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Treasury Acts to Save Mortgage GiantsBack to Article »
The announcement of a plan to inject billions of dollars in loans and investments was intended to show the government would stand behind the beleaguered companies.
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226.
July 13th, 2008 11:43 pm
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I'd like someone to step up to the plate and explain why the bailouts are necessary. What is needed to avoid the mess -- more or less regulation? Why are the same people who say they want less government now crying that the government should offer a bailout? Aren't the tax cuts for the rich sufficiently stimulating to the economy?
— ShowMe, Missouri
Recommend Recommended by 2 Readers
227.
July 13th, 2008 11:43 pm
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This is the worst financial news I have read in 35 years.It combines depression with a sort of socialism. Folks, we have trouble in all the cities.
— V rth, daLLAS
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228.
July 13th, 2008 11:43 pm
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now, remind me again why I've paid off my house and have no car or credit card debt? Am I the only chump in the entire world who is not borrowing? I say let Fannie Mae and Freddie Mac go under....let those suckers go down. If anyone votes for McCain they are REALLY REALLY dumb as this entire mess has come from federal deregulation started under Reagan and continued by the Bush's and even Clinton!!Republicans claim that unfettered markets are the key and are the efficient ways to run the world . . . so if Freddie Mae and Mac can't compete, they go out of business. Simple . . . and that'd their mantra..NOT!!
— the doc, Tucson
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229.
July 13th, 2008 11:43 pm
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Did these guys go to business schools? Don't they understand what the terms "free market economy", "capitalism" mean? They must had skipped classes in ECO 101.
— Ken, NYC
Recommend Recommended by 1 Reader
230.
July 14th, 2008 3:22 am
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What too the treasury so long to react to the problems at Freddie Mac and Freddie May? Is it because they were government agencies? Where was the money to come from? This administration even screws up the easy ones. Thank God they are almost through. But, it is smart to remember that in the next five months they can, and probably will do enormous damage to the country, i.e. Iran, Global warming; Failure to support the development of alternative non polluting fuels; continued torture of prisoners; warrantless searches of phone and other records of American citizens; I could go on through the night, but then they would have caused me to lose a night's sleep. No thanks.Sincerely,Sheldon G. Bardach
— Sheldon G. Bardach, Los Angeles
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231.
July 14th, 2008 3:22 am
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Why not bail out the Citizens of this Republic? Did the government think that a measly $600 would really help?
— sr, San Francisco
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232.
July 14th, 2008 3:22 am
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Instead of bailing out the rich and super rich, why not trying the other way around?....Bailing out the poor before foreclosure, through a federal sponsored refinance package or 120 days moratorium?
— kikek3, Miami,Florida
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233.
July 14th, 2008 3:22 am
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A necessary and prudent action to take. To the benefit of all in the long run.
— Paulboy, Ohio
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234.
July 14th, 2008 3:22 am
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This is textbook fascism. What next, der government vill own major shares uf ALL industries?Nothing like a "Decider" (I wonder what that is in German) who has two subservient branches of government and indirectly controls most of the United States. Fortunately, he takes his cues from God, so we have no worries.
— Darster, Birmingham
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235.
July 14th, 2008 3:22 am
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You should now put the US dollar's trade-based exchange rate at the top of your market data including at least a five year chart. It's just a commodity just like oil, cereals... but unlike the others it is in serious over-supply and nobody needs it - you can't even put it in your gas-tank. Non-US$ investors are heading for a loss well over 50% despite Paulson's regular incantation in favour of a strong dollar. The fall in the value of East and West Asian US-dollar holdings will seriously impact their economies.Good morning America - This is your financial Saigon.
— Pierre Garenne, France
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236.
July 14th, 2008 3:22 am
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My question is: where does the money come from? Where does the government get the money to bail all these folks out? Not from the American people; they don't have any money, they're in debt! So where does the money come from? Why do we act as if the government is immune to risk? All we're doing is transferring risk and debt from individuals (the folks who can't afford their mortgages) to institutions (Fanny Mae and Freddy Mac) and now on to the government. And the government passes it on to the foreigners who finance our debt. What happens when the foreigners pull out? What happens when China realizes we have nothing backing up this debt, no way to pay it, and they shift all their investments over to Euros or Yen? What happens when there's no one left to pass the debt on to? Our country goes bankrupt, that's what happens! It sounds extreme, but mark my words, it is coming! Our government, our businesses, and the American people have all been living way beyond our means, leading a lifestyle we have not earned, paying for things with money we do not have, letting the rest of the world finance our debt. Sooner or later, the rest of the world will say enough is enough! And when that day comes, look out.
— Jon, San Francisco
Recommend Recommended by 1 Reader
237.
July 14th, 2008 4:00 am
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A prerequisite of applying for the U.S. Presidency in this market should be a psychiatric examination.
— Rachelle, Kirkland
Recommend Recommended by 0 Readers
238.
July 14th, 2008 4:00 am
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the beginning of the end? look up. the sky just might be falling.
— tony, mount vernon, wa
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239.
July 14th, 2008 4:00 am
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In its origin, "private money" came from the King's mints. It belongs to the government and has been loaned out to the King's subjects, or to each other if the government were democratic. It is all "fiat money", if you like to call it that, more stable than the phoney sub-prime bonds posing as "fiat money".The government had not increased the amount of "fiat money" in line with the growing economy, which led to the invention of phoney bonds, as so often has happened. Without this, "taxpayers" would have been spared paying any taxes because they would have no income.A true Central Bank is a Bank of Issue!
— Michael Moore, England
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240.
July 14th, 2008 4:38 am
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Self-regulation doesn't work.
— Spinoza, Europe
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241.
July 14th, 2008 4:38 am
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This debacle - which ain't over yet - is attributable to one key mistake, without which we would not be where we are. That mistake was to extend lending for home purchases to persons with little, no or very poor credit history on the assumption that even if they default on the loan, the underlying collatteral (i.e., the home) will foreever increase in value so the lender can't lose. Similar to a ponzi scehme, pyramid sales, etc. We are all at fault for having let ourselves be blinded by quick profits to allow this. And yes, I say we are all at fault. There's enough blame to go around. While the bankers were stuffing their pockets with fat and easy profits, others were propping that up by protecting the "little guy" from "discriminatory lending" and all that (Mr. Schumer was a big supporter of protecting these "little guys", by the way), making the criteria for obtaining a loan not much more challenging than demonstrating a pulse and a breath. So is it so surprising that we are where we are? You don't need an MBA or PhD to figure this out.
— RB, Korea
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242.
July 14th, 2008 4:38 am
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Should this be any surprise in a corporativist economy (evolved fascism - Italy, 1922-1943 - private ownership, public administration, the public being corporations)? Here, you have a guarantee to the parasitic speculators ("investors" - China, US financiers, or the Saudis, for example?) that the public will continuously feed the now overworked pack animal of their machinations. According to a well explained 11 July 2008 article, "The $5 trillion mess" by Katie Benner (http://money.cnn.com/2008/07/11/news/economy/fannie_freddie.fortune/index.htm?postversion=2008071110), "Fannie and Freddie could borrow at super-low rates, a benefit they used to purchase - and hold -high-yielding mortgage loans. The spread between the two provided an irresistible earnings stream and the companies just kept getting bigger. “ Because of Fannie and Freddie's lying about their financial condition the speculators are fleeing. Now, the public is expected to reward their parasitism by a bailout, because FM and FM are quasi-public corporations. It is not “liberals”, “neocons” (ultra-reactionaries – not conservatives), or communists, Here, the marriage between the corporation as a privately owned entity and public control is complete; classical Italian Fascism has evolved into the present day corporativism. Mussolini lives, after all! It is not that we are re-living 1932 in Germany, but the March on Rome in 1922. (See Mussolini's "Doctrine of Fascism" and other of his works - too, the Syndicalist Law of 1926 - in spirit, we already are there.) Look around, folks and see where else the corporations have triumphed in spite of anti-merger laws. See how the peoples' resources are in the hands of the corporations and speculators. Until voters in this country wake up, really re-examine their political philosophies and understand the others, decide that they really want a representative democracy, then more of the same awaits down the road. This time, we do not have the cushions on which to fall after the depression begins (50% agricultural base of 1930, war as an economic generator, a more tolerant environment). This time, only a hard rock is our destiny.
— Jeremy Horne, Ph.D., Alamogordo, NM
Recommend Recommended by 0 Readers
243.
July 14th, 2008 4:38 am
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As long as the U.S. has things that foreigners want to buy, everything will be ok. There are buying opportunities out there. Last week it was the Chrysler building. This week it is Anheuser-Busch. Next week it will be..maybe the state of New Jersey. What is your best price for the state of New Jersey?
— John C, Portugal
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244.
July 14th, 2008 4:38 am
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There goes that invisible hand of the market again !
— Jim Roth, Maynard MA
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245.
July 14th, 2008 4:38 am
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WHY ARE THEY BAILING OUT THE EQUITY HOLDERS?Can anyone explain the logic in that?I understand that the agencies are needed to give liquidity to the housing market, but people who bought preferred equity expected higher returns for greater risk and, thus, should now bear the losses.Freddie hasn't even given up ther "right" to pay DIVIDENDS on common stock yet !I am afraid that if we insist with this generous bail-outs we will kill American capitalism which would be worse than any housing crisis or bank failure.Want to hide losses and hope for the best? ask the Japanese.
— gn, NY
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246.
July 14th, 2008 4:38 am
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The Central Bank of Russia has invested much money from the Reserve Fund into the bonds of these two companies.So better you have an inflation of 10% than a collapse.
— Svetlana, Moscow
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247.
July 14th, 2008 4:38 am
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In recent decades, America has transformed into a money manufacturing economy. The epicenters of this new economy are New York City and Irvine, Ca. Detroit has been replaced by CountryWide, GM Finance, along with armies of financial engineers.Financial services, the generating/loaning of money, now accounts for something like a staggering 40% of all corporate profits. Effectively Alan Greenspan allowed Wall St banks to create a totally unregulated private monetary system, with a license to literally print money. Since not regulated, this money ( derivatives, etc.) could be reloaned over and over again for enormous profits, creating massive credit over-leveraging in housing speculation, similar to the 1920s stock market.Republicans have been dismantling financial regulatory systems for the last 20 years, in favor of industry "self-regulation". Problem is, what brokerage business in their right mind is going to "self-regulate" away their enormous profits?Additionally, Greenspan pushed interest rates down so far for so long, it became a textbook recipe for inflation. Greenspan said he never saw the bubbles coming; hard to believe he never turned on a TV for 6 years and noticed 'flip this house' on every other channel. Maybe Greenspan just truly never grasped this new world of finance? The Fed focused their efforts on preventing 1990s Japanese style "Deflation", meaning printing money - but how exactly did they confuse Japan with the U.S.??But everybody loves bubbles, the new national casino, with get rich quick opportunities for all (in a global outsourced era of falling incomes). They employ millions and allow gambling of huge sums of money, with no almost no risk, due to bailouts. This is Socialism by any definition, amounting to home equity welfare/guaranteed income for affluent homeowners. It's real cost is massive inflation: oil prices, based on dollar contracts, are skyrocketing as traders anticipate bailout driven inflation/devaluation of the dollar.Deregulation in itself is not a bad thing. But Greenspan and company effectively removed all the stop lights from the roads, let the fox guard the chicken coop, encouraged risky loans by implied government mortgage guarantees, and recklessly substituted inflation for basic economic management - is it any surprise we're in the current financial mess ?Naturally the whole process has been liberally greased by huge Wall St campaign cash. Chris Dodd and others banking regulators have been getting favorable loans from the companies they regulate, which sounds suspiciously like bribes. Bond rating companies are paid by the same companies they rate. We certainly have the cleanest, most competent regulatory system money can buy.Maybe bailouts aren't such a bad thing, maybe even an investment in public safety - look at it this way, if you don't help your over extended neighbor ( and his lender ) pay for the McMansion/Lexus he can't afford, both may just show up at your door and rob you at gun point - taxes are much less messy!
— Holten Norris, NYC
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248.
July 14th, 2008 4:38 am
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The US is becoming increasingly similar with USSR, and it is the reason why US collapses so quickly in recent years.
— Rick, NYC
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249.
July 14th, 2008 4:38 am
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So much for the free market economy.
— Alex G, San Francisco
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250.
July 14th, 2008 4:38 am
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When the heck will people figure out that is way past time to send these guys home? The War at 2- 3 trillion after Cheney and McCain said that the oil in Iraq would pay the bill after we were greeted with flowers in the streets, and over 4,000 now dead, Afghanistan which has had more US killed in June than any time since we "beat the Taliban", Katrina, and Iraq now wants to send us packing despite Bush and Cheney wanting to stay. It has only been a few week since the White House and the Sec of Treas said that the economy was doing oh so well and that the markets would work it out for us. Only three days since McCain's co-chair and chief economics advisor on a trip to woo the WSJ editorial board said that all the troubles were in our heads and that if we would just stop whinning all would be great.Maybe the way to solve the horrible financial troubles of our government is a Very High TAX on Stupidity -- there seems to be no lack of that in White House Circles.
— John Cook, Dallas
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