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What do you think of the Government bailout?

A place to debate issues or to rant about what's on your mind. In addition to discussions about historical fiction, books, the publishing industry, and history, discussions about current political, social, and religious issues and other topics are allowed, so those who are easily offended by certain topics may want to avoid such threads. Members are expected to keep the discussions friendly and polite and to avoid personal attacks on other members. The moderators reserve the right to shut down a thread without warning if they believe it necessary.
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Divia
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Post by Divia » Sat September 27th, 2008, 9:14 pm

I agree that its far too easy for people to get credit these days. And its far too eaasy for people to use credit cards when they want that new LCD TV or that new sweater or whatever it is. Its annoying and tiresome that I work hard for my money yet I rarely see it. I try not to spend above my means. I saved up over the course of 4 months to buy a ring. walked into Kays and plopped down the 700 bucks. I thought the lady was gonna die. But tahts how people should do things, but they dont.

I want to say that this crunch is gonna make people realize how poorly they ahve been living, but I doubt it.

And I just heard the other day that a CEO took over a company for like 6 days and left and now he is gonna get a muliti million dollar deal. How the hell is that fair???????
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Leyland
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Post by Leyland » Sat September 27th, 2008, 10:24 pm

I just wonder where we'd be now if Rep. Barney Frank (D-MA) hadn't opposed the Bush administration's and other Republicans' attempt at a regulatory overhaul of the housing finance industry back in 2003. The following is a Frank quote from a NY Times article:

"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

The outline of the plan is also quoted from NY Times:

"Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates."


Here's a link to the article - http://query.nytimes.com/gst/fullpage.h ... Mae&st=cse

As Telynor stated, the mess has been brewing for a long time. Apparently, oversight of Fannie Mae and Freddie Mac has been acknowledged as being broken for the last five years. And I understand that the housing market expected for homes to keep appreciating in value. I assume this lead everyone to believe that underlying problems could be ridden out without consequence. Guess not.

I'm glad that so many people have had a chance to buy a house for the first time in the last ten years, but should they have been given the opportunity if they really couldn't afford it once they got it? I saw on a business program today that a year ago Frank approved a bill that allowed people to obtain FHA backed loans with zero percent down. Unbelievable. Remember the generations of hardworking people that saved up and went without so they had a down payment for a home? Equity is such a huge factor in attaining and keeping such an important asset.

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Telynor
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Post by Telynor » Mon September 29th, 2008, 4:27 am

One of my favourite authors, Robert Heinlein, mentioned in his The Notebooks of Lazarus Long that:

Pay in cash or do without. Knowledge of debt eats up marital harmony as well as peace of mind.

And oh, how true that is! My ex, The Weasel, had not a clue about money or the real world, and continually had bills or was out of work, while I slaved away for years trying to figure out how to make him happy. (he was a con-man, through and through) For about the last ten years, I've been living on a cash only basis, and this week, we got the notification that the mortgage on J's home has been paid off.

All they have to do now is recreate debtor's prison or sponging houses -- that would end most people buying on credit. However, with easy credit and the high interest rates, most people have dug themselves in so deeply that there's almost no way that they can dig themselves out.

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Divia
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Post by Divia » Mon September 29th, 2008, 11:10 am

I believe the average household debt is 10 grand on credit cards.
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LCW
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Post by LCW » Mon September 29th, 2008, 2:25 pm

10 grand in cc debt?? That's crazy! I guess we are lucky that we don't have any debt other than a mortgage and student loan debt. It's a big chunk but nothing unmanageable, we have very low interest rates, and we get big tax writeoffs from them every year. We do use cc's for some things but we could pay it off it we wanted to. I admit that I used to be a carefree spender, although I never went into debt for it, but my fiance is really good with money and has taught me a lot. I've learned to respect small amounts of money and that the constant bleeding of $5 here or 10 there is what really eats up your money. We usually bring lunch, cook at home, don't drive expensive cars, don't go out to too many expensive dinners, and manage to put back a good amount of savings. We pretty much live simple and under our means and we don't feel deprived at all.
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Leyland
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Post by Leyland » Mon September 29th, 2008, 2:46 pm

I use credit cards constantly to accumulate air miles instead of using my debit card, but try to go online every two weeks or so and draft the balance from my checking account as if it were a debit card. That's worked fairly well for me the last few years. Those little $5 and $10's do add up as 1lila1 says and it helps to see them add up online. Especially all the Amazon hits my balance takes from buying books you wonderful people have recommended here! ;)

I think I've got enough cc miles for a free round trip ticket, but it seems that I can't get the travel dates or times I want for the free air ticket anymore. So I think I'll start using my Barnes & Noble Mastercard all the time and get points for freebies there.

Again, going online and seeing latest transactions and current balance is a good psychological tool for controlling personal finance. That is, unless you're a master of denial. :(
We are the music makers, And we are the dreamers of dreams ~ Arthur O'Shaughnessy, Ode

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Telynor
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Post by Telynor » Mon September 29th, 2008, 7:31 pm

I just saw on CNN that the bailout has failed in the House.

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Divia
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Post by Divia » Mon September 29th, 2008, 9:13 pm

Yeah I saw that too. I want to read it, but its all one big mystery to us all. What is in it? I dont want to give wall street a blank check.
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princess garnet
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Dow Falls Big Time

Post by princess garnet » Mon September 29th, 2008, 11:33 pm

Wow, the Dow fell 778 pts in 1 day! :eek:
http://www.washingtonpost.com/wp-dyn/co ... id=topnews
I can see tomorrow's newspaper headlines...

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Leyland
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Post by Leyland » Tue September 30th, 2008, 12:19 am

I hope the average American with 401k savings now understands that the bill wasn't for the benefit of Wall St financial firms so much, but for we, the people. This market plunge is horrific and affects every American with securities investments - namely retirement savings. I understand the members of the House that voted against the bill did so because their constituents demanded it. Pelosi wasn't any help either. I think those people are wrong.

I want our government/us to buy these bad investments now and get the credit machine back up and running. I'd hate for any of us to be working for a company that relies on a line of credit to meet payroll and not be able to get it. That's the most dire possibilty I can think of happening.

We unfortunately need a government intervention and I hope another bill gets drafted very soon. I watched TV all day during the crash in 1987 in disbelief. Scary stuff.

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