Thursday, September 25, 2008

Thoughts on the Bail-Out

Let's pay for the $700 billion economic bail-out package. With a U.S. population of 300 million, that's $2333 apiece. So much for our economic stimulus checks of $600 or $300.

Why is it that when people are having trouble, we get hundreds of dollars, but when corporations are having trouble, they take thousands from us and give it to the corporations?

Another question, what's going to happen to all of those bad loans that the Treasury Dept will own? Will they foreclose? Will they forgive? That means that irresponsible people who bought more house than they could afford get rewarded, while those of us who have been trying to build up savings for a down payment get passed over. Ugh.

1 comment:

Nate said...

I think Barney Frank, the congressman, was saying that the plan is not to buy the bad loans, but rather to buy bundles of loans ("mortgage backed securities") that are worthless as packages (due to their market collapsing) but that contain some good and some bad mortgages. It's kind of like a totaled car that is worth more in pieces than as a whole. So the government will give $700 billion for the whole cars, but what they are buying does have some value. The Democrats' plan for the government to take a share in equity of the companies is basically meant as a way to make up for whatever of the $700 billion is lost.

The sticking point-- the market has valued these securities as less than nothing, so how much are they worth when taken apart? Nobody knows.