I spoke with some county and state people I have connections with for an explanation of this bailout and if it really is needed. I got this answer which seems to be the better ones I have heard without the Republican/Democrat BS so I felt it deserved a new thread hopefully with solid and informative responses.
A bailout is necessary to save the US. There is no more money in the financial institutions pockets to lend. Companies (like yours and even government) borrow money on a daily basis to finance their operations, buy products and finance projects. In the past when banks and financial institutions ran out of money, they go to the Fed Reserve to borrow money. The Fed is now out of money. When this happens, financial institutions stop lending. All these financial institutions offered all these crazy (interest only loans) and let people who were not qualified to borrow large sums of money borrow it, and they failed to pay the banks back. So the net result is the banks don’t have any money. Once lending stops people can’t buy goods. That causes a Recession first and then after businesses close and people are unemployed, you get a Depression. The US is talking to financial institutions in China, England, France and Germany to borrow the money. Kind of stupid to borrow money to help provide money, but that is the only thing they can do. Once they get the money into the system and stimulate the economy, people will pay back debt. The borrowing comes with an interest rate and the banks that help us out tend to get a nice profit, but it is necessary to get the US economy going.
Part that I can relate is that my company buys millions of dollars of equipment from jobs using lines of credit and loans from a small bank which are paid off when the project is complete and payment from the customer is recieved… If we were unable to do so, our business would suffer which in turn hurts all the employees, which in turn prevents them from paying back their debt.
My big question still tho is are the banks that are being bailed out are ones that relied on these high interest loans to help their business and now are hurt and suffering losses and want help? What about the big banks who actually were tough to get loans from? Why doesn’t just HSBC and other big banks who were not failing buy up these banks and debt.
United States — Population: 301,139,947 (July 2007 est.)
700,000,000,000 / 301,139,947 = 2200ish per person… Now per tax paying person, probably about 5000 per tax payer. Per home owner… probably 15000 per homeowner.
Thanks Dan. That was pretty much it and a bag of cupcakes.
I had a reasonable suggestion but I forgot it lol.
Ok if those are the figures though why not help the actual tax payers or even the home owners as opposed to the banks? Ultimately isnt that money going to go right back into the banks system anyway?
has anyone found a pros and cons list for the bailout?? what are the pros and cons to rec’ing the bailing and not rec’ing the bailout. It does look like we are fucked if the bailout doesnt happen.
good article. Kind of what i have been saying to friends and family all along.
also whats to stop the financial institutions from exaggerating their debt and actually pocketing a lot of the money being given to them?
I hate to say this but i dont believe it for a minute. Simply because every politician that has been on TV about this has tried hard as fuck to seem sincere in their belief that this is the only way. Granted thats not my only reason.