Supply Side Welfare

"(Dick) Durbin(D-Sen-ILL) said more than 2 million homeowners face foreclosure by the end of 2009, many of whom were duped into signing mortgages with unfair terms. The Center for Responsible Lending, which combats predatory lending practices, estimates about 600,000 people would keep their homes under Durbin's plan instead of ending up before bankruptcy judges who aren't permitted to adjust mortgage terms, regardless of how onerous they are"

Awww…people didnt read the terms of their mortgage and now they cant afford their house. Now I should pay for it. Great. Because some people are either so incompetent or because they just didnt care – they just wanted a house – they should be bailed out. NO

What about the people who did things the right way. the people who saved and sacraficed, looked over their documents and knew what they said before they signed it. Did their due dilligence.

Maybe they should have just not paid their bills too. Then someone else could have. Like me and you.

Everything you just typed would also apply to Bear Sterns. You know that.

Why should the good responsible financial institutions not be able to participate in some of that bailout money? They played by the rules. Just not fair.

Someone else is paying Bear Stern's bills….it's you and me.

The point is one of imbalance. No bailouts for powerless people. Always bailouts for the powerful investor class.

What difference does it make if the welfare goes to people who are too sorry to work for a living, or goes for bailouts? In either case, the federal government has their hand deep in my pocket, and they're going to get their share before I get to keep whatever's left, anyway.

If people were actually misled or duped into signing these mortgages, don't they already have recourse in the justice system? Isn't fraud illegal anymore?

Rev,
I sympathize with your viewpoint here, though I really do think our government had no choice but to come to the rescue. 70% of mortgage lending is now done through investment banks like Bear Stearns. Only 30% is done through commercial banks like in the old days. If Bear Stearns, who had something like a trillion dollars in securitized instruments out there, was allowed to collapse, this financial crisis could have spun totally out of control, making this a thousand times worse than it is right now. That would have harmed every one of us in the country financially. Forget the big guy vs. the little guy thing. It would have hurt all of us. In fact, it already is going to hurt all of us. The question is only one of how much. The government had to move into damage control mode.

The mistake was not the bailout. The mistake was the non-regulation that allowed the situation to occur in the first place.

Bailing out individuals who took out mortgage loans is a different matter. Unless that individual was defrauded, what valid reason is there for a bailout ? To keep home prices artificially high ? That's a lousy reason. As painful as it is, the housing bubble NEEDED to burst. If a borrower takes out a no-down-payment low interest rate ARM, that is not fraud, that is a decision, which carries risk. If the market then collapses and his house is worth less than he paid for it, that is not a reason for a bailout. That is crazy talk. I can see using some refinancing measures to alleviate the problem where possible, but that's about it. Putting taxpayers on the hook for another person's individual decision is not the right thing to do. It isn't really the right thing to do with Bear Stearns either, but it's the lesser of two evils when your talking about an impact that big. It's unfair, but necessary.

And I almost forgot. This has NOTHING to do with supply side economics. You keep misusing that term.

I see Rev's point–excellent—I see King's point—excellent.

However stupid, ignorant, or perhaps extremely desperate or unintelligent or outright mentally retarded or slow — that these people who either "trusted" the banker they were listening to and did not read the fine print or have someone else smarter read the fine print to them with explanation, or signed the document regardless of knowing they were taking a giant gamble, they are LOSING THEIR HOMES!

Now, aren't we a loving, forgiving American people or have we become totally ruthless? Do not the stupid deserve homes? Or food, or shall we just starve them all and kick them into the sewers for shelter?

Help and EDUCATION and reprimanding for both groups should be available and punctual—NOW.

Have we become so seperated from each other that we have lost our loving feelings and the sense that WE ARE AMERICANS?!

Dumb and smart, black and white, brown and beige and red, and democrat and republican, rich and poor, religious and non-religious—do we have to see an asteroid coming toward us all to confront it with a concerted effort by all to get that loving feeling back?

Geez, perhaps Mother Nature should send an asteroid toward us—we'll all have to shelter together then and then the formerly rich will come to appreciate that the poor have developed survival skills that they would find useful—such as garbage-diving and living in caves instead of mansions.

I mostly agree with your longer comment. Especially on non-regulation being the basic problem.

It is supply side economics, however. All of those tax dollars used to guarantee the Bear merger are going to the supply side of the equation. Those dollars are not going to guarantee the demand side.

larry: ARM's are fraudulent by nature. You won't agree, but that's how I see it. Just like introductory bait and switch interest rates are fraudulent by nature. Just like rebates are fraudulent by nature.

Does that excuse buyers from being stupid? No. But with the trickery of today's money schemes, it's becoming more and more difficult to understand and grasp the pitfalls.

The American economic system has morphed into gamesmanship, trickery, and complicated money and paper shuffling techniques, all for the sole purpose of enriching a small group of folks orchestrating the schemes.

This methodology has resulted in the rollercoaster ups and downs we've witnessed intensifying in the last 15 years or so.
Stock market, commodities and now housing.

I think ARMs should be illegal but can't see how they're fraudulent in nature unless the terms are lied about or hidden.

What's truly fraudulent in nature is insurance, which is inherently a ripoff for most of its purchasers. And it's mandated by the state in many instances.

Agreed on the insurance stuff.

Rebates are fraudulent money schemes by nature. The terms of rebates are not lied about or hidden….not really. Yet, the sole purpose of rebates is for the advantage of the rebater. Playing the percentages. Gift cards are the same.

That's how I see ARM's. While seeming to benefit the customer, like rebates, the sole purpose is to trap the buyer in a scheme where the percentages favor the sellers.

I'm glad you think ARM's should be illegal.

America used to at least try to limit bait and switch programs. No more. They are now mainstream. Bait and switch credit cards. Bait and switch CD rates. "Introductory rates" ……is the bait, just like with ARM's, and when the switching happens, the beneficiary is never the customer.

Hucksterism.

Rev,
The bailout of Bear Stearns is essentially a tax increase, albeit a delayed one. It is an increase in government spending (Keynesian economics, not supply side). Supply side economics is based upon the stimulative effects of tax cuts. That doesn't apply to the mortgage crisis. You're way off base here.

Also, the housing crisis will definitely affect demand. As housing prices plummet and interest rates drop, housing sales will rise. That's already happening. In march, housing sales rose.

You're kidding about ARM's being fraudulent, right ? What's fraudulent about them ?

Speaking of supply side vs Keynesian economics, Dubya actually did both at the same time. Kaboom ! Does not compute.

I still don't agree. The FED printed $29 billion in new currency and put it all into the money supply. It isn't a tax increase. It's deflation of currency.

The FED did this to stimulate the banking industry. That's part of supply side thinking. Those doing the supplying receive the most stimulus because, in the thinking of supply siders, the supply side stimulus will eventually trickle down to the benefit of all consumers.

Just like cutting taxes for the wealthiest.

Actually, the FED did this to stop the collapse of the banking industry, not really to stimulate it, and it was almost all centered around increased government spending, which, I repeat, is Keynesian, not supply side.

The only supply side part of the whole economic government plan is the ill-conceived economic stimulus rebate checks, but those had bipartisan support.

If not for the dangers of the Bear Stearns collapse, which were scary, I would have preferred to let the whole thing play out with next to no government intervention, other than the needed regulatrion of the banking and credit industries. That would have resulted in the needed correction. I'm afraid the actions of our government will only makes things worse in the long run. This idea of borrow, borrow, borrow has got to stop somewhere, but once again, our government is abetting it and avoiding responsibility.

You and I do agree on this issue.

One distinction however is this….when taxes are cut, you don't relate that to government spending. But it is.

It's only a minor detail…but you know how ornery I am.

If we are back to talking about the 2003 Bush tax cuts, those were the right thing to do to pull us out of a recession. Tax cuts stimiulate economic growth. The inexcusable part was Bush dramatically increasing spending at the same time. When you combine those two factors, then I can agree with you that the resulting deficit spending is still spending, and it's also an immoral burden placed on future taxpayers. There can be legitimate reasons for deficit spending at times, but Bush didn't have to do it.

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