And the bail out goes right in to the toilet

[smokey the elder]

There is a high fear factor in the credit markets now, the way I see it (strictly lay observation.) No one wants to lend money at all, because all proper risk assessment has gone right out the window! The LIBOR low-risk short-term loans that are the "lube" of the economy aren't being made, so the economy is "stuck". Money exists; it's just not moving. Closest model: Japan in the 1990s. (Thanks, Robert Krulwich for making this simple enough for a scientist to understand!)

Is the "fear factor" justified, or part of a self-fulfilling prophecy? Just an example, in June we KNEW that oil was going to $150 a barrel....and it did, almost. But, then it came down, because it was apparently unsustainable.

Now the government, led by W, "KNOWS" that we'll enter the next Great Depression if they don't "bail" us out (I think that's a lousy term, btw).

Just FWIW, W "KNEW" there were WMDs in Iraq...interpret that as you will.

[Puckstop31]

No one wants to lend money at all, because all proper risk assessment has gone right out the window!

Yes, because they were MANDATED to give 'bad' loans, by Congress.

Money exists; it's just not moving.

Yes. The fat cats think that they can get a better return on their investment if they wait until the bad loans are 'bailed" out.

Now the government, led by W, "KNOWS" that we'll enter the next Great Depression if they don't "bail" us out (I think that's a lousy term, btw).

Just FWIW, W "KNEW" there were WMDs in Iraq...interpret that as you will.

All the more reason the 'bail out' should not be done. We are ALL going to take it on a chin a bit however.

[Grace]

In the latest issue of NEWSWEEK there is an article explaining how this financial mess happened. I've read it once, and plan to read it again and again - maybe then I'll better understand it all.

In case anyone is interested - HERE is a link.

[RICHARD]

From what I understand, which are a few hand gestures and the labels on Top Ramen, is that back in the late 90's the admin at that time saw a disparity regarding the numbers of MINORITY home buyers/owners.

The pres encouraged lenders to approvel loans with little or no downs and the balloon payments to follow.

The industry has been in free falll for the last 2.5 years. THe mortgage/title/bank industry are mostly to blame for this. They lent out tons of money and they were riding the horse to the river while everyone else walked.

In 99 I worked for a title company who had offices all across the So Cal. 35-40? It was a huge operation and the money was there.

The place where it went wrong was the greed and the lax rules that everyone operated by. The amount of money made, wasted and just thrown away was incredible.

A title/mortgage office would open up and the people running the office were given carte blanche to buy some of the silliest office supplies on the planet.

Why settle for plain BIC stick pens when you can order pens that are engraved with your name and phone?

I threw out about 50 thousand business cards all told.

At one office they had just delivered a 3,000 card order and the office closed a few days later!

Reps were stealing customer files and doing deals outside of the company's business.

Reps were quitting and stealing files when they moved on.

IT got to the point where a person was sent to a soon to be closed office, without warning, with a pair of bolt cutters and a note.The evening before the whole office data base would be run and saved at the main office, Then the 'Angel of Death would give the note to the office manager and go to the back room and cut the phone/computer lines to keep the people in the office from deleting files and taking them off site.

There was HUGE MONEY TO be made-people closed deals, made some serious green and said EFF IT!

Money was lent out to foreigners who spoke little or no English and sometimes had their teen agers who spoke better English than the parents would try to explaing what they were signing. There were other reports of people buying homes with no paperwork or any proof of income. Applications were submitted
and if they were denied, a new loan app would come back later in the day with 'new' info on the form.

That was the way it was. I worked for about 6 months total across the year closing escrow offices and had I been paying attention to what I was working with there would have been a chance to help people out keep their homes without screwing them and making honest money on the side.


What a shame that we have hit this low.

[blue]

I missed that comment, Sara, either that or I completely ignored it for some reason.

Pres. Carter didn't have the power to give away money........as stated earlier, that power is in the hands of Congress, not the executive branch.

The executive branch can veto those expenditures.

[Lady's Human]

The executive can veto expenditures, but only by vetoing the entire bill. Line item veto doesn't exist, and the House and Senate would never agree to giving the executive that power.

For a perfect example of this, look at last year's highway bill. It was packed with non-relevant spending, but there were so many pet projects packed into the bill as a whole, there was no way a presidential veto would have stood.

[Grace]

In the Senate - 74 yes, 25 no, 1 absent (Kennedy)

Those voting no -

Allard (R)
Barasso (R)
Brownback (R)
Bunning (R)
Cantwell (D)
Cochran (R)
Crapo (R)
DeMint (R)
Dole (R)
Dorgan (D)
Enzi (R)
Feingold (D)
Inhofe (R)
Johnson (D)
Landrieu (D)
Nelson (FL) (D)
Roberts (R)
Sanders (I)
Sessions (R)
Shelby (R)
Stabenow (D)
Tester (D)
Vitter (R)
Wicker (R)
Wyden (D)

[sparks19]

Well... I don't think it matters either way *SIGH* WE are going to be the ones paying for it whether it went through or not

But... I'm just a Canadian living in the US so am not allowed to have an opinion

[Marigold2]

I guess this means people will just have to stop using their credit cards and really,really think about what they are going to buy and what they can live without. Maybe taking on a second job, even if it's just for 8 hours a week. Many people are already doing this and still having a hard time and I truly feel for them. It's a lesson for us all. Don't sign a contract unless you have a lawyer to look it over, and if you can't afford a lawyer, you can't afford to buy a house.

[blue]

I guess this means people will just have to stop using their credit cards and really,really think about what they are going to buy and what they can live without. Maybe taking on a second job, even if it's just for 8 hours a week. Many people are already doing this and still having a hard time and I truly feel for them. It's a lesson for us all. Don't sign a contract unless you have a lawyer to look it over, and if you can't afford a lawyer, you can't afford to buy a house.

If you have problems with credit you are correct. Why should the gov rescue you from your bad deccisions?

What corp is buying my mortage? I dont know. I have a fixed mortage so Im not sure I care.

[Puckstop31]

I guess this means people will just have to stop using their credit cards and really,really think about what they are going to buy and what they can live without. Maybe taking on a second job, even if it's just for 8 hours a week. Many people are already doing this and still having a hard time and I truly feel for them. It's a lesson for us all. Don't sign a contract unless you have a lawyer to look it over, and if you can't afford a lawyer, you can't afford to buy a house.

I agree, until the last sentence. Tanya and I live on CASH. She has two small credit cards and I have two small credit cards. Together they have a limit of about $1500. We NEVER use them.

Sure, our home is humble, but I honestly would not have it any other way. We pay our bills, take care of Hannah, eat well and have a little extra to stick away. Life is good.

As for a lawyer.... Ummmm, we just bought a house without a lawyer. I read the whole thing and understand it. Just under 7% fixed. You don't need a lawyer, you just need to not be stupid.

[smokey the elder]

The enormous increase in the cost of oil, and by extension, gasoline, has caused many Americans to change their driving habits.

I would hazard a guess that the tight credit will cause many Americans to change their borrowing/credit card habits. As usual, the people who get you-know-what seem to be the middle class and lower.

The mortgage mess has such a load of complicated features, going back to the mandates. But there was an awful lot of monkey business with the subprime market, aggressive marketing techniques, etc. playing on people's ignorance. "You can buy a house with no money down and be upside-down on your mortgage! Just call 1-800-WEGYPYU!"

IMO, greed, pure and simple, is the biggest bar on this Pareto chart (geeky statistics tool).

[Edwina's Secretary]

This is about much more than credit cards and home mortgages!

The expression "seed money"? The farmer borrows the money to buy the seed to plant the crops. When the farmer sells the crop he/she pays back the loan with interest. If credit is too tight for the farmer to buy seed, he/she plants less and harvests less. Less food supply means prices go up.

A company makes a product but does not have the income until the buyer of the product pays for it. How do they make the payroll for the people who make the product? A short term loan. Too tight credit means they can't get the money to meet payroll.

Tight credit will not change my use of credit cards one iota (yes I have them and use them. But they work for me. I pay the balance off each month so I get the float without incurring any interest. I have never paid interest on a credit card and I use them daily.)

But tight credit will hamper the ability of businesses to do business.

You rent so who cares about mortgages? Whoever built the structure you rent undoubtably borrowed the money to build it. And the builder borrowed the money for the construction.

And if credit is tight -- the building of housing stock -- rental as well as ownership -- goes down. And if there is less housing stock? Rents go up.

How about cars? Tight credit means you will have trouble getting a loan to buy a car -- new or used. Tight credit also means car dealerships cannot borrow the money to buy the cars to have on the lot for you to buy.

So, if the dealers cannot buy cars to put on the lot the car makers are stuck with inventory they cannot move. If they can't move inventory they won't make more cars. And the car factory workers get laid off. And of course it "trickles down" from there because the auto worker now does not have money to spend.

This is a situation that requires us to look beyond our own backyard. No one is an island and no one -- whether you pay cash for everything or not -- is unaffected by this situation.

[Puckstop31]

ES, I agree with you. I know that just because we do not use credit cards, we will not be effected by all of this. Further, your description of how you use your CC's is wise. Sad that too many people do not use them as you do.

IF banks REALLY decide to stop giving credit to business, that is when things get rough. Jobs will be the first to go. Because if you cannot get credit to aquire product, you need cash instead... It has to come from somewhere. For instance, my company has a large credit line with Dell. This allows us to aquire product from Dell, install it and THEN bill our client. I am sure our business will take a hit if we would need to collect money before we do the work...

This is why I cannot get behind BO's tax plan. How is increasing taxes on big biz going to help this situation?

----

This bail out plan the Senate passed, pisses me off. How DARE they load up the most important piece of legislation in modern history with LOADS of pork spending? Do any of these clowns REALLY get it?

<sigh>

McCain screwed himself voting for it... Mr. "no more earmarks" my rear...

[Grace]

This bail out plan the Senate passed, pisses me off. How DARE they load up the most important piece of legislation in modern history with LOADS of pork spending? Do any of these clowns REALLY get it?

<sigh>

McCain screwed himself voting for it... Mr. "no more earmarks" my rear...

Apparently the Senate feels that by sweetening it up, they would attract more House members to vote for it??