Exhibit A on how to counter a poorly conceived soundbite:
Rep. Barney Frank confronts the notion that the bailout bill might have passed - were it not for the speech of Speaker Pelosi:
Memo to the Dems - THIS is how you go after the partisan BS talking points.
Also, it would help if the Dems weren't such mindless tools when it comes to legislating in crisis - but, one thing at a time.
3 comments:
Full points for comments, but seriously the bailout/rescue plan wasn't ready.
They could buy up risky securities, sell them, and buy more. Who are we really saving? Yes, I know if we do nothing housing values go down, everyone pays more property taxes, we loses services, business shut down from lack of credit, jobs are lost.
One of the ideas I find amusing is giving say 250 billion directly to the American taxpayers. Let's say there are 250 million taxpayers and say we pay 33% tax, that's around $666,666 each after taxes. Housing crisis averted.
Okay I didn't bother to check the math. Ummm... that's really $666 each. We're so screwed!
But I think your overall point is right though.
There are two main tacks I've heard so far:
1) Shore up the investments that are failing due to loan forclosure and falling real estate prices.
or
2) Shore up the loans that are in danger of forclosing.
I've heard a lot about the downsides of #1.
-Regardless of who owns the investments - they still are bad investments. The government buying them may help some banks in the short term, but more forclosures are coming. If real estate prices keep going down - more of these investments will start tanking. What then?
-The Government has to pick a price to buy these things. If they buy them at their current market value (near worthless) the banks may still go under. If they buy them at above market value - we're paying more money to banks for stuff that is worthless.
I'm interested in hearing more about option 2 - where we try to shore up the loans that are causing this problem.
The downside of that approach (as I see it) is that
-it will take longer to deal with those loans. Our economy may not be able to wait for bankruptcy judges to adjust the terms of the million or so loans that are in forclosure.
-Some buyers cannot pay no matter what the terms are. Mortgage brokers were selling loans to people who didn't have (as the man said) "a pot to piss in" - so a certain percentage of these loans are going to fail no matter what. If that percentage is high - I'm not sure this is the way to go.
But I'd think adjusting the loans that can be salvaged would be a good move. Then some of the investments out there would at least have some value - because they'd be tied to investments where people are paying their mortgage.
This "Give us a bunch of money and we'll fix it" smacks of panic and contempt for Congress.
Sure, do something to stave off a meltdown in the short term - but come up with a long term fix with the time you buy.
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