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$700 billion bailout in US
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 09-28-2008, 7:54 PM |
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Paladin
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$700 billion bailout in US
Tentative deal reached on $700 billion Wall Street bailout in U.S.
September 28, 2008
By Charles Babington, ASSOCIATED PRESS
Democratic presidential nominee Barack Obama, in a statement Sunday, said that "failure to deal with the current crisis would have devastating consequences for our economy, costing millions of Americans their jobs and retirement security."
Under the plan, the government would purchase mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.
The legislation would place 'reasonable' limits on severance packages for executives of companies that benefit from the rescue plan, said a senior administration official who was authorized to speak only on background.
It also calls for the financial sector to help make up the difference if the government does not recoup its investment in five years, the official said, but details remained unclear. The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
What $700 billion won't buy: a quick fix for the U.S. economy
By Michael Liedtke, THE ASSOCIATED PRESS
Although legislators are still sparring over the precise details, the proposed bailout would authorize the government to borrow up to $700 billion to buy the toxic assets poisoning banks. Most of these holdings are tied to mortgages made to borrowers who either can't afford to make their monthly payments or have simply chosen to default because they owe far more than their homes are worth. No one seems quite certain how much these assets are worth, but the government is betting that - with time - it can get a handle on it and eventually profit.
Even as the government tries to clean up the mess left by reckless home lenders, borrowers and investors, more problems are likely to stack up.
The trouble could include longer unemployment lines as struggling companies faced with declining sales and limited access to credit trim their payrolls. That could lead to even more bank failures as cash-strapped borrowers don't repay loans. And most experts think there's still a good chance the downturn in the housing and stock markets will deepen to further spook already frightened consumers.
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This Post contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, social and criminal justice issues, etc. We believe this constitutes 'Fair Dealing' of any such copyrighted material as provided for in Canada's Copyright Law. The material in this Post is distributed without profit to those who have expressed a interest in receiving the included information for research and educational purposes.
The Canadian Copyright Act provides that "fair dealing" with any material protected by copyright for the purposes of private study, research, criticism, review or news reporting is not an infringement of copyright. Fair dealing with a work does not require the permission of the copyright owner or the payment of royalties.
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| 09-29-2008, 1:36 PM |
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willie c wuddle
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In The Witness Protection Program
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Posts 17,490
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Re: $700 billion bailout in US
I don't think I fully understand what is going on here. If the US can afford that kind of money why can't they bail out the national debt? ![Uhm [uhm]](/emoticons/uhm.gif)
Remember yesterday, respect tomorrow, live for today.
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| 09-29-2008, 3:02 PM |
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Re: $700 billion bailout in US
Because the U.S. debt is like $10 trillion.
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| 09-29-2008, 3:06 PM |
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Re: $700 billion bailout in US
Actually it's approximately this much:
$ 9,896,271,051,119.91
$ 700,000,000,000.00 is the amount proposed in the "bail out".
Which just failed to pass in a vote by the House of Representatives, by the way.
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| 09-29-2008, 3:41 PM |
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Paladin
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Moderator in Residence
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U.S. House defeats $700 billion financial markets bailout bill
Monday September 29th, 2008
Julie Hirschfeld Davis, THE ASSOCIATED PRESS
WASHINGTON - In a stunning vote that shocked the capital and worldwide markets, the House of Representatives on Monday defeated a US$700 billion emergency rescue for the U.S. financial system.
The House ignored urgent warnings from President George W. Bush and congressional leaders of both parties that the economy could nosedive without the bailout.
Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was officially announced on the House floor.
As a digital screen in the House chamber recorded a cascade of "no" votes against the bailout, Democratic Representative Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward. The decline was about 600 points shortly before the close of the trading day.
"No" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 per cent of Democrats opposed the bill.
Full Story... ====================================
This Post contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, social and criminal justice issues, etc. We believe this constitutes 'Fair Dealing' of any such copyrighted material as provided for in Canada's Copyright Law. The material in this Post is distributed without profit to those who have expressed a interest in receiving the included information for research and educational purposes.
The Canadian Copyright Act provides that "fair dealing" with any material protected by copyright for the purposes of private study, research, criticism, review or news reporting is not an infringement of copyright. Fair dealing with a work does not require the permission of the copyright owner or the payment of royalties.
Keeping you informed, entertained, amused.. and Spam Free Buy, Sell, or Trade on Moncton.net. Moncton's Free Classifieds Chat! "The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it." - Albert Einstein - Chat Room
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| 09-29-2008, 4:02 PM |
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willie c wuddle
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In The Witness Protection Program
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Posts 17,490
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Re: $700 billion bailout in US
 Lord Denning wrote:Because the U.S. debt is like $10 trillion.
Possibly the Americans should cut back on those $1,000.00 Superbowl seats or five blade shaves and concentrate on paying their bills.
Remember yesterday, respect tomorrow, live for today.
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| 09-29-2008, 5:09 PM |
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Re: $700 billion bailout in US
willie c wuddle wrote:
Lord Denning wrote: Because the U.S. debt is like $10 trillion.
Possibly the Americans should cut back on those $1,000.00 Superbowl seats or five blade shaves and concentrate on paying their bills.
Yeah, those five blade shavers can really take a chunk out of a guy's budget. I'm still on 2 blades, and I buy the no name brand 2 blades, and make them last a month each.
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| 09-29-2008, 6:57 PM |
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Paladin
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Moderator in Residence
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Re: $700 billion bailout in US
Financial Crisis 101: What happened? ![Confused [*-)]](/emoticons/emotion-42.gif) ![Confused [8-)]](/emoticons/emotion-43.gif)
The current crisis is rooted in the sub-prime meltdown that we started to hear about in the summer of 2007 as the real estate bubble burst and mortgage defaults started to climb. During the boom years, mortgage brokers, lured by the heady combination of big commissions and little regulatory oversight, talked buyers with poor credit into accepting expensive housing mortgages with little or no down payment and no credit checks. Banks and other financial institutions typically repackaged these debts with other risky debts and sold them to worldwide investors as ‘collateralized debt obligations’ (those CDOs you’ve been hearing so much about – basically, bundles of bad debt).
As it started to become obvious that the banks’ had also significantly leveraged their exposure to the bad loans by dealing in trillions of dollars of turbo-charged financial derivatives, investors began to lose confidence (freaked out) and starting in June 2007, the system began to unravel. Share prices tumbled and banks began the process of attempting to unload these bad investments (ie bundles of mortgages that would never be paid back) at fire sale prices to raise capital. This in turn, brought down their value for all other banks and financial institutions that held the same bad investments on their books, forcing them to either raise large buckets of new capital and/or dump their bad loans on the markets as well. Inter-bank lending slowed to a trickle as banks increasingly questioned the financial health of their peers, and like a poorly lubricated engine, the financial system starting grinding to a halt.
What resulted was a death spiral….Bear Stearns was taken over by JP Morgan, Lehman collapsed, Merrill Lynch was bought by BoA, the government stepped in and essentially took over Fannie May and Freddie Mac, the biggest funders of mortgages and AIG, the world’s largest insurance company. BUT, in spite of shoring up these companies by injecting billions of dollars, things kept getting worse, and now the government is proposing to step in and essentially buy, not the floundering companies themselves, but their bad debt, to the tune of $700 billion.
Again, they’re not stepping in and taking over control, they’re just buying up all those shaky, bad mortgage backed securities that the investment banks have accumulated (including international banks), with taxpayers money, taking them off the banks’ books and leaving taxpayers with the burden. This bailout for billionaires comes at a cost of up to $10,000 per person in the U.S.
Then yesterday came the announcement that Goldman Sachs and Morgan Stanley, the last two remaining investment banks are becoming Bank Holding Companies (essentially commercial banks like Citi or Bank of America) – a move that will give them the ability to take deposits, bring them under tighter regulation and require them to reduce their leverage.
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This Post contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, social and criminal justice issues, etc. We believe this constitutes 'Fair Dealing' of any such copyrighted material as provided for in Canada's Copyright Law. The material in this Post is distributed without profit to those who have expressed a interest in receiving the included information for research and educational purposes.
The Canadian Copyright Act provides that "fair dealing" with any material protected by copyright for the purposes of private study, research, criticism, review or news reporting is not an infringement of copyright. Fair dealing with a work does not require the permission of the copyright owner or the payment of royalties.
Keeping you informed, entertained, amused.. and Spam Free Buy, Sell, or Trade on Moncton.net. Moncton's Free Classifieds Chat! "The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it." - Albert Einstein - Chat Room
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| 09-29-2008, 7:09 PM |
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Re: $700 billion bailout in US
my only question is what is going to happen to the Canadian economy once the ripples reach us
"Every dog is a lion at home" - Italian proverb ---  50 Years of Space Age
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| 09-29-2008, 7:13 PM |
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Paladin
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Moderator in Residence
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Re: $700 billion bailout in US
Student wrote: my only question is what is going to happen to the Canadian economy once the ripples reach us
I'm looking...I'm looking...
still haven't found anything yet...
Almost afraid to find out....
Keeping you informed, entertained, amused.. and Spam Free Buy, Sell, or Trade on Moncton.net. Moncton's Free Classifieds Chat! "The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it." - Albert Einstein - Chat Room
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| 09-29-2008, 7:18 PM |
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willie c wuddle
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In The Witness Protection Program
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Posts 17,490
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Re: $700 billion bailout in US
Student wrote: my only question is what is going to happen to the Canadian economy once the ripples reach us
We will still pay taxes and die. We will just have less money to pay for the taxes and funerals.
Remember yesterday, respect tomorrow, live for today.
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| 09-29-2008, 7:20 PM |
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Paladin
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Moderator in Residence
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Re: $700 billion bailout in US
willie c wuddle wrote:
Student wrote: my only question is what is going to happen to the Canadian economy once the ripples reach us
We will still pay taxes and die. We will just have less money to pay for the taxes and funerals.
or die of paying taxes....
Keeping you informed, entertained, amused.. and Spam Free Buy, Sell, or Trade on Moncton.net. Moncton's Free Classifieds Chat! "The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it." - Albert Einstein - Chat Room
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| 09-29-2008, 7:29 PM |
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Re: $700 billion bailout in US
Paladin wrote: willie c wuddle wrote:
Student wrote: my only question is what is going to happen to the Canadian economy once the ripples reach us
We will still pay taxes and die. We will just have less money to pay for the taxes and funerals.
or die of paying taxes....
thats what i thought...but want sure, tks for confirming
"Every dog is a lion at home" - Italian proverb --- 50 Years of Space Age
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| 09-29-2008, 7:43 PM |
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Paladin
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Moderator in Residence
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Re: $700 billion bailout in US
People defaulting on their mortages seems to be the main reason for this...
what would happen if people started defaulting on their personal loans and other debts ?
Keeping you informed, entertained, amused.. and Spam Free Buy, Sell, or Trade on Moncton.net. Moncton's Free Classifieds Chat! "The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it." - Albert Einstein - Chat Room
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