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View Full Version : U.S. Issues Can/Will we really be able to buy low and sell high?


Mr. Laz
09-25-2008, 11:13 AM
that's basically the nuts of the current proposal isn't it.

use taxpayer money to buy all the bad morgage debts etc and then hole on to them and hope they turn around and make our money back.

will it really work?

won't something(*cough*greed*cough*) in our government screw it up?

Taco John
09-25-2008, 11:16 AM
The market isn't working because the rich people who own all this bad debt aren't able to sell it for what they believed they could sell it for. In reality, the market is working just fine. This bailout is nothing but cutting the losses for the wealthy off of the backs of taxpayers.

Brock
09-25-2008, 11:16 AM
The market isn't working because the rich people who own all this bad debt aren't able to sell it for what they believed they could sell it for. In reality, the market is working just fine. This bailout is nothing but cutting the losses for the wealthy off of the backs of taxpayers.

Yep.

BigCatDaddy
09-25-2008, 11:18 AM
So what happens if we don't bail them out?

Chief Henry
09-25-2008, 11:19 AM
People had the opprotunity to buy AIG at $2.21 last Wednesday. Thats an opprotunity
you should have pounced on. That is buying low. Just don't buy crap that those former Fannie Mae and Freddie Executives were Managing.

Taco John
09-25-2008, 11:23 AM
So what happens if we don't bail them out?

Rich people become poor. Institutions crumble, and others rise to take their places.

Taco John
09-25-2008, 11:25 AM
So what happens if we don't bail them out?


Here's a better question: what happens to the dollar if we DO bail them out.

triple
09-25-2008, 11:28 AM
i have not seen the deal, but if it isn't like the government is just going to give these companies billions for free, if the government buys up these MBSs, taxpayers will actually get something they can reasonably expect to get some sort of a return on, which is better than any other government program where money just disappears down the rabbit hole.

The overwhelming majority of these mortgages will not default and the MBSs still have value. They are just worth far less than these companies essentially paid for them.

In some ways, this is the scariest bailout in history because of the interference in natural market forces, but in other ways it's not so bad because there's at least something that can be sold at a later date, perhaps even for a profit or at least a less significant loss.

personally, i think we should let these idiots and their businesses fail. consequences like business failure are the only thing that keeps people from doing things like subprime lending. no risk means no incentive to be prudent. we shouldn't mess up that process.

but the government won't let social engineering programs like Fannie and Freddie die. At least this is better than what they normally would propose.

alnorth
09-25-2008, 11:41 AM
Can/Will we really be able to buy low and sell high?

Easily. There is not a lot of downside and the upside is pretty immense. The face value we will purchase will run into the trillions. If any significant percentage of these homeowners don't default we will profit.

The firms in trouble don't have the staying power and need their money now. Due to the credit crunch, no one else has the money to buy them off. Given what we did to AIG, the government is likely going to drive a pretty hard bargain and make out like bandits in a few years. A future president/congress could receive a hefty windfall a little ways down the road when this is all over.

Donger
09-25-2008, 11:42 AM
A future president/congress could receive a hefty windfall a little ways down the road when this is all over.

I wonder what they'll spend it on?