a check for $10 after years of litigation..... |
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10/01/2008 01:19:24 PM · #227 |
Originally posted by Melethia:
Heh! Why does that make me think of those class action lawsuits for billions of dollars where the average share/stakeholder gets a check for $10 after years of litigation..... |
Only in this case, "your share" of the $700B is approximately $3100, as it is for every adult American.
Hopefully, we can expect a better return on our investment than a 99.7% loss.
The biggest things for me are oversight and stakeholding. Remember, these are the same people who created this mess, I'm absolutely no OK with just handing them a check for $700B to do with as they please. Remember, Treasury Secretary Paulson, is a very rich man who made his forune as the CEO of Goldman Sachs, he's as much a part of making this mess as any of the other irresponsible CEO's. Since the government is taking a huge risk, the government (and the people it represents) should share in the rewards. If the banks recover and start making money, so should the government. We should not simply use that $700B to sell the government debts that are unlikely to be repaid.
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10/01/2008 01:25:22 PM · #228 |
| Not sure what that number means. Do I loan my government $3100 now so they can bail out the cronies, then in ten or twenty years or so they'll give me my $3100 back? |
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10/01/2008 01:30:09 PM · #229 |
I think that's your share of the amount being lent to these banks to "re-captitalize" the markets. If you get $10 of it back you'll have that 99.xx% loss.
Right now each of us (and any newborn citizen) owes (if averaged out equally) almost $30,000+ towards repaying the nation's debt. |
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10/01/2008 01:45:44 PM · #230 |
Here's where I came up with $3100. Someone sent me an email claiming that the $85B bailout of AIG claiming that the goverment would be better off dividing that equally among American adults and that each adult would get a rebate of $425,000. That's a nice sentiment, but the math is off by 3 orders of magnitude and it would be $425.
I then did a similar analysis and looked at the whole $700B bailout package using population estimates of 228,750,000 American adults (305,000,000 Americans with ~ 25% of them under 18) from the US Census Bureau and divided to get $3060 per adult. |
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10/01/2008 01:53:56 PM · #231 |
| Many companies fund daily operations, including salaries, on a line of credit. If those dry up, so do many people's paychecks. |
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10/01/2008 02:09:55 PM · #232 |
Originally posted by GeneralE:
Originally posted by Ristyz:
Originally posted by GeneralE:
I think a lot of folks are pretty sure there's a depression coming no matter what, and we don't particularly care whether those stockbrokers have to start flippin' a few burgers for "the King" ... |
Ha! Maybe we'll start to see some decent service at "the King" and others! Lately , at least here, they really suck 'cause they are all run by less than motivated teens and young adults..... the last of the worker pool for our area. (the better workers went for the better jobs 'cause there are plenty of jobs in our local market currently) |
I'm curious to see whether those folks will work for the Federal minimum wage. |
HeHe, well, FWIW, the local (so-called) fast food restaurants are offering well over the Federal Minimum wage for starters. so, you never know.
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10/01/2008 03:11:22 PM · #233 |
Originally posted by posthumous:
Many companies fund daily operations, including salaries, on a line of credit. If those dry up, so do many people's paychecks. |
That's one thing that I'm trying to figure out. And there are no data anywhere that I can find on it.
a) how many companies rely on a credit to pay salaries?
a) 1. can they pay (assume monthly) salaries given the next month's revenue?
a) 2. how many months of revenue would they need to pay salaries?
a) 3. what is those companies' balance sheet like? Earning or losing money?
b) how many people cannot live without one month's salary?
b) 1. what would you do if your source of income dried up for a month?
b) 2. how about for 3 months? Would you survive?
c) how wealthy and prosperous is this country anyway? Was it all based only on our available credit limits?
We should have let the president push his social security privatization act through congress. It would have been much more fun now, watching both 401(k) and SS money turn into vapor! |
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10/01/2008 03:23:02 PM · #234 |
Originally posted by srdanz:
Originally posted by posthumous:
Many companies fund daily operations, including salaries, on a line of credit. If those dry up, so do many people's paychecks. |
That's one thing that I'm trying to figure out. And there are no data anywhere that I can find on it.
a) how many companies rely on a credit to pay salaries? ... |
Even if you're successful or have a sound business plan, it takes a lot of capital to fill a car dealer's lot, stock the shelves of a retail store, fill the tanks of a gas station, build an assembly line, load the freezers of a restaurant, etc. You might get 30% profits on some whiz-bang invention, but first you have to pay to make them, package them, advertise and distribute them. That's money up front that generally requires credit. |
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10/01/2008 03:28:17 PM · #235 |
Originally posted by scalvert:
Originally posted by srdanz:
Originally posted by posthumous:
Many companies fund daily operations, including salaries, on a line of credit. If those dry up, so do many people's paychecks. |
That's one thing that I'm trying to figure out. And there are no data anywhere that I can find on it.
a) how many companies rely on a credit to pay salaries? ... |
Even if you're successful or have a sound business plan, it takes a lot of capital to fill a car dealer's lot, stock the shelves of a retail store, fill the tanks of a gas station, build an assembly line, load the freezers of a restaurant, etc. You might get 30% profits on some whiz-bang invention, but first you have to pay to make them, package them, advertise and distribute them. That's money up front that generally requires credit. |
I understand this when you're starting a business... but assuming you've been working/having a business for awhile, do you constantly depend on a credit line for salaries?
Same goes for individuals. Once you land your first job out of school, you need to by a car, rent an apartment, buy shoes etc. But if you've been working for a year or so, do you still need to run on credit? |
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10/01/2008 03:33:10 PM · #236 |
Originally posted by srdanz:
Originally posted by scalvert:
Even if you're successful or have a sound business plan, it takes a lot of capital to fill a car dealer's lot, stock the shelves of a retail store, fill the tanks of a gas station, build an assembly line, load the freezers of a restaurant, etc. You might get 30% profits on some whiz-bang invention, but first you have to pay to make them, package them, advertise and distribute them. That's money up front that generally requires credit. |
I understand this when you're starting a business... but assuming you've been working/having a business for awhile, do you constantly depend on a credit line for salaries?
Same goes for individuals. Once you land your first job out of school, you need to by a car, rent an apartment, buy shoes etc. But if you've been working for a year or so, do you still need to run on credit? |
Very often, yes. Even if you've been in business for years, a project may come up that requires bigger computers or some other large expense. You'll make money when the project is finished and billed, but until then... Visa. |
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10/01/2008 03:34:24 PM · #237 |
I run on credit solely for my house. Everything else is on a cash basis. It took me awhile to get here, but I also haven't run a balance on credit cards for nearly twenty years now. (Credit card companies hate me. In fact, I just cancelled two and will cancel another next month. That leaves me with one, which is all anyone really needs.) I did buy cars on credit up until now, but I'll no longer finance a car, either. I was raised by rather sensible parents who taught me if you couldn't afford it, you probably didn't really need it.
Even if a business runs on credit, and that does make sense to a certain extent, I would assume a good business bases that credit on projected earnings, not vapor products. At least I would hope so.
I'm just not sure I see the wisdom (though I can see the realities to some extent) of bailing out people for being needlessly greedy and simply not very fiscally smart. |
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10/01/2008 04:07:13 PM · #238 |
Originally posted by scalvert:
Originally posted by srdanz:
I understand this when you're starting a business... but assuming you've been working/having a business for awhile, do you constantly depend on a credit line for salaries?
Same goes for individuals. Once you land your first job out of school, you need to by a car, rent an apartment, buy shoes etc. But if you've been working for a year or so, do you still need to run on credit? |
Very often, yes. Even if you've been in business for years, a project may come up that requires bigger computers or some other large expense. You'll make money when the project is finished and billed, but until then... Visa. |
Then my position is still the same. Let the world slow down a step. Skip a beat. Use any idiom you want. Go back to normal from hyper. Yes, it may hurt, but we deserve it. The whole thing was inflated, and although I realize that I may not get out of it free, I am for tightening. It can grow into a healthier state of the affairs.
I do not see how any influx of money, short of 100x bigger than the one proposed, will change anything in the long run. |
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10/01/2008 04:13:01 PM · #239 |
Originally posted by Melethia:
Even if a business runs on credit, and that does make sense to a certain extent, I would assume a good business bases that credit on projected earnings, not vapor products. At least I would hope so. |
But if credit dries up, even a responsible company can get screwed.
Every company has money coming in (revenues) and money going out (expenses). A company can plan very responsibly to not spend more money than it makes. However, sometimes their clients are late in paying, or their projects are timed so that they take a while before they get paid. They need a line of credit to keep things running until they get paid. And for many companies, the biggest expense is salaries. |
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10/01/2008 04:14:31 PM · #240 |
I say imprison all the politicians and let one single person,  scalvert, be King of the World. Real money to fix the problem can be raised by selling tickets to events such as Beheadings of Politicians, and Feeding Politicians to Lions.
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10/01/2008 04:19:21 PM · #241 |
Originally posted by srdanz:
What did you answer with these?
the first one talks about less credit card offers going out, and a tighter control over whom to offer a credit line? The second one talks about a person not being able to get a new truck for $3000 down, while at the same time talks about persons with verifiable income and good credit not having any trouble securing loans? The third one also talking about tightening rules for giving out credit?
This is exactly why we should not hurry with infusing money. If that money will go to finance people from these examples, what are the guarantees that those people will return the money? None.
Give me actual case where someone with a legitimate business plan and a history of good credit decisions is refused a loan. I've heard Caterpillar mentioned in the news, only to read about it from the company that they do not have credit issues. |
The problem I was pointing out was that businesses are suffering (as pointed to in the articles) because they can't give or get credit. Banks aren't lending money to them either so they have to short inventory. A 50 year old retail store just closed here locally because they couldn't get their credit extended. As a business, like many businesses, they run in the red until about thanksgiving and need the credit available to float until then. They couldn't get the credit so they had to close.
This is where it is effecting main street. You will see a lot of small businesses close because of lack of credit. And we aren't talking about bad credit either.
A retail store gets fronted inventory (being granted credit). Well, now the providers of inventory are demanding their money sooner. At the same time, people aren't buying. They are getting hammered from both ends. The only ones that will survive are the big box stores. Mom and pop stores will go away, and the damage will be worse the longer this carries on. Additionally, many people who work at these places will lose their jobs.
*fixed typo*
Message edited by author 2008-10-01 16:20:12. |
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10/01/2008 04:31:59 PM · #242 |
Effects on Small Biz and Here
Don't Freak |
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10/01/2008 08:24:46 PM · #243 |
Originally posted by HawkeyeLonewolf:
Great column that shows where the trouble actually began. People who could NOT afford homes given the opportunity. Increased demand caused the supply to become overvalued. As the loan situation started faltering a few years ago and prices got too high, demand started dwindling, thus values for the increased supply started coming down. As those who voluntarily chose to make bad loans (ARMs, etc.) started adjusting and refinancing, they found their houses would not appraise for even what they paid for it. This affected many areas of the country, though not all. Not everyone had a "bubble".
So they were left with a bad loan they couldn't afford because they couldn't get a better one because they were now upside down.
Meanwhile builders who kept building have left scads of unfinished subdivisions all over the country. And their construction loans are due too.
Originally posted by "Column":
This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.
Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."
Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.
Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness...
Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.
When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.
In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded." (of course, home-keepership plummeted - HL)
Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.
A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.
In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.
Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.
Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.
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Can you/somebody post a link to the original article? I would like to know where it came from.
ETA: Found the source in an ealier post. Honestly, I am not sure if I would consider this a reliable source.. it doesnt look like an independent and impartial resource to me. Any other factual/independent/politically impartial sources?
Very interesting article though.
Message edited by author 2008-10-01 20:37:28.
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10/01/2008 09:32:51 PM · #244 |
What are your opinions/thoughts/ideas on this plan?
(And yes, he does Christian-based financial planning, so if you can't get past the Christian part of it, might not want to read it, even though he doesn't say anything exclusively Christian. I just know some of you honestly admit to not liking anything coming from the Christian sector). |
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10/01/2008 10:00:28 PM · #245 |
The $50B in 1c seems wildly optimistic given the scope of the problem to be insured, I think part II was already implemented today, and part III seems like an open invitation to wild speculation (probably the opposite of what's needed).
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10/01/2008 10:35:04 PM · #246 |
Originally posted by Melethia:
I run on credit solely for my house. Everything else is on a cash basis. It took me awhile to get here, but I also haven't run a balance on credit cards for nearly twenty years now. (Credit card companies hate me. In fact, I just cancelled two and will cancel another next month. That leaves me with one, which is all anyone really needs.) I did buy cars on credit up until now, but I'll no longer finance a car, either. I was raised by rather sensible parents who taught me if you couldn't afford it, you probably didn't really need it.
Even if a business runs on credit, and that does make sense to a certain extent, I would assume a good business bases that credit on projected earnings, not vapor products. At least I would hope so.
I'm just not sure I see the wisdom (though I can see the realities to some extent) of bailing out people for being needlessly greedy and simply not very fiscally smart. |
I agree that one should pay for the greed they brewed. But if that greed starts to affect a whole nation's economy, something tells me the system needs a patch up. Although to have a money-oriented (capitalist) democracy, and then to still talk about regulating it tightly kind of defies the whole idea of a free market.
I wish more main street people (many many more) were as sensible as you are, Deb... because there will always be 'baits' like introductory offers on credit cards or a 0 downpayment housing loan in a free market.
About wall street, if you think about it, most of the senior executives keep a backup plan... they ensure hefty severence packages in the worst case that they have to depart...so they are smart.
In all fairness, thats the survival of the fittest (the context being financial wisdom)..isnt it?
And now, many of us financially stupid people (yes, myself included) will pay to bail out the few smart wall street guys (yes I just saw the breaking news.. the bill was approved in senate). And guess what, us main street guyys need the (financially) smart wall street guys to bring back the liquidity in the market so we can make that Columbus day trip again worry free knowing we will still have our jobs when we come back.
Its the essence of capitalism, isnt it? :-)
Message edited by author 2008-10-02 01:02:39.
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10/02/2008 12:08:09 AM · #247 |
Yeah, I realize I'm entirely too simple in my view of things. What I would like to see and what really exists/happens are wildly divergent at times. I think I'll stick to viewing and voting challenges and avoid the political realms. :-)
So if the bill has passed, how much do I now owe? |
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10/02/2008 12:27:31 AM · #248 |
I guess we are too simple too. We have been credit card free for 5 years now, we only owe the mortgage on our home and no longer have a valid credit card, we don't want one. If we can't buy it with cash then we do not get it. Our business is run on the same theory .. we've been in business for 2 1/2 years now (very successful) and have never had a credit card, line of credit or any type of credit for it, we pay cash for everything we do. If our clients make purchases for goods through us they are required to pay in advance and so far this has been met without resistance and with understanding.
I'm with Deb ... how much more do I owe now that the bill has passed and how much more am I going to loose on my 401k and other investments! |
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10/02/2008 12:34:54 AM · #249 |
If the problem is that banks are "too afraid to lend" there assets, why not do what's done with the student loan and FHA progrmas -- in exchange for giving a reasonably low rate and fair terms to qualified potential debtors, the bank must make the loan, and the government guarantees it against default.
People/businesses deserving of credit will get it, those trying to live beyond their means won't. |
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10/02/2008 12:50:54 AM · #250 |
I don't get the stories where people allegedly could not buy cars because nobody would extend a credit.
Last time I checked, you could not drive a car that you bought on credit out of a dealer's lot without showing a proof of full insurance - and the car is a collateral in any case, 1st lienholder is the bank that gave you the loan.
It seems unreasonable that a loan company would reject a customer with a decent credit history and a decent downpayment.
Having to document income and put money down is a normal thing, do not make a crisis out of it.
Should I try going to the bank tomorrow and asking for a credit line? I'd like to experience the crisis myself. If I find the time, I may do that - not really take the money, just let them go through the process of preapproval. I'll post back here if I get to do it. |
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