Unintended Bailout Consequences

As I undestand it, Americans were granted mortgages that far exceeded the true value of the houses and these same people simply abandoned those houses without any payments.

This did not and is not happenning in Canada, and yet we are facing the same economic problems because of the big three auto plants, and how they affect our overall economy. For me to buy a house, I must have a percentage down payment (forget now if it is 10 or 20 percent.). I must also have the financial resources to repay that mortgage. We have a lot of houses that have been up for sale going on three years. Houses under $100,000.00 mortgage are still selling.

Owing to greed the world is in a financial mess.....not just the USA.
If we don't fix the underlying problem, we cannot mend the mess.

Our government is very cautious about lending money to the auto three, and they have laidout very strict conditions on a timely basis.

In order to boost the economy and encourage spending, the government has offered certain safeguards to the lending companies. Seems like a sensible thing to do given the circumstances,,,,,,,,,,,but, the bottom line remains,,,,,,,,,,,who really knows?

Cheers,

Jim

 

The problem goes much further than that. This crisis the libs made is now being used to spend money we do not have on every liberal pet project known to man. And as the polls show the country is not buying into it.

 

I understand. I am just saying the government intervention that started all this need to fix the banks is now continuing into every aspect of our lives. We will be destroyed.

 

Does Subaru have plants here in the US? How many American's benefit if Gov subsidizes the big 3 vs how many American's working for Subaru get impacted by the same measure?

 

Too bad it was a republican president who started this demise...

 

I was wondering if Subaru could buy one of the faltering big 3. I didn't know they only sold about 200K/yr. They were the first with the 4WD/AWD cars which is great to have in the snow. My idea won't be well received since that would mean Japanese ownership of an American company.

Not the US government but the foreign makers in the south get tons of incentives from the state governments. I wonder what Indiana does for Subaru?

 

Don't sell yourself short, I think you can get one real cheap and the Government will finance the deal. :thumbsup: :smilewinkgrin:

 

Isn't it true that Japan has been subsidizing their auto makers for a long time?

 

We always seem to consider unintended consequences way too late. It is easy to blame one party or another when what we need to do is be skeptical of any plan where the cure is more government control.

The current financial "crisis" has its roots almost exclusively in government mandates on the one hand (to make home ownership easier) and lack of oversight (protecting Fannie and Freddie from proper accounting rules until far too late. In this case, some of the same folks who are directly at fault are the same folks that have, and will have significant control over the "solutions". Do a search for the proposed $825 billion "stimulus" pkg and look at what is included. It is more about increasing the size and scope of government and very little about stimulating the economy.

The coming financial crisis has its roots completely in a combination of government short sightedness and a citizenry not committed to providing oversight to elected officials. Social Security, Medicare, and SCHIP are all programs that were sold with one argument and then expanded without any meaningful plan to cover future costs.

Reagan's statement about government being the problem has never been more true.

 

Well, to a degree banks and investment companies are the same. However, it was primarily the banks making mortgage loans and wall street investment companies doing the bundling.

 

After the Second World War, a system similar to the Gold Standard was established by the Bretton Woods Agreements. Under this system, many countries fixed their exchange rates relative to the US dollar. The US promised to fix the price of gold at $35 per ounce. Implicitly, then, all currencies pegged to the dollar also had a fixed value in terms of gold. Under the regime of the French President Charles de Gaulle up to 1970, France reduced its dollar reserves, trading them for gold from the U.S. government, thereby reducing US economic influence abroad. This, along with the fiscal strain of Lyndon Johnson's Great Society expenditures and the Vietnam War, led President Richard Nixon to eliminate the fixed gold price in 1971, causing the system to break down.

http://en.wikipedia.org/wiki/Gold_standard

 

Yes it is fair. That is just my subjective view especially in regards to all imported products. But wait there's more. The US dollar is about to lose 20-30% of its value in the next couple of months, guess what that will do for Subaru sales?

 

Personally I think America will default on all its obligations. This will force the interest rates back to where they should be. America WAS rich but we have been living on the good graces of foreign investors. When they pull out, and they will, America will be left out in the cold. We will lose all our ability to borrow (actually a good thing) but will hyper inflate our currency to write off huge debts. It will be nigh impossible for us to by anything made overseas once this happens, unless the rest of the world sinks it's currency along with ours. This has other unintended consequences nearly as bad as a strong currency. Either way America is broke and our charge card is about to be taken away.