When the Bankruptcy Bill passed in 2005 it asked people to take personal responsibility for their spending and not to binge on credit cards. As it turns out, most families go bankrupt due to medical bills and divorce. The government likes to make sure that we are regulated, but doesn't seem to be concerned about the banking and credit card industries. It's called Free Trade, especially when credit card companies can charge whatever interest they want and payday loan companies can charge our brave service people over 600% in interest.
Things started to fall apart after the Federal Reserve brought down interest rates to amazingly low levels. Unscrupulous brokers got creative and signed up people who couldn't really afford to buy homes. They packaged up those mortgages into bundles and sold them on, and on. They ended up being bought by banks and hedge funds etc. All the dealers made fortunes. Now that people are realizing that they can't afford the adjusted mortgage payments, the whole house of cards is tumbling.
Last week's stock market panic bought on by the sub-prime mortgage melt-down and the resultant credit squeeze was a case in point. Instead of taking responsibility for what transpired, the unregulated hedge funds and banks went straight to the Federal Reserve and World Banks for a bail out. What did the banks do? They started the printing presses in Japan, Europe and the U.S.
Wouldn't it be wonderful if when your business got into trouble, you could go to the Federal Reserve for help? It looks like hedge funds and banks can do anything and they will get bailed out. It's SOCIALISM for big business, crony capitalism. It puts a different twist on the term 'FREE trade'.
florencev
22 Comments
The injection of money into the banking system was to provide liquidity in a situation where banks were no longer lending. If the credit market shuts down, so will the rest of the economy. This money was NOT a gift to the banks, but came in the form of short-term loans. This from forbes.com:
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"On Friday, the U.S. financial markets received three massive injections of liquidity from the Federal Reserve, as central bankers tried to prevent the banking system from seizing up. The move at first panicked traders into an aggressive sell off, but, by the end of the day, the Dow finished just modestly down.
The New York Federal Reserve Bank provided $3 billion to the banking system on Friday afternoon, following injections of $16 billion and $19 billion earlier in the day. The short-term loans came in the form of repurchase agreements for mortgage-backed securities, and all three operations were undertaken at interest rates near the Federal Reserve's target of 5.25% for federal funds, the overnight interbank loans that banks usually use to meet their short-term financing requirements."
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Incidentally, the Democrats are proposing an even wider bailout. Should we reward individuals for not taking personal responsibility for their spending and binging on credit cards? From money.cnn.com:
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"NEW YORK (Reuters) -- The federal government should offer troubled borrowers hundreds of millions of dollars to bail them out of subprime mortgage loans, several leading Democratic lawmakers said on Wednesday.
"The federal government can send in an infusion of [money] to prevent foreclosure," said Charles Schumer, a New York Democrat.
The cash infusion is needed right away and should go to both help fund community groups aiding troubled borrowers and to directly fund bailouts, Schumer said.
Schumer spoke as chairman of the Joint Economic Committee, a joint committee of Congress, and appeared with Democratic senators Robert Menendez of New Jersey and Sherrod Brown of Ohio.
He said he planned to introduce legislation soon.
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I do have to say that a lot of people were sold those rates without real explanations, and as much as people need to take personal responsibility for what they did, it seems that people were sold a 'bill of goods'.
I agree -- it's in nobody's best interest to have people on the street and homes sitting empty and in disrepair. The rent thing is an interesting idea. I would hope that the banks might be able to negotiate some sort of deal with the owners to keep them solvent. It seems in their best interest to do so in this sort of situation.
now all of a sudden that we are facing a huge recession the government decides to act upon it? now that hundreds of thousands of families have lost their homes it is time to act?
at least the government acted a little faster with regards to katrina *L*
I think more could have been done to help people to help themselves and avoid foreclosure.
i think its kinda odd to benefit from someone elses misfortune - but im sure you didn't even give it a thought.
As far as Katrina is concerned, there you have a prime example of why the biggest lie ever told is "I'm from the government, I'm here to help" That also makes for a very good case for not having socialized medicine. If the government gets it's greedy hands on healthcare, I'm willing to bet it's screwed up beyond repair in less than a year.
obviously there are people that are irresponsible - im not talking about those people.
im talking about the hard working people who have been taken advantage of and how the government could just stand by and watch, fast forward to today and now they have to respond because theres a big time recession right over the horizon.
if they were at all intelligent they would have responded faster and avoided this mess.
what a fookin waste.
It's funny that it's ok for the government to move in to help the banks, but not ok for the government to help people.
Katrina is working perfectly for the Repugs. Lots of money coming into corporations to build expensive apartments and very few black folks to vote for Dems.
It is interesting that the VA, which is socialized medicine, works really well, except that it's under-funded, and that Medicare works, which is a single payer system.
I pray that Kookymonstir can continue to afford healthcare, and stays well so that he never needs to use it.
You know, I'm laughing to myself because you've made my point florence. The VA is under funded, that is a shame but it's true. How many people currently rely on the VA for medical care? I'm not sure myself, maybe millions, maybe ten million ( Im sure someone here will find out, Im not looking for it) Now multiply the problem with funding by 25. (250-270 million in the US) and lets not forget the incredible inefficiency with which the govt. runs. I have worked for and around govt workers all my life (grew up in the DC area) I can tell you FIRST HAND, No corporation would survive if they employed the people who permeate the rank and file government agencies. Now add the ridiculous rules, procedures, forms and over regulation that the govt places upon it self. I believe you would have to take the current cost of total health care throughout the nation and double or possibly triple that cost. Then there is the question of availability..............I hear about Canadians coming to the US (if they can afford to) to recieve bypass surgery and cancer treatments because of the long waiting periods.
I appreciate your prayers florence. I hope I never need to use it either. I'm not saying there shouldn't be safety nets built into the current system but I don't see why you would advocate throwing out the whole works for some HUGE government fuster cluck.
My understanding is that private healthcare costs us 30 cents on the dollar, instead of Medicare costing 3 cents, so the government can't be doing that badly.
I also think that we could be saving a lot of money if people with no insurance had other choices than just the emergency room, as that is the most expensive.
If you were the one that was ill, you would be quite happy for us to spend less on star wars and more on healthcare.
There may be excess in the government healthcare, but at least we aren't paying their head paper pushers over $1 billion in wages, which the private sector does, and there would be no need to spend mega millions on advertising. There would also be the possibility of getting drugs at a better rate.
We also need to spend money on encouraging people excercising, and have good food and exercise in schools.
that's really good. My shredded stuff gets used for compost (the Council collects it) so at least it isn't wasted. (Shredders are cheap here too, I must get one; till then it's easier for me to tear off the ID and put the rest out for recycling.)
BTW your sub-prime bubble has just hit one of our largest mortgage lenders (because of your sub-prime difficulties, lenders have become wary of lending to it). The Bank of England has bailed it out but this is a bad omen.
But the worry about this mortgage lender's problems was that if it went bust its customers would be affected badly...
Hey you know AdGuy always gets the last word! ;)