The Economy has been Poisoned

[competentone]

The economy has ingested poison -- the "poison" is toxic debt in the system (debt that isn't likely to be paid back).

Just as a poisoning victim will vomit to expel the ingested poison as quickly as possible, so too the economy wants to "vomit" and get rid of the bad debt and effectively bankrupt companies.

The government's actions last week -- in passing the bailout package -- and previous actions of propping up failing companies, is the equivalent of preventing the poison victim from vomiting.

The poison is being kept in the system; it is spreading throughout the patient's body damaging vital organs.

It would have been better to let the patient "vomit." (Yea, it would have been messy in the short term.)

The damage will be much worse since the poison has not been purged from the system quickly.

[onewhippedpuppy]

Agreed. By bailing everyone out, we're effectively encouraging their actions, because nobody has to pay the consequences. In this case, we are encouraging our society's dependence on debt to live outside their means. I fear that this is only delaying the inevitable, and when the proverbial other shoe drops, the effect on the country will be far worse.

It's sad, because this could have been the shock required to return people to sound financial practices.

[Porsche-O-Phile]

The poison is stupidity. And there's no antidote, unfortunately.

[competentone]

Originally Posted by Porsche-O-Phile

The poison is stupidity. And there's no antidote, unfortunately.

You'd be surprised at how smart "stupid" people will become if allowed to feel some "pain" for their bad behavior.

I had a great aunt who used to work as a volunteer in an inner city (Detroit) hospital before the age of Medicaid.

She told a story about how the hospital dealt with the problem of young single girls coming back year-after-year giving birth to new children -- the hospital stopped administering anesthetic during childbirth.

She says that solved the problem -- the "repeat pregnancies" stopped.

[Porsche-O-Phile]

The politicians will never allow the harsh honesty of capitalism to work in this case. It's politically incorrect to hold people accountable. That's the death of us.

[HardDrive]

Originally Posted by porsche-o-phile

the politicians will never allow the harsh honesty of capitalism to work in this case. It's politically incorrect to hold people accountable. That's the death of us.

+1

[competentone]

Originally Posted by Porsche-O-Phile

The politicians will never allow the harsh honesty of capitalism to work in this case. It's politically incorrect to hold people accountable. That's the death of us.

"The death of us" will be hyper-inflation.

Every bad debt is going to be bailed out with the "printing press" -- which will actually work to turn "good and OK debt" into more bad debt.

Why "be responsible" and pay off your debts, when being irresponsible and defaulting gets the reward of a government bailout!

[widebody911]

[the]

Originally Posted by competentone

"The death of us" will be hyper-inflation.

Yep, I agree. And that hurts those of us who are the most responsible. Work hard, live below your means, and save. Only to have all of that hard earned savings significantly devalued and diluted.

[sammyg2]

Originally Posted by widebody911

You gotta be kidding me. You think it's the banker's fault? Are they the ones who borrowed money they couldn't pay back? Are they the ones who are defaulting on their loans? NO!
The greedy dumass people who are defaulting on their loans are the ones to blame. They did this to the rest of us. They need to be punished, but no politician has the guts to go after them or even put the blame where it belongs.

They drove up the prices of houses by buying crap they couldn't afford, then they walked away and drove the prices down, and left the bankers holding useless pieces of paper.

Yoy people who are against the bailout, do you really understand what is happening? Do you have any idea what would happen if we don't bail out our finiancial system? It will DIE! Worldwide!
We are going into a depression. If we don't do the bailout it will be a HUGE depression. People are going to be hurt really, really bad. All people. Everyone of us. It would last for decades!
We are totally screwed and this bailout is the last hope we have of maintaining any semblance of an economy.

[onewhippedpuppy]

Originally Posted by sammyg2

You gotta be kidding me. You think it's the banker's fault? Are they the ones who borrowed money they couldn't pay back? Are they the ones who are defaulting on their loans? NO!
The greedy dumass people who are defaulting on their loans are the ones to blame. They did this to the rest of us. They need to be punished, but no politician has the guts to go after them or even put the blame where it belongs.

They drove up the prices of houses by buying crap they couldn't afford, then they walked away and drove the prices down, and left the bankers holding useless pieces of paper.

Yoy people who are against the bailout, do you really understand what is happening? Do you have any idea what would happen if we don't bail out our finiancial system? It will DIE! Worldwide!
We are going into a depression. If we don't do the bailout it will be a HUGE depression. People are going to be hurt really, really bad. All people. Everyone of us. It would last for decades!
We are totally screwed and this bailout is the last hope we have of maintaining any semblance of an economy.

Congrats! If effective, now you've handed the problem off to our children. If not, maybe we'll postpone the big bang until the next presidential administration.

Our country as a whole has a HUGE addiction to debt. The answer to the problem isn't more debt.

[Moses]

Come on, people. You're too bright to pretend you don't understand the genesis of the problem.

The Community Reinvestment Act intentionally undermined the mortgage system in order to put poor people in homes. Banks responded by gleefully making government backed loans to people who were terrible credit risks. Banks who tried to avoid the Fannie Mae sub-prime heroin were actually SUED by the Feds! (Citibank is one).

The greedy bankers were simply making government backed loans according to government mandated guidelines!

Government lending rules got so lax, they encouraged banks to lend money to people with no assets, poor credit and no proof of employment! With all that new cash available, housing prices predictably soared.

You want to blame someone? Look no further than congress.

[MRM]

The blame game reminds me of a lyric:

I shouted out
who killed the Kennedys?
When after all
it was you and me.

[Porsche-O-Phile]

Originally Posted by Moses

Come on, people. You're too bright to pretend you don't understand the genesis of the problem.

The Community Reinvestment Act intentionally undermined the mortgage system in order to put poor people in homes. Banks responded by gleefully making government backed loans to people who were terrible credit risks. Banks who tried to avoid the Fannie Mae sub-prime heroin were actually SUED by the Feds! (Citibank is one).

The greedy bankers were simply making government backed loans according to government mandated guidelines!

Government lending rules got so lax, they encouraged banks to lend money to people with no assets, poor credit and no proof of employment! With all that new cash available, housing prices predictably soared.

You want to blame someone? Look no further than LIBERALS.

Agreed 99%, but I fixed the 1% for ya'.

Sorry if this pushes this into P.A.R.F. realm, but it's worth pointing out that Barack Obama worked for one of the law firms that sued banks who didn't make enough loans to po' folk.

http://www.mediacircus.com/2008/10/obama-sued-citibank-under-cra-to-force-it-to-make-bad-loans/

[the]

Originally Posted by Moses

Come on, people. You're too bright to pretend you don't understand the genesis of the problem.

The Community Reinvestment Act intentionally undermined the mortgage system in order to put poor people in homes. Banks responded by gleefully making government backed loans to people who were terrible credit risks. Banks who tried to avoid the Fannie Mae sub-prime heroin were actually SUED by the Feds! (Citibank is one).

The greedy bankers were simply making government backed loans according to government mandated guidelines!

Government lending rules got so lax, they encouraged banks to lend money to people with no assets, poor credit and no proof of employment! With all that new cash available, housing prices predictably soared.

You want to blame someone? Look no further than congress.

All true.

[JeremyD]

Originally Posted by Moses

Come on, people. You're too bright to pretend you don't understand the genesis of the problem.

The Community Reinvestment Act intentionally undermined the mortgage system in order to put poor people in homes. Banks responded by gleefully making government backed loans to people who were terrible credit risks. Banks who tried to avoid the Fannie Mae sub-prime heroin were actually SUED by the Feds! (Citibank is one).

The greedy bankers were simply making government backed loans according to government mandated guidelines!

Government lending rules got so lax, they encouraged banks to lend money to people with no assets, poor credit and no proof of employment! With all that new cash available, housing prices predictably soared.

You want to blame someone? Look no further than congress.

Amen brother - Moses for President!

[svandamme]

eeh. the real dirt wasn't the loans in itself, but reselling them as rock solid AAA rated investments, and parking stuff on special purpose vehicles, or whatever they are called, offshore, and outside the transparant accounting, so it wouldn't show up in forecasts and what not...And taking on more bad loans then they could handle, because they knew they were selling the rotten stuff for profit elsewhere...


sort of like a piramid scheme...
That's what the bankers did
not the loaners
not the govment

They re-sold ****e for gold, and while the run was on, they cashed out millions in bonusses, based on a non sustainable image of growth...

[Moses]

Originally Posted by svandamme

eeh. the real dirt wasn't the loans in itself, but reselling them as rock solid AAA rated investments, and parking stuff on special purpose vehicles, or whatever they are called, offshore, and outside the transparant accounting, so it wouldn't show up in forecasts and what not...And taking on more bad loans then they could handle, because they knew they were selling the rotten stuff for profit elsewhere...


sort of like a piramid scheme...
That's what the bankers did
not the loaners
not the govment

They re-sold ****e for gold, and while the run was on, they cashed out millions in bonusses, based on a non sustainable image of growth...

True. However...

When the first warning signs became evident, there were hearing in congress to determine if more aggressive oversight of Fannie Mae and Freddie Mac were needed. The representatives who pushed for for oversight and tighter lending restrictions were accused of racism (by Maxine Waters) and were told that there was no need for increased regulatory vigilance (Barney Frank).

Congress LOVED the fact that Fannie and Freddie were buying homes for the poor and minorities at unparalleled rates. They resisted every attempt to reign in the lending monster.

[competentone]

Originally Posted by Moses

True. However...

When the first warning signs became evident, there were hearing in congress to determine if more aggressive oversight of Fannie Mae and Freddie Mac were needed. The representatives who pushed for for oversight and tighter lending restrictions were accused of racism (by Maxine Waters) and were told that there was no need for increased regulatory vigilance (Barney Frank).

Congress LOVED the fact that Fannie and Freddie were buying homes for the poor and minorities at unparalleled rates. They resisted every attempt to reign in the lending monster.

Here is a collection of video clips of our Congressional members defending Fannie and Freddie and actually attacking regulators who uncovered wrong-doing at the GSEs:

[red-beard]

Originally Posted by competentone

It would have been better to let the patient "vomit." (Yea, it would have been messy in the short term.)

I'm not cleaning THAT up! I cleaned up after the cat this morning and that is enough for m.