OT: Bailout Bill

[Ed]

On Thu, Sep 25, 2008 at 11:21 AM, Nathan <nathan at paysonlinux.org> wrote:
> On Thursday 25 September 2008 09:43:09 Joshua Zeidner wrote:
>>  Hey all,
>>
>>    sorry for the OT, but I think the gravity of this situation offsets
>> the negatives of making this post here.
>>
>>    In case you are not aware, congress is currently considering
>> emergency legislation for a supposed 'bailout' of 700 billion dollar
>> credit line to the US Treasury in order to provide 'liquidity' to
>> credit markets in the US and worldwide.  The situation is somewhat
>> complex, but what I want to explain here is how it relates to things
>> you may see every day as an Arizonan.  You have no doubt seen more
>> than one totally ridiculous and imprudent mortgage loan dispensed in
>> the area over the past few years.  You might have assumed that these
>> risky loans would be the problem of either the bank or the borrower.
>> The alarming aspect to these recent developments are that we as
>> Americans have learned that it is in fact *all of us* that are going
>> to pay for these bad loans.  Does that sound fair to you?  And it gets
>> better: when we fork up the 700 billion, houses will not even become
>> any more affordable.  If you are struggling you will continue to
>> struggle despite this unprecedented transfer of wealth to the
>> treasurer.  With 700 billion dollars we could build houses for the
>> entire country.  This bill amounts to nothing less than robbery.
>>
>>    I truly hope that you consider calling your congressmen and
>> congresswomen and voice your opinion to this bill.  Your real voice
>> makes a difference.
>>
>>    thanks all, and I really hope you call your representatives.  We as
>> a country have to stop complaining and get involved.  Im not really an
>> 'activist', Im just a regular American who knows enough about this
>> situation to know how much of a tragedy it is.
>>
>>   you can get the phone numbers here by typing in your ZIP code:
>> http://www.congress.org/congressorg/home/
>>
>>   thanks, jmz
>
> Hear hear!
> I could not have said it better myself. Once again, our government has
> disguised highway robbery as 'helping the American economy'
>
> Good OT Josh.
>
> nathan
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The reason we are forking up 700B is not to make houses affordable.
that will continue to happen over the next 6 months as the housing
market continues to drop. What you are putting your 700B up for is to
take mortgages that are in default (after reassembling them from bits
& pieces) off the books of financial institutions so they don't go
bust so other financial institutions will again trust them
(accountants are screwing us here with new rules too). This is because
700B is 5% of the mortgage paper out there, which is only a (small)
part of the ~74T paper these banks have out there in all types of
contracts (actively traded every day). In 12 to 24 maybe 36 months the
housing market will again begin to "not move down" the extent of this
may be driven by demographics, but also there will be a time when all
this excess inventory will be sold - then the market will come back
and housing will again be an appreciating market. The Government will
then be able to sell the paper it bought with the 700B, most likely at
a profit. The profit comes from buying "toxic" paper at the bottom of
the market (pennies on the dollar) being "safe hands" through the
market troubles, and selling the paper (no longer toxic because the
housing market is back) for many more pennies on the dollar.

This is how all the great fortunes became huge - they come in at the
bottom of the market - soak up whatever nobody can stand to have and
wait until everyone wants it again because the sky isn't falling. This
is result of too much money in the system, too much complexity in the
market, and a machine that has been creating low to no quality paper
over - well, since 1999.