[...] We don’t need no stinking bailout @ frugaldad.com [...]

[...] We Don’t Need No Stinking Bailout Plan @Frugal Dad [...]

This is not a bailout of wall street. It’s a “funding” of the US Economy.
More than likely, according to Warren Buffett, the government will make money on this transaction.

Credit is the lifeblood of any economy. If Credit doesn’t flow, economy stops, people loose jobs, less tax revenue…you can see where this goes

Couldn’t have said it better myself, the US (and the rest of us) are in for some serious pain. Another Great Depression no, a long deep recession yes.

http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php

[...] the news over the past couple weeks has been dominated by the financial markets, specifically the $700 billion bailout plan proposed by the current administration.  There are many personal finance lessons to be learned [...]

I am doubtful to believe suggestions made by many in a time such as this. I believe it is far too complex an issue to be understood or even easily solved at a moment’s notice. Though people like Cuban and Buffet are intelligent investors, they still base their thought processes on a thriving market and a free economy. If the gov. steps in, the rules change. They change in ways that no one can imagine.

On the surface, it sounded like a much better plan than taxpayers supplying a loan to these finance companies, with any repayments going back into the government’s coffers.

The sick part of it is, there aren’t THAT many foreclosures. The news accounts I read suggest that ALL sub-prime mortgages are in default, which isn’t the case. The vast majority of them are not: they’re doing as we do, and paying down the debt while they climb out of whatever bad state of affairs knocked them into the sub-prime category to begin with. Yes, the national foreclosure rate is higher than it’s been in a while, and yes, the rate is higher still on subprime loans, but we’re still talking about a single-digit number. How is it that a single-digit number in foreclosure ratio is turning into a double-digit or triple-digit number in stock gain or loss percentage and a NINE TO TEN digit number in terms of Uncle Sam dipping into my pocketbook? I’m seeing some amplification here and I’m not believing it.

Even with a 5% default rate it’s important to remember that 95% of mortgages in that category are good, and some are creating a heftier return on investment because the interest rate is bigger. If they were my investments, I would simply comb through them, separate the people with a good record from those with a bad record, and cull the herd. In a field stuffed with Harvard and Yale graduates, I’m not understanding why thinning the herd hasn’t occurred to someone else.

My own mortgage, for example, is a nice, shiny little nugget of an investment for somebody. There’s never been a late payment, in fact I send in extra payments.

Add to this credit cards, car loans, and other sources of income that banks have, and there may still be a slight net loss but it shouldn’t be enough to break the bank.

I’m thinking that all the conniptions over subprime mortgages are artificial. The timing of this drama is really, really dubious. I’m starting to suspect that there’s no real crisis at all. We’ve amazingly survived this last couple weeks while Congress hemmed and hawed. Nobody has taken a giant eraser and wiped cities off the map. I’m thinking that we could get by indefinitely without a bailout.