Hey Econ-types

[JesseMartin]

Of you who are more finance-savvy than politicos, what the hell kind of model are they using to determine that this bailout will actually be helpful in the long run? Everything I've read/heard has been the "dumbed down for the public who can't think for themselves" crap. From a public policy standpoint, it's God-awful, but I wasn't an econ major, so I may be missing some key stuff that makes it more palatable.

Does anyone know where their reasoning is coming from? Or is this just another pork-barrel, help out the guys who pay for our reelection piece of crap?

[KingDL1]

If I understand it correctly on top of the 700 BILLION congress added an extra 150 BILLION not being discussed in special interest and other riders. Now that is BS.

Edited October 6, 2008 by KingDL1

[UNTflyer]

In theory, by buying high risk loans from the lenders the government is taking bad debt from the finance companies so they can turn around and make good loans again. The government bureaucracy, being the closest thing humans will ever get to eternal life and not subject to profit/loss scrutiny and SOX acompliance like the rest of us, will then be able to sit on those foreclosed properties and bad loans (in theory, for year or even decades) until the market rebounds and then sell them for a profit.

For me, I don't like the plan at all, but have to agree that the alternative would have been a painful recession. We may end up thinking that was a batter idea.

[yyz28]

Flyer is correct. That pretty well boils it down.

...Workin' great so far, huh?

Today's great econmoic headline:

"DOW PULLS BACK FROM 800-POINT LOSS TO END DAY DOWN 369 POINTS"

Here's what you can bank on, folks. If the government gets involved, no matter who's running the show, the situation will get worse.

[JesseMartin]

Alternatives:

-Use the $700 billion to pay off the bad loans. The banks get their money, and people keep their houses.

-Split the $700 billion among all households designated "low income" by the IRS. This comes out to about $60,000 per household, making everyone middle class or above for at least one year.

[UNTflyer]

I have a real problem with using tax money to give away houses to people who should have never signed the closing papers to begin with. Yes, predatory lending was a factor... but good God, folks need to use some common sense!

[JesseMartin]

I totally agree...I'm pretty Libertarian, but if you're gonna rip off the American public to the tune of approximately $4,500 per taxpayer, which is the most sure-fire way to hook up the economy? The two that I pointed out are only great in their simplicity. The current Congressional plan is based on the "winner" of competing theories (who likely has/had put lots of money into reelection funds). It might work, and if it does, great. But it's unproven economics, and if the theorists are wrong, look for the $4,500 to increase drastically for those who still have jobs in the next 2-3 years.

Seriously, even after the pumping up that everybody used to give me about running for office, I'm only happy about this in that I didn't end up as one of the people having to vote on it. This is the first time since then that I have absolutely no clue what I would do were I in office. "Fringe labor" members, beware the next 18 months or so...even the well-grounded minds might not be able to work this out.

(Edit-went on a pro-Burgess rant, but I'm all better now ;P)

Edited October 7, 2008 by JesseMartin

[forevereagle]

Flyer is correct. That pretty well boils it down.

...Workin' great so far, huh?

Today's great econmoic headline:

"DOW PULLS BACK FROM 800-POINT LOSS TO END DAY DOWN 369 POINTS"

Here's what you can bank on, folks. If the government gets involved, no matter who's running the show, the situation will get worse.

Be careful using the stock market as a leading indicator of the economy. The market over-reacts to the smallest peice of news. Stocks are responsive to news, they do not anticipate. Stocks are also not a good predictor of where the economy is heading. The market is another way for people to make money, not an evaluator of the economy.

[JesseMartin]

I've also questioned some of my friends as to whether the stock market may be a "failed experiment" in the near future and be replaced with a different paradigm. The only response was that maybe stocks would evolve in some unforeseeable manner.