$600 worth of stupidity

[wolfe]

http://www.npr.org/templates/story/stor ... d=18391644

Let me get this straight. The economy is screwed up because high-risk loans were given to the lower and middle class. And the solution is to give free money to lower and middle class taxpayers?

People are just going to spend the money toward their debt or buy cheap crap from China.

[Jonathan S.]

Not lower and middle class; loans were made to highly risky borrowers, class didn't matter. Then instruments such as collateralized debt obligations, (CDOs - investment vehicles used to peddle bonds backed by pools of sub-prime mortgages) in the billions alone at Merrill Lynch, collapsed when the housing bubble burst and left many holding un-hedged bonds.

The third and fourth quarters of last year ushered in unprecedented write-offs (billions) which seems to be welcoming a bear market. Enter Bush's genius (said facetiously) plan of a stimulus package (which should be called a rescue package).

Save your money and go counter to our President's wishes to spend, spend and spend some more should be an option in this lovely poll.

[Oompa Midgets]

Bush is an idiot!!!

[wolfe]

Jonathan,
Your post may as well have been one of Mick's upside-down backwards posts. I'm dizzy.

Pelosi and the Pandering Dems are just as stupid as Bush.

[Jonathan S.]

Upside down? Backwards? How could you have the audacity to compare anything I've created mentally with Mick's mental work? There's a key difference between our two outputs...mine is actually built with factual knowledge.

I was merely trying to break it down for you. You know..."FOX it down."

[Jonathan S.]

Highly coincidental is the participation by Mick and Anferney in getting some of these loans approved. Of course, I'm postulating, but did either of you do business with First Franklin? Primco?

[Oompa Midgets]

Yes, several loans went to First Franklin including my own!

I agree that it was WAY to easy to get a loan, but most of these borrowers made other irrational decisions regarding their finances and credit! You can only advise people and guide them in the right direction. You cannot hold their hand and make choices for them the rest of their lives.....This started a LONG time ago when ANYONE could get a credit card

Americans don't know how to live below their means! Keep up with the Rockefellers.

[bilyeuofbaxter]

Debt
Macroeconomists, including the current chairman of the U.S. Federal Reserve Bank System Ben Bernanke, have revived the debt-deflation view of the Great Depression originated by Arthur Cecil Pigou and Irving Fisher. In the 1920s, in the U.S. the widespread use of purchases of businesses and factories on credit and the use of home mortgages and credit purchases of automobiles, furniture and even some stocks boosted spending but created consumer and commercial debt. People and businesses who were deeply in debt when a price deflation occurred or demand for their product decreased were often in serious trouble—even if they kept their jobs, they risked default. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged.

Massive layoffs occurred, resulting in unemployment rates of over 25%. Banks which had financed a lot of this debt began to fail as debtors defaulted on debt and bank depositors became worried about their deposits and began massive withdrawals. Government guarantees and Federal Reserve banking regulations to prevent these types of panics were ineffective or not used. Bank failures led to the evaporation of billions of dollars in assets. Up to 40% of the available money supply normally used for purchases and bank payments was destroyed by all these bank failures.

Furthermore, the debt became heavier, because prices and incomes fell 20–50%, but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 banks failed. In all, 9,000 banks failed during the decade of the 30s. By 1933, depositors saw $140 billion of their deposits disappear due to uninsured bank failures. [1] Bank failures snowballed as desperate bankers tried calling in loans which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending. [2] Banks built up their capital reserves, which intensified deflationary pressures. The vicious cycle developed and the downward spiral accelerated. This kind of self-aggravating process may have turned a 1930 recession into a 1933 great depression.

Sound like anything that's going on now?

[Oompa Midgets]

I have told many people that we are headed in that direction!

Better get ready to live off the land

[Jonathan S.]

I think you're wrong Anferney. Yes, David, it does sound very similar to what's going today; however, there is a new player in economics, globalization.

Our economy and the world's is interdependent, and China's thirst for goods will most likely not allow anything like the Great Depression to set in. Did you know that during the former decade that China was busy cultivating a 400 million people strong middle class? Obviously their buying power isn't as strong as the average American who is considered to be middle class, but their large numbers, which should continue to increase, counteracts that lessened buying power.

Of course there will be ups and downs, and downs may become frequent, but most likely not sustained unless unusual events occur, e.g. massively destructive terrorist actions.