The Bush Bailout Plan

OK, so I barely understand the details of the bailout, but that still
puts me ahead of Bush.

Seriously; I have no misconceptions that a C- student who has never
run a successful business has ANY idea of the details or the
complexity of the bailout; hell, I know PhDs in economics who aren't
really sure themselves...so every time I read some news article where
he states uncategorically how necessary it is, or how the US economy
will go down the tubes without it, I have to wonder why is he so
adamant about it. What could his handlers have explained to him in
high-school terminology to convince him that we need to toss that kind
of money around, while we are bankrupting ourselves over a worthless
war, a tanking economy and a housing brick.

Here's my theory.

The overall bailout plan is fairly straightforward (if you neglect the
details): the US Gov't buys a truckload of 'bad' morgages (IOW, takes
ownership of a bunch of foreclosed properties from speculators,
mostly) at 'current market rates'. This infuses the banks who are
holding these bad mortagages with real currency, and they unload bad
debts, and its happy days for them; they dodged a bullet.

Meanwhile, the US Govt is holding title to all these properties that
it acquired at market rates, right at a time when the housing market
is rock-bottom. I'm not sure if they are buying these mortgages for
the mature value, their balance due, or if they are acquiring them for
the current sellable price of the property, but in any case, with
market conditions the way they are, its a firesale.

So in 3-5 years, now that the banking sector is back on its feet, the
housing anti-bubble has reinflated, and all the americans who are
terrified about where to keep their money decide that Real Estate is
the best place (since housing prices are so low), the market starts to
soar. Then the Govt starts selling these properties off...bit by
bit...until they have increased their profit multifold, just as any
homeowner wants to do.

The end result: there is a huge surge of profits from Gov't Owned
properties that gets applied toward the National Debt, and Bush gets
to claim from his comfy lecture tour circuit that he saved the day for
the National Debt, paid for the War on Terror, and salvaged the US
Financial system.

LOL

--riverman

On Wed, 1 Oct 2008 03:50:10 -0700 (PDT), riverman
wrote:

OK, so I barely understand the details of the bailout, but that still
puts me ahead of Bush.

Ah, so you and he have had in-depth conversations about it in which you
formed this opinion...?

Seriously; I have no misconceptions that a C- student who has never
run a successful business has ANY idea of the details or the
complexity of the bailout; hell, I know PhDs in economics who aren't
really sure themselves...so every time I read some news article where
he states uncategorically how necessary it is, or how the US economy
will go down the tubes without it, I have to wonder why is he so
adamant about it. What could his handlers have explained to him in
high-school terminology to convince him that we need to toss that kind
of money around, while we are bankrupting ourselves over a worthless
war, a tanking economy and a housing brick.

Here's my theory.

The overall bailout plan is fairly straightforward (if you neglect the
details): the US Gov't buys a truckload of 'bad' morgages (IOW, takes
ownership of a bunch of foreclosed properties from speculators,
mostly) at 'current market rates'. This infuses the banks who are
holding these bad mortagages with real currency, and they unload bad
debts, and its happy days for them; they dodged a bullet.

Meanwhile, the US Govt is holding title to all these properties that
it acquired at market rates, right at a time when the housing market
is rock-bottom. I'm not sure if they are buying these mortgages for
the mature value, their balance due, or if they are acquiring them for
the current sellable price of the property, but in any case, with
market conditions the way they are, its a firesale.

So in 3-5 years, now that the banking sector is back on its feet, the
housing anti-bubble has reinflated, and all the americans who are
terrified about where to keep their money decide that Real Estate is
the best place (since housing prices are so low), the market starts to
soar. Then the Govt starts selling these properties off...bit by
bit...until they have increased their profit multifold, just as any
homeowner wants to do.

The end result: there is a huge surge of profits from Gov't Owned
properties that gets applied toward the National Debt, and Bush gets
to claim from his comfy lecture tour circuit that he saved the day for
the National Debt, paid for the War on Terror, and salvaged the US
Financial system.

LOL

And I'm curious - why do you call it "The Bush Bailout Plan" when the
Dems, in control of the House and including the Party nominee for POTUS,
it was sponsored by a Dem (...so I guess it's really the "Rangel Bailout
Plan," ala Gramm-Leach, which Dems claim Gramm authored and which passed
343-86...). IAC, the Democrats voted 140-95. The Republicans voted
65-133, so the ol' "party lines" crapola doesn't really apply. What
this is about, to paraphrase a pol being at least momentarily honest, is
about saving politicians' jobs. Now, if (and it's a _BIG_ if) the Fed
can inject some security into the market and make a buck or three, I'm
all for it, but if there was big bucks to be made, private money would
be fighting over the chance to buy in. And all this about there being
no money in the private sector to participate is horse**** - there is
something like 1 trillion US in _cash_ in the hands of _non-financial_
US business, and much more than that, esp. when RCAs are taken into
account, in the hands of financials.

The problem is that this turd of a "plan" is nothing more than what it
is commonly called - "a bailout." And it's "bailing out" folks who
don't deserve it, be they homeowners who overbought, speculators who saw
one too many episodes of "Flip This House," or dip**** Wall Streeters
who cooked up **** like credit default swaps and other crazy derivatives
so they could play craps AND insure against losses. Real money, like
matter, is neither created or destroyed. It just changes hands. And
bailing out folks who didn't really lose anything (insofar as they
really never "made" anything) is a bad idea. For the Fed to bet on the
come when the last betting on the come started the whole thing is a bad
idea. And for the Fed to engage in speculative investments on bad
speculative investments is pure stupidity, even allowing that a
bureaucracy, US or otherwise, is physically- and
temperamentally-structured to do so (it isn't). It's time to let the
weak fail and the strong survive.

TC,
R

--riverman

wrote in message
...
On Wed, 1 Oct 2008 03:50:10 -0700 (PDT), riverman
wrote:

OK, so I barely understand the details of the bailout, but that still
puts me ahead of Bush.

Ah, so you and he have had in-depth conversations about it in which you
formed this opinion...?

Much like those you've had with everyone who "REALLY" know everything about
everything, ainna?

Seriously; I have no misconceptions that a C- student who has never
run a successful business has ANY idea of the details or the
complexity of the bailout; hell, I know PhDs in economics who aren't
really sure themselves...so every time I read some news article where
he states uncategorically how necessary it is, or how the US economy
will go down the tubes without it, I have to wonder why is he so
adamant about it. What could his handlers have explained to him in
high-school terminology to convince him that we need to toss that kind
of money around, while we are bankrupting ourselves over a worthless
war, a tanking economy and a housing brick.

Here's my theory.

The overall bailout plan is fairly straightforward (if you neglect the
details): the US Gov't buys a truckload of 'bad' morgages (IOW, takes
ownership of a bunch of foreclosed properties from speculators,
mostly) at 'current market rates'. This infuses the banks who are
holding these bad mortagages with real currency, and they unload bad
debts, and its happy days for them; they dodged a bullet.

Meanwhile, the US Govt is holding title to all these properties that
it acquired at market rates, right at a time when the housing market
is rock-bottom. I'm not sure if they are buying these mortgages for
the mature value, their balance due, or if they are acquiring them for
the current sellable price of the property, but in any case, with
market conditions the way they are, its a firesale.

So in 3-5 years, now that the banking sector is back on its feet, the
housing anti-bubble has reinflated, and all the americans who are
terrified about where to keep their money decide that Real Estate is
the best place (since housing prices are so low), the market starts to
soar. Then the Govt starts selling these properties off...bit by
bit...until they have increased their profit multifold, just as any
homeowner wants to do.

The end result: there is a huge surge of profits from Gov't Owned
properties that gets applied toward the National Debt, and Bush gets
to claim from his comfy lecture tour circuit that he saved the day for
the National Debt, paid for the War on Terror, and salvaged the US
Financial system.

LOL

And I'm curious - why do you call it "The Bush Bailout Plan" when the
Dems, in control of the House and including the Party nominee for POTUS,
it was sponsored by a Dem (...so I guess it's really the "Rangel Bailout
Plan," ala Gramm-Leach, which Dems claim Gramm authored and which passed
343-86...). IAC, the Democrats voted 140-95. The Republicans voted
65-133, so the ol' "party lines" crapola doesn't really apply. What
this is about, to paraphrase a pol being at least momentarily honest, is
about saving politicians' jobs. Now, if (and it's a _BIG_ if) the Fed
can inject some security into the market and make a buck or three, I'm
all for it, but if there was big bucks to be made, private money would
be fighting over the chance to buy in. And all this about there being
no money in the private sector to participate is horse**** - there is
something like 1 trillion US in _cash_ in the hands of _non-financial_
US business, and much more than that, esp. when RCAs are taken into
account, in the hands of financials.

The problem is that this turd of a "plan" is nothing more than what it
is commonly called - "a bailout." And it's "bailing out" folks who
don't deserve it, be they homeowners who overbought, speculators who saw
one too many episodes of "Flip This House," or dip**** Wall Streeters
who cooked up **** like credit default swaps and other crazy derivatives
so they could play craps AND insure against losses. Real money, like
matter, is neither created or destroyed. It just changes hands. And
bailing out folks who didn't really lose anything (insofar as they
really never "made" anything) is a bad idea. For the Fed to bet on the
come when the last betting on the come started the whole thing is a bad
idea. And for the Fed to engage in speculative investments on bad
speculative investments is pure stupidity, even allowing that a
bureaucracy, US or otherwise, is physically- and
temperamentally-structured to do so (it isn't).

You ever wonder how life might be different if words like truth, integrity,
decency, humanity, knowledge, reflection, honesty, caring, learning, and
others meant anything at all to you?

It's time to let the
weak fail and the strong survive.

Next time you're in town, stop by. I'll take you down to the intersection
of 33rd and North. You can shout that at passing motorists and pedestrians.

Wolfgang

Wolfgang

On Oct 1, 5:33 am, wrote:

Real money, like matter, is neither created or destroyed.

I was with you up until here. Yes, indeed, money is created all the
time. Ben "printing press" Bernanke makes sure of it. Each new (not
replacement) dollar that rolls off the presses devalues the ones in
your pocket by a little bit. The government can create as much as it
wants. Secondly, our money isn't "real" anyways, since there is no
standard behind it. It's just paper we place a perceived value on.
That value can change anytime, just ask the Zimbabweans...

Jon.

wrote in message
...
On Oct 1, 5:33 am, wrote:

Real money, like matter, is neither created or destroyed.

I was with you up until here. Yes, indeed, money is created all the
time. Ben "printing press" Bernanke makes sure of it. Each new (not
replacement) dollar that rolls off the presses devalues the ones in
your pocket by a little bit. The government can create as much as it
wants. Secondly, our money isn't "real" anyways, since there is no
standard behind it. It's just paper we place a perceived value on.
That value can change anytime, just ask the Zimbabweans...

sigh yet another chapter in the never ending saga of the idiots versus
the morons. sigh

Assuming that dicklet has any better idea of what he may have wanted to say
than you do......not a safe assumption by any means, but what the
hell.....let's guess that by "Real money" he meant something like "wealth."
Thus, not only are you wrong by virtue of poor reading skills, as usual, but
he is also wrong, as usual, as a natural consequence of having no idea
whatsoever of what he is talking about.

Wolfgang
who begins to think that some sort of high school equivalency test should be
a prerequisite for participating in usenet. hm......or in government, for
that matter.

On Wed, 1 Oct 2008 06:12:15 -0700 (PDT), wrote:

On Oct 1, 5:33 am, wrote:

Real money, like matter, is neither created or destroyed.

I was with you up until here. Yes, indeed, money is created all the
time. Ben "printing press" Bernanke makes sure of it. Each new (not
replacement) dollar that rolls off the presses devalues the ones in
your pocket by a little bit. The government can create as much as it
wants. Secondly, our money isn't "real" anyways, since there is no
standard behind it. It's just paper we place a perceived value on.
That value can change anytime, just ask the Zimbabweans...

That's cash, not money. IAC, what I mean is that for every winner in a
financial transaction, there is a loser. For example, if you sell me
1000 shares of XYZ Corp at 100.00USD per (or 100 goats per, or 100 grams
of gold per, or whatever unit), and it plummets to 50 the next day and I
bail, I lose, you win, but have the whole 100K and you have the 50,000 I
lost, it didn't "evaporate." OTOH, if it jumps to 200 per and I sell, I
now have 100,000 profit. If it drops back to 100 the following day, I
still have the 100K, and the buyer I sold it to lost 100K, but I have
it.

So, let's move to the current mess. To keep it simple, let's take Pat
Homebuyer. Pat buys a house for 500K. The seller gets 500K (the
alleged "market value" at time instant to the exchange of consideration)
and some entity gets a mortgage/DOT/whatever claim on the house. The
market tanks, the house is now only worth 300K and Pat, who never really
could afford the house, bails out. The holder of the recourse has a
house worth 300K, but the seller has 500K, which was worth exactly what
500,000USD was worth when they received it, the net present asset value.
It makes no difference what it is worth at some point in the future,
whether up or down, regardless of how much cash is printed in the
future. Now, if the mortgagee sold their rights (let's assume instantly
for simplicity's sake) and recourse in some complex bundle, they now
have 500K plus fees, so they did business as usual and are in line with
expectations. Whomever is holding the paper when the music stops loses,
but "the economy" didn't lose, in the above example, 200K, and no one
"created" money, it simply changed hands.

OTOH, if Pat could afford it, is keeping up the payments, and intends to
live in it for 20 years, it has no "market value" 3 years after the
purchase because there is no willing seller, regard of potential willing
buyers or for what the house next door sold. Pat's house may have an
appraised/assignable value for whatever purpose, but that, again, is a
different matter. Whatever happens to the mortgagee or holders in due
course is of no consequence to Pat and Pat has lost nothing because of
whatever trouble they may be in as a result of whatever they used their
interest to do - Pat has a house, owes a debt secured by it as agreed,
and someone has recourse should Pat fail to live up to that obligation.
The fact that someone along the way lost their ass, along with their
recourse, to someone else in a crap game they themselves helped rig
isn't Pat's problem and it sure as **** isn't mine.

And I hope the current "credit crunch" does stop "average Americans from
the dream of home ownership" right slap in its tracks if those dreamers
can't afford the payments any more than those folks whose mortgages are
now or soon will be foreclosed because they can't afford them. Keep in
mind that this wasn't some unforeseen force that suddenly took a 500K
mortgage, which amortized at X percent for 30 years at Y per month, to a
800K mortgage at 2X percent for 15 years at Y-plus per month. And no,
bad and/or inappropriate financial _choices_ on the part of homebuyers
regarding ARMs, equity lines, desires, overbuying, speculation,
believing the "bubble" would never burst, etc. don't fall into
"unforeseen force."

TC,
R

Jon.

wrote in message
...
On Wed, 1 Oct 2008 06:12:15 -0700 (PDT), wrote:

On Oct 1, 5:33 am, wrote:

Real money, like matter, is neither created or destroyed.

I was with you up until here. Yes, indeed, money is created all the
time. Ben "printing press" Bernanke makes sure of it. Each new (not
replacement) dollar that rolls off the presses devalues the ones in
your pocket by a little bit. The government can create as much as it
wants. Secondly, our money isn't "real" anyways, since there is no
standard behind it. It's just paper we place a perceived value on.
That value can change anytime, just ask the Zimbabweans...

That's cash, not money. IAC, what I mean is that for every winner in a
financial transaction, there is a loser. For example, if you sell me
1000 shares of XYZ Corp at 100.00USD per (or 100 goats per, or 100 grams
of gold per, or whatever unit), and it plummets to 50 the next day and I
bail, I lose, you win, but have the whole 100K and you have the 50,000 I
lost, it didn't "evaporate." OTOH, if it jumps to 200 per and I sell, I
now have 100,000 profit. If it drops back to 100 the following day, I
still have the 100K, and the buyer I sold it to lost 100K, but I have
it.

So, let's move to the current mess. To keep it simple, let's take Pat
Homebuyer. Pat buys a house for 500K. The seller gets 500K (the
alleged "market value" at time instant to the exchange of consideration)
and some entity gets a mortgage/DOT/whatever claim on the house. The
market tanks, the house is now only worth 300K and Pat, who never really
could afford the house, bails out. The holder of the recourse has a
house worth 300K, but the seller has 500K, which was worth exactly what
500,000USD was worth when they received it, the net present asset value.
It makes no difference what it is worth at some point in the future,
whether up or down, regardless of how much cash is printed in the
future. Now, if the mortgagee sold their rights (let's assume instantly
for simplicity's sake) and recourse in some complex bundle, they now
have 500K plus fees, so they did business as usual and are in line with
expectations. Whomever is holding the paper when the music stops loses,
but "the economy" didn't lose, in the above example, 200K, and no one
"created" money, it simply changed hands.

OTOH, if Pat could afford it, is keeping up the payments, and intends to
live in it for 20 years, it has no "market value" 3 years after the
purchase because there is no willing seller, regard of potential willing
buyers or for what the house next door sold. Pat's house may have an
appraised/assignable value for whatever purpose, but that, again, is a
different matter. Whatever happens to the mortgagee or holders in due
course is of no consequence to Pat and Pat has lost nothing because of
whatever trouble they may be in as a result of whatever they used their
interest to do - Pat has a house, owes a debt secured by it as agreed,
and someone has recourse should Pat fail to live up to that obligation.
The fact that someone along the way lost their ass, along with their
recourse, to someone else in a crap game they themselves helped rig
isn't Pat's problem and it sure as **** isn't mine.

And I hope the current "credit crunch" does stop "average Americans from
the dream of home ownership" right slap in its tracks if those dreamers
can't afford the payments any more than those folks whose mortgages are
now or soon will be foreclosed because they can't afford them. Keep in
mind that this wasn't some unforeseen force that suddenly took a 500K
mortgage, which amortized at X percent for 30 years at Y per month, to a
800K mortgage at 2X percent for 15 years at Y-plus per month. And no,
bad and/or inappropriate financial _choices_ on the part of homebuyers
regarding ARMs, equity lines, desires, overbuying, speculation,
believing the "bubble" would never burst, etc. don't fall into
"unforeseen force."

Hm......

Thus, are we to take it that you actually believe you said something in this
latest long-winded exposition of inaccurate and inane analysis of yet
another thing you know nothing about?

You know, you COULD simply have said that you know nothing at all about the
simple meaning, let alone the mechanics and implications, of wealth and the
methods by which it is created, destroyed, distributed, accumulated, gained,
lost and used. I mean, theoretically, you COULD have.

But that wouldn't have been any fun for any of us......right?

O.k., so, continue.......tell us what role (if any) resources play with
regard to wealth.

Wolfgang
o.k., who wants to confess to holding the silly notion that this isn't just
going to get better and better?

On Oct 1, 9:03 am, wrote:
expectations. Whomever is holding the paper when the music stops loses,
but "the economy" didn't lose, in the above example, 200K, and no one
"created" money, it simply changed hands.

Nothing to disagree with in everything you wrote, except that the
classic definition of money is what you want to call "cash". Maybe you
want "Real Money" to mean actual value, but this too is vacuous as
there is only the present perceived value, which can wildly fluctuate.

http://www.investopedia.com/articles.../03/061303.asp

http://economics.about.com/cs/studen...es/f/money.htm

Since your examples were in USD, here's another: Suppose there are
100,000 USD in existence, and the government hires you to build a
bridge. At the end it pays you 1,000 USD, but since it didn't have it
before, it simply printed it. Now there are 101,000 USD in existence.
Voila, money was created. Now all of that 101,000 USD can take part in
all your scenario.

HTH,

Jon.

On Wed, 1 Oct 2008 08:42:53 -0700 (PDT), wrote:

On Oct 1, 9:03 am, wrote:
expectations. Whomever is holding the paper when the music stops loses,
but "the economy" didn't lose, in the above example, 200K, and no one
"created" money, it simply changed hands.

Nothing to disagree with in everything you wrote, except that the
classic definition of money is what you want to call "cash". Maybe you
want "Real Money" to mean actual value, but this too is vacuous as
there is only the present perceived value, which can wildly fluctuate.

http://www.investopedia.com/articles.../03/061303.asp

http://economics.about.com/cs/studen...es/f/money.htm

Since your examples were in USD, here's another: Suppose there are
100,000 USD in existence, and the government hires you to build a
bridge. At the end it pays you 1,000 USD, but since it didn't have it
before, it simply printed it. Now there are 101,000 USD in existence.
Voila, money was created. Now all of that 101,000 USD can take part in
all your scenario.

No, that's cash/currency - U S D ollars, which _can be_ money, but it
isn't "money" simply because it exists. And the "classic" definition of
"money" is not "cash." The common-speech definition of "money" in the
US is "cash" in that if you go into your bank and say, "I'd like 100
dollars of money from my account," they will assume you mean "cash" in
the form of US currency, not a bearer credit instrument payable at X
exchange rate in Hong Kong Dollars, but both are "money." For example,
I could take a picture of Lefty Kreh, put "100" in each corner and if
you'd exchange it for 100USD, it would be "money" to you, but unless you
could find someone else who equally valued it to exchange it for milk,
bread, a fly line, or whatever you felt was worth 100LK, which was worth
100USD to you, it would not be "money" in a commercial/economy sense.

TC,
R

HTH,

Jon.