340.29m/s

I'm not trying to make a political jab by this, I am really curious.

When did the US start to move away from people being fiscally responsible on their own and start relying on the government?

Can it ever be reversed? Should it even be reversed or does it make us a better nation in some way?

To reverse, wouldn't it require people to stop worrying only about themselves and start thinking about the nation as a whole? I can't see this happening...



note: I've obviously been watching too much cable news

__________________
I don't believe in signatures. Well, except for this one.

nEighter

with the housing "bubble" it was a money grab.. the regulations were loosened cause in the 90's the economy would have came to the crawl that we are experiencing now.. only then there wouldn't have been the amount of people who were allowed to get loans that were fundamentally not sound. That of course was because of "the great build" of the 90's.. someone had to live in all the houses that were built.. so they kept loosing the requirements till the builders/banks were free of the debt.. only to get there money and theoretically be able to get the properties back and resale them again once people started to go defunct on their loans.. only the cost of energy went up, then people's money started to flee their pockets/accounts and they were unable to afford other things and the economy spirals down more.. so then people loose their jobs and are unable to pay their mortgages and then the same banks/lending firms are now stuck with properties they can't resale.. not to mention that refinancing in alot of areas is out of the picture cause now their homes are worth less than they bought them for... compound that by the fact that these institutions grouped these loans together and sold them to foreign governments to rid themselves of the burden.. now they are the ones that are stuck with property notes on properties that aren't worth as much as they have bought them for.. which can't sell.. and no buyers to buy them anyway.

What you have is.. a group (who knows who they are).. who have stolen money from the home owner, government, banks, and foreign investors. Someone somewhere is sitting back with all the money laughing their ass off.. and guess what? They will more than likely be the ones that buy all the bad debt off at a fraction of the price.

So weather it is the government or the individual I don't know.. but something must be done.

You ask me? I say across the board allow people to refinance their homes. Not red tape, nothing. Let people get into a loan they can keep, in effect starting over at square one. Why give them that? People are walking away from their homes in record amounts right now. I saw a figure yesterday (friday) that says that 9-11% of all homeowners are late on payments right now.

If ever there is a time for the government to step in and say.. hey this is gunna happen, and you are going to allow it... it should be now. This will give the banks money they don't have from payments that people haven't been able to afford prior to this deal. In a way, this is the stimulus package we need. Homes will actually stay in the individuals hands and not be vacant dwellings that are looted for their valuable possesions.. and will give the homeowner a chance at actually being responsible monetarily for their purchases.


I know it was a broader question than what I have said above, and I am sure that I have left out a ton that I couldn't type fast enough to get down, but that is the jist of what I think.

__________________

340.29m/s

Do you think Fannie and Freddie were willing to buy up sub-primes and Alt-A loans because they had government backing and didn't have to worry about failure?

Isn't it ironic that we created Fannie and Freddie to help the housing market after the depression and now Fannie and Freddie are heading us IN to economic problems.

__________________
I don't believe in signatures. Well, except for this one.

nEighter

I haven't read the actual takeover deal yet.. I have just browsed it.. It is the same as the savings and loan debacle of the 80's.. only this time with the housing market.. I didn't know the history of these two companies ironic indeed

__________________

nEighter

Government to wipe out Fannie/Freddie shareholders by Sunday

Posted Sep 6th 2008 8:48AM by Peter Cohan
Filed under: Federal Natl Mtge (FNM), Goldman Sachs Group (GS)


And now what could become history's biggest transfer of tax dollars to bail out bad lending begins. Last month Congress passed a bill that gave the Treasury Department $800 billion to bail out Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). And while it is unclear how much money will be used to bail them out, the general outlines of the soon-to-be-announced terms are becoming clearer than they were last night.
The New York Times and The Washington Post report on five key features as follows:

• Government bankruptcy. Fannie and Freddie will be taken under a conservatorship -- which is similar to a bankruptcy wherein a trustee operates the company so it can be fixed and ultimately sold back to public investors. The bailout would reduce the value of their common and preferred shares "to little or nothing," according to the Times.
• Taxpayers bailout defaulted mortgages. Some share of the $800 billion in taxpayer funds will be used to pay "any losses on mortgages [Fannie and Freddie] own or guarantee," according to the Times.
• Payouts on a quarterly basis depending on reported results. Treasury is trying to dribble the bailout over time. "Instead of giving each company a big capital infusion up front, the government could make quarterly injections as the companies' losses warrant. This would be an attempt to minimize the initial cost of the rescue," according to the Washington Post.

• Fire CEOs and replace the boards. At a meeting earlier in the week, on which I posted, Daniel Mudd, Fannie's CEO, and Richard Syron, Freddie's CEO, "were told that they would have to leave. [And] the companies boards would be replaced," according to the Times. I can only imagine the firestorm that will ensue if Syron gets another $38 million as a severance package.
• Announce deal before Asian markets open. As it did with the Bear Stearns bailout, the government caters to Asian markets so it "had been planning to announce the decision as early as Sunday, before the Asian markets reopen," according to the Times -- as I thought yesterday.

Why did Paulson decide on this bailout? His bazooka strategy -- merely having the authority to bail out the two companies -- did not alleviate investor anxiety. He measured that by the widening interest rate difference between Treasury and Fannie- and Freddie-backed securities. And concluded that in order to lower that spread and bring down mortgage rates he would need to use his bazooka rather than merely keeping it in his pocket.
When it was announced in May 2006 that Paulson would take over as Treasury Secretary, I speculated that he did so because he thought he would have a bigger challenge than Robert Rubin -- another Goldman Sachs Group (NYSE: GS) alum -- in cleaning up the coming financial catastrophe created by our dependence on foreign ownership of U.S. debt. And I thought Paulson would try to make his name in the history books by dealing with that cleanup.
It remains to be seen how history will judge him -- but since China owns $340 billion of Fannie and Freddie mortgage-backed securities -- it looks like my guess about the first part was partially right.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

__________________

jdv

It was only a few weeks ago that 1st National Bank of Nevada and First Heritage Bank were locked up and closed down by the feds as well. Financially this country is in REAL bad shape and it isn't going to get better any time soon.

__________________
1968 Mustang Coupe

timeless2

The New Deal. <--click

__________________
Tim

2010 Ford Mustang | MagnaFlow Exhaust | Toy Reviews & Recalls

nEighter

you are soo right Jades.. ALOT of banks have failed in the last 2 yrs.. in the hundreds. I think this may take the cake as far as financial disaster to the country is concerned. Been what 20+ yrs since USSR broke apart? They are pretty much all paid back and ready for the next cold war. Le Sigh..

__________________

nEighter

Man that is what I thought of when I first read this thread.. AntiTrust laws, and the breaking apart of Monopolies.. Rockefeller and the steel companies.

__________________

nEighter

You know.. I remember going over all this stuff in class, gradeschool and then highschool and thinking it was the most boring shit ever.. having to do reports on it and all... Now I really kick my self for not learning it better than what I did.

__________________

jdv

I would never want another cold war, but in time of wartime, our economy seems to thrive, although we pay the price with a large debt in the end.

Greenspan did A LOT of damage, and Bernanke has done nothing to improve.

Finally, rates are not rising anymore, the economy is at a stand still, oil prices are still at an all time high, price of grain has skyrocketed (I believe this should be the largest concern right now). Mortgages, loans are being defaulted on because rates are high and people simply don't have the money to afford them anymore because of raising cost of living, along with wages that don't support it.

The housing bubble is an absolute disaster and Greenspan admitted he did nothing to prevent it, and even more frightening, admitted to it being a suprise to him. On top of that, he blamed analysts after forecasting it once the "variable mortgage" became popular a few years ago. Even worse, once he retired, he admitted the fed's manipulate the market.

__________________
1968 Mustang Coupe

jdv

Also, another thing that pisses me off is listening to ANY canidate speak about our current financial situtation. As a politican, why haven't they already try to hold board members responsible for the situtation they created? On top of that, what EXACTLY can they do rather than ease the speculators? Everything that is involved with the reserve and politicans regarding our spending and finacial situtaiton is a total crock.

__________________
1968 Mustang Coupe

nEighter

It is for these reasons you speak of I wanted Ron Paul into office. He knows about money, that we need money that is backed by "something" gold standard is what he champions and to abolish the Fed. The fed is a non government body that does nothing but manipulate the rates to make money. Bottom line THEY (the richest families in the world) own and make the money off our dollar.

He is a smart guy. I really hope that we can change things around.. we haven't seen the real storm yet I feel.

__________________

340.29m/s

Posted via Mobile Device

Wow, talk about an awesome thread! I am glad the new deal was brought up because that really was the original program when government started all of this, and I agree with most of the above points...but I am really interested in when it become socially acceptable to live off the government and then have the audacity to complain that they are not as comfortable as they want to be.

As for Ron Paul, I completely agree. Bob Barr is really not bad either. I would love to see a republican party a little more like them.

jdv

Basically it does exist for a lot of people.

People are taking advantage of state assistance and the welfare system, we are too familar we these people, you might know exactly who I'm talking about. The family of 7, mother, father, 5 children and 26 cats. Both mother and father are unemployed, drug users and they neglect their children for their cats, which are unfixed and reproducing. Mother recieves alimony, welfare and the father is on disability.

These are the same people that get "injured" at work and work the workers compensation program as well.

__________________
1968 Mustang Coupe

nEighter

you know my neighbors?! J/K... STINKY's NEIGHBORS??!!!

__________________

rbohm

nope, it started in the 60's with the "great society". that was when welfare, medicade, and other bloated government programs were instituted. then in the late 60's or early 70's things were made far worse when lawyers were allowed to advertise on radio and television. i saw ads that lawyers were putting out from california that literally stated that if you were in an accident, the law firm could get you money even if you were at fault. that was the end of personal responsibility.

__________________
64 falcon
66 mustang
76 el camino

a man's fate is a man's fate
and life is but an illusion

jdv

If I recall, there was fine print at the bottom of the advertisement, since it was on every station everytime there was a commercial break, I thought it said that it was under a conditional base only and wasn't guaranteed? I could be wrong though, but I would agree it was pretty bad.

Remember the "burglar falling through a window and suing the owner" type lawsuits we all heard about? I honestly thought they were true until I took a look at snopes: snopes.com: Stella Awards. Atleast it brings me some sort of hope within our system still.

__________________
1968 Mustang Coupe

rbohm

my problem though is that when lawyers were allowed to advertise, you know the first thing they were going to advertise was you can sue people and get money. the fine print didnt matter then or now. these lawsuits are frivolous for the most part and cost money and time that could be better spent doing constructive work rather than just enriching lawyers.

__________________
64 falcon
66 mustang
76 el camino

a man's fate is a man's fate
and life is but an illusion

jdv

Yea, but just remember, they are marketizing of the greed of all of us, it's that concept that anyone can sue anyone at anytime for anything that is allowing them to do that. Who know's what the outcome may be, even consulting, or losing a case they'll still bring in a lot of money.

__________________
1968 Mustang Coupe

Jackie Chan