How Would You Feel If The Bailout Turned A Profit?

[torchbearer]

welcome comrade.

 

[InThaBackGround]

Your Hit the Nail on the head

EPIC FAIL

Anyone who thinks the federal government can make a smart business move is chugging moonshine. They can't even fight a war in Iraq properly (let alone Constitutionally) without having BILLIONS of dollars just... disappear into the netherworld.

Secondly, it's not government's job to get involved in such things, regardless of how much money they "could" make. They don't have the constitutional authority to gamble with my money. And on top of that, how come THEY can gamble with my money, when they won't let ME gamble with my money?

Finally, Government doesn't have anything it doesn't take from us, either via taxation or inflation. And you can be darned sure they ain't gonna lower taxes once they win the lottery.

It's just like this 175% tax most places have had on tobacco products now for a few years to influence people that smoking was bad for them. I said from the start that once they get the taste off all that extra money they will become dependant on it and IF everyone did suddenly quit smoking; they would create new taxes to replace the lost income.

I am literally so angry right now i cannot think straight. This country, when this bill passes, will LITERALLY no longer be the United States of America. It is hard for me to imagine that our constitution is dead BUT IT IS. We may as well accept it and Yesa Massa pleasa gives me mo taxes souz younz can live it up.

I want to see may law suits filed against everyone that supports this.

I want to see Bush IMPEACHED before he can slither out of office.

I want to see states rising up and petitionig to remove themselves form this internally resolved and broken union.

I want to see millions of people screaming......

I have to gain my composure.

Peace and God Bless, or Alah, or Budda, or Ganesha or whomever bless all the freedom loving liberty fighters.

 

[freelance]

Apparently, last night (don't know where), Robert Rubin came out and called what we're going to have with this bailout "Social Capitalism." That's how they're going to sell communism to us.

 

[wizardwatson]

I posted this in another thread, but thought I'd make it more visible here...

Look at this scenario:

Say a house has a mortgage on it for $200k.
The current value of that house is $170k.
The Treasury can buy the mortgage for 40 cents on the dollar (many have proposed that this would be the ballpark purchase price), so $80k.
Even though it has a high probability for default, there's still a great opportunity to profit.
Say the mortgagor defaults and the house goes through foreclosure where it is bought at 60% of the fair market value. That means the mortgage holder receives proceeds of 60% of $170k or $102k.

That leaves the mortgage holder (in this case the Treasury) a profit of $22k or a return of 27.5% to go back to the taxpayers.

So, really this plan can produce a profit and many have speculated that it will... In short, the banks STILL took the loss as they only got $80k on their initial $200k, but they also received some capital when it was sold and were able to turn around lend it into the capital markets.

FROM LRC BLOG:
------------------
As reported on Volokh: funny letter to Washington Post:

While witnessing, but not participating in, the home real estate frenzy in 2005 and 2006, I kept asking: Who is the idiot buying up all these mortgages issued on inflated home prices to all these people who have neither the capacity nor the intention to repay the loans?

Now I learn it was me.

TED THACKER Ann Arbor, Mich.

According to a comment there, "Heard on the radio today that the US government could make as much as 2.1 TRILLION dollars in profit from selling the bad loans that they will soon be buying."

Well, if this is true--the feds ought to expand this program and buy distressed mortgages all over the globe. Just buy about $10 trillion worth, and make a cool $30 trillion profit. Debt free, baby!
----------------------------------------
The last sentence speaks to vote4ronpauleeeze's idea.

 

[lucius]

pigs can fly...interesting facts about the SL boondoggle in the 80's:

The goverment bail out will cost the taxpayers around $1.4 trillion dollars when it is over.

The authors of "Inside Job", a book about the S&L scandal, found criminal activity at every S&L they investigated.

I know; it's all different now...

 

[SeanEdwards]

You still have the problem of mega moral hazard, where businesses are encouraged to take foolish risks because they know that Sugar Daddy Uncle Sam is on call to pick up the pieces.

What we need is a simple direct market system. One where the state's roll is simply to enforce laws against fraud, and to maintain the court system for the settling of contractual disputes. Other than that, we don't need any regulation. Let unscrupulous goofs lend billions of dollars to homeless people who want to open crackstand franchises, or whatever. Who cares? As long as the risk and the profits hit the right parties the market will do a better job of regulating than any number of stuffed government suits.

 

[scooter]

This guy isn't really worth responding too. He's obviously brainwashed by the media's cheerleading of this bailout.

Look, we get it. No bailout would mean tons of pain for THIS financial system. But what you miss the point on is that it would usher in a NEW financial system. One based on prices that actually match what the free market is willing to pay, before all the government socialism took place.

The bailout might give a little security that the bubble and this economy won't crash right away, but it still does not solve the fact that we have a completely broken system. In fact, the bailout is intending to perpetuate the failed system.

Do not sacrifice freedoms for security, because you'll end up with neither.

 

[Cowlesy]

Whatever the government tells you is the market price, is a lie.

Bernanke already said they'd purchase these assets at HTM ("Held to Maturity") prices, meaning we are going to pay face value (or close to it) and take a bath.

And to the original question. I am against whether profit or no profit. State Capitalism in any form = failboat.

 

[fedup100]

Wake up! It isn't the money, it is a COUP by the FED to stay in power forever unabated!

 

[Dave39168]

Oh it will turn a profit for someone. By creating a new 700 Billion dollars, someone is going to make some money.

Its like someone said earlier, they will privatize profits, and socialize losses.

The common man will pay for it to the tune of $2300 / person (that's 700Billion/300Million).

Ever since I learned about the coming economic collapse, I always wondered how it would manifest itself. Well this is it. As someone said earlier, government controls the money and when they enter the market by buying these failing companies out, then the private businesses can't compete. So they fail, and the government buys them out, making it even tougher for any private businesses left to compete. They fail, govmnt buys them out. Its a fast track to socialist/fascism. the snowball has just started rolling. the government will own all the means, and everyone will work for them. Socialism!!!! mmmm can't wait.

 

[HenryKnoxFineBooks]

I keep thinking about all the mobile homes FEMA bought that rotted away. hm.

AHA!!! but if the federal govt. can rent those trailers for more than it cost to buy them, then FEMA can turn a profit....










<sarcasm off>

 

[Dr.3D]

What does it profit when the bailout plan inflates the currency to the point any profit that may have come from the bailout plan is absorbed by that inflation?

This is taxation without representation. The people do not get to vote as stock holders of the banks being bailed out. Instead, they get the results of the inflation cause by the bailout.

We never see a period of deflation after there has been a period of inflation. All we ever see is more inflation, time and time again. Every time the government is allowed to inflate the currency, it stays inflated. They just keep adding to the inflation year after year. This is why we see a chart like the one below.

Source: http://data.bls.gov/cgi-bin/cpicalc.pl

Edit: Is it any wonder why people don't save money in this country? If they kept 100 dollars in a bank for their lifetime, it would be only worth about ten dollars (added interest to it) by the time their kids get to inherit what is in the savings account.

 

[Brian4Liberty]

Apparently, last night (don't know where), Robert Rubin came out and called what we're going to have with this bailout "Social Capitalism." That's how they're going to sell communism to us.

At risk of repeating myself, there is already a name for this: Fascism.

 

[FindLiberty]

<snip>
Source: http://data.bls.gov/cgi-bin/cpicalc.pl

Edit: Is it any wonder why people don't save money in this country? If they kept 100 dollars in a bank for their lifetime, it would be only worth about ten dollars (added interest to it) by the time their kids get to inherit what is in the savings account.

...and don't forget that we still use the penny today, now with new designs featuring the tyrant Lincoln in various poses. (Reminds me of those old propaganda photos of Hitler smiling, posed with children and babies.)

Less copper, but still worth more melted down, illegal to melt, much higher cost to make 'em, won't buy much today. What a joke - our gubermint at work.

 

[freelance]

How would you like it if we were greeted with flowers and candy in Baghdad?

 

[lucius]

I posted this in another thread, but thought I'd make it more visible here...

Look at this scenario:

Say a house has a mortgage on it for $200k.
The current value of that house is $170k.
The Treasury can buy the mortgage for 40 cents on the dollar (many have proposed that this would be the ballpark purchase price), so $80k.
Even though it has a high probability for default, there's still a great opportunity to profit.
Say the mortgagor defaults and the house goes through foreclosure where it is bought at 60% of the fair market value. That means the mortgage holder receives proceeds of 60% of $170k or $102k.

That leaves the mortgage holder (in this case the Treasury) a profit of $22k or a return of 27.5% to go back to the taxpayers.

So, really this plan can produce a profit and many have speculated that it will... In short, the banks STILL took the loss as they only got $80k on their initial $200k, but they also received some capital when it was sold and were able to turn around lend it into the capital markets.

So here's where I'm at:

I am a recovering slave whose whole training, values, judgments, hopes, fears, aspirations, labors, fiber, existence, being... have been skewed since birth to serve Leviathan (livyathan). With what little I can now dimly see, I am beginning to formulate a rudimentary understanding not unlike Nietzsche in 'Thus Spoke Zarathustra:'

"The State is the coldest of all cold monsters, and coldly it tells lies, and this lie drones on from its mouth: 'I, the State, am the people'."

Not even near this magnitude, but authors Pizzo, Fricker and Muolo in their 1980's expose 'Inside Job: The Looting of America's Savings and Loans' (ISBN: 006098600X) found criminal activity at EVERY SL they investigated, like a national network of Mafiosi...

I hear the droning in your post...do you actually still believe?

 

[Grimnir Wotansvolk]

If we could wave a magic wand and redo the last +/- 100 years with a society based entirely on voluntary association, a bailout of this magnitude could potentially work wonders.

When it's tied to a military industrial complex, though, and a salivatingly hawkish leadership, it's doomed to fail on every level.

 

[Dr.3D]

...and don't forget that we still use the penny today, now with new designs featuring the tyrant Lincoln in various poses. (Reminds me of those old propaganda photos of Hitler smiling, posed with children and babies.)

Less copper, but still worth more melted down, illegal to melt, much higher cost to make 'em, won't buy much today. What a joke - our gubermint at work.

Now you know why our kids pay 22 cents or more for penny candy.

When I was a kid, the store down the street sold two for a penny candy. I went down there and bought 10 cents worth and sold all twenty of them to my brother and sister for 20 cents. I then went back and bought 40 more pieces of the candy and again sold them to my brother and sister for another 40 cents.

Now I thought I had a good thing going here and I was being a capitalist till the next time I went down to that store, they told me they wouldn't sell me any more of that candy. After that happened, I felt like throwing a brick through their window. Then after I thought about it for awhile , I thought, well, at least I have 40 cents instead of the 10 cents I had started with.

The stupid people at the store probably thought they were doing my parents a favor by not letting a little kid buy too much candy.

 

[Zippyjuan]

In the 1980's the Resolution Trust Corporation was set up to deal with the S&L crisis. At the peak, over 1000 S&Ls were shut down and the RTC helped liquidate them. After their expenses, they returned a profit to the government.

What was initially proposed was to use money to buy the mortgage backed securities in reverse auctions- buying from those willing to sell their securities at the lowest prices- and then go through them to try to more accurately price them (good mortgages are mixed up with riskier ones and sold together and then bundles of those can be again repackaged and sold leading to massive confusion about what is actually in the security packages and thus the value). Since the companies are unable or do not have the time to unravel the packages and see exactly what is inside, nobody want to buy any of them at any price. The Treasury would become the market for them- go through the work of valuing them and reselling them hopefully at a profit as the RTC was able to do. There are lots of loan specialists currently out of work who would be available to help sort through them.

 

[Ceos]

Fact A: Government cannot create wealth. All it can do is redistribute it (to their pockets of course)

So any talk of a real profit that would benefit the people is nonsense.