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good! lawmakers on the radio today were saying 90% of their callers were against it. this is a victory for the stingy saver who doesn't obsess over vacation hom

good! lawmakers on the radio today were saying 90% of their callers were against it. this is a victory for the stingy saver who doesn't obsess over vacation homes and luxury cars. every THING is about to go on sale, and the prudent will have their day. taxpayers who pay their bills and live wisely don't need credit, they live on cash. these people should not be punished for the greed of everyone else on wall st and main st

run4yourlives 18y ago
this is a victory for the stingy saver who doesn't obsess over vacation homes and luxury cars. Unfortunately, 90% of America isn't described in the above sentence.
- fallentimes 18y ago
  Well, in a way, they sort of had it coming with their negative savings rates and all. Personal accountability really does go to die in the States although other countries are approaching our levels. Fat? Liposuction. Ugly? Plastic surgery. Don't want to exercise or eat right? Pills. Poor? Welfare. Don't know what you're doing with massive gobs of money? $700 Billion Bailout!?
  - krschultz 18y ago
    What are you talking about? There are plenty of people who put 20% down on a fixed rate mortgage, are paying that off perfectly, and the market value of their house is now below what they paid for it. Those people are going to get hammered if they sell the house and owe the bank tens of thousands of dollars. In that situation you just don't sell your house. But what if you have to sell your house? Medical bills? Job changes? Want to retire? It's nice that you think you are superior to all this vain people, but this crisis is not about vain people getting fucked. It is about responsible people have their American dream burned to the ground by morons with oversized sub prime mortgages and the banks that lent to them. This goes beyond hurting the people who caused the mess!
    - fallentimes 18y ago
      Houses are not an investment vehicle. If you buy one, it should be the for the long-term. Otherwise - don't. And I do feel for the minority of people with special circumstances. I do not think I'm superior; I just try to know what I'm doing before acting. The people who took out those loans knew what they were getting in to, and if they didn't, they should have. If it sounds too good to be true... I'm well aware that this affects everyone in some way. We're at a point where fixing liquidity is crucial and something needs to be done, and we need to make sure to profit from any money lent. I really like what Sweden did: http://is.gd/3iO2 http://is.gd/3iO2 I just worry our government is going to react instead of decide.
      - krschultz 18y ago
        You keep speaking on the premise that it is contained to sub-prime mortgages. "The people who took out those loans knew what they were getting into" What about the other 90% of people who live on the same street as the asshole with the sub prime mortgage who are now unable to sell their house if they need to because the sub prime one is at auction for half the price they need to get? Liquidity isn't going to fix that, we have a problem with too many houses on the market and too few people buying them. If you have enough money you can still get a prime mortgage, people just don't want to buy right now.
        fallentimes 18y ago
        No, I don't. I was talking about all houses and all mortgages when I said: "Houses are not an investment vehicle. If you buy one, it should be for the long-term."
- nihilocrat 18y ago
  Yeah, I bet those 'stingy savers' didn't go to college, and thus accrue the student loans that are practically required to get an education these days.
transburgh 18y ago
What about those who are young and hacker-ish that have not had the chance to save (I mean compared to someone that has been working for 20 years)? Times might get a little tough.
- tomjen 18y ago
  Well, we will hack through it.
- kirse 18y ago
  Well, if you're worth nothing you have nothing to lose, that's the way I see it.
  - mechanical_fish 18y ago
    This is precisely correct. Not a joke at all. To first order, this is great for you. Stocks are going on sale. You want to do your saving immediately after the massive crash, not before. Of course, that's just the first-order analysis. The second-order problems are potentially, um, annoying: If the economy tanks you might not earn any money to save next year. And your joy at being able to invest in a bear market (because you've got plenty of time to wait for the recovery) might be dampened by the sight of your parents moving in with you to save money because their retirement fund just evaporated. (They don't have time to wait for a recovery.)
    - netcan 18y ago
      I think that the better statement is 'volatility creates opportunities.' For example, depressed real estate markets can create high demand for rentals. You might be able to make money each month on a mortgaged property (a real novelty in Australia for example). And if rental demand is high, prices will probably eventually recover. The issue is that a recession by definition means most people are worse off.
- run4yourlives 18y ago
  You guys are much better off. Those of us with houses and bills are going to hurt. Those of us with stretched lines of credit and a penchant for living above our means are really going to hurt.
biohacker42 18y ago
The Fed can still print money and screw us savers.
jeremytliles 18y ago
Ok, here's the thing: even if you disagree philosophically with the legislation that they put together, you still would be wise to be very worried about the overall state of the economy due to tight credit. Many businesses (good, solid, profitable businesses that employ hard-working people) fund their operations via credit markets that have seized up. Absent some kind of intervention (and I for one would like to see more ideas on the table), even your ideal "prudent" person will probably suffer. Just because you've done everything prudently on your own micro scale doesn't mean macro events can't hurt you.
- davidw 18y ago
  I can't pretend that I understand this whole thing, and am quite suspicious of anyone that says they do, who does not report on it more or less full time and have a good grasp of economics, but... one analogy that's come to mind is a car stopping. In one case, with the brakes, in another, by hitting a rock wall. The end result is still a stopped car, but there are some other differences that might be of interest to the occupants. In any case, most of the discussion that's worth anything is coming from economists, of which there are a wide variety to read. Most people on sites like this one don't seem to have the expertise to say much that's useful, either for or against (and that includes me, thanks). http://economistsview.typepad.com/ http://economistsview.typepad.com/ http://econlog.econlib.org/ http://econlog.econlib.org/ http://www.marginalrevolution.com/ http://www.marginalrevolution.com/ http://www.economist.com/blogs/freeexchange/ http://www.economist.com/blogs/freeexchange/ http://economix.blogs.nytimes.com/ http://economix.blogs.nytimes.com/ http://delong.typepad.com/ http://delong.typepad.com/ http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd18c.html http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd1... As you can see even those guys are peddling their own ideologies to various degrees, along with everyone else with vested interests - and that's a lot of people, because 700 billion combined with a potential collapse of the economy is pretty high stakes. This doesn't make it easier to understand.
  - run4yourlives 18y ago
    That's a great analogy. There's a brick wall looming up ahead, and we just cut the line to the brakes.
natrius 18y ago
The bailout isn't to help taxpayers get credit. It's to help businesses get credit so the prudent will still have jobs in a month. Everything may go on sale, but you can't go on a shopping spree when you're unemployed. The vast majority of the bailout criticisms I've heard are woefully uninformed.
- kingkongrevenge 18y ago
  You can't wave a magic wand and create real reserves to lend. Real credit comes from reserves of savings. This is about stopping a deleveraging process in the financial markets, not about ensuring the flow of credit to businesses. That's just the propaganda. Credit demand is collapsing as an economic bubble bursts and this is DRIVING the deleveraging. Not the other way around. If the economy were truly starved for credit you'd see 8% rates on CDs as banks scramble to raise reserves to lend out.
  - natrius 18y ago
    "Credit demand is collapsing as an economic bubble bursts and this is DRIVING the deleveraging." You're going to have to explain that more. How does lower credit demand force deleveraging? I was under the impression that the deleveraging is being caused my huge losses on heavily levered investments. "If the economy were truly starved for credit you'd see 8% rates on CDs as banks scramble to raise reserves to lend out." The markets for debt have just taken a huge beating. I'm guessing the banks aren't meeting the demand for credit because it has just become more difficult to sell debt. If they are having issues with the loans they've already made, it's easy to see why they aren't rushing to issue more. I can't prove that the economy is starved for credit, but it's clearly the conventional wisdom. If you're going to call that propaganda, you need to prove that the conventional wisdom is wrong.
    - kingkongrevenge 18y ago
      > I can't prove that the economy is starved for credit You can get a loan at very reasonable rates right now if you meet the criteria. That's just a fact, and I'm not in a mood to give you documenting links. Outstanding credit continues to grow at only a slightly lower rate than before. There is not a credit shortage. There is a shortage of viable uses for credit. There is huge overcapacity in retail, housing, etc. People who can't reasonably be expected to pay back loans can't get them right now. Which is basically a good thing. Businesses can't get loans to expand because nobody in their right mind thinks many kinds of business SHOULD be expanding. The macro-economic conditions are driving the markets, not the other way around. The financial firms are suffering because the REAL economy ran out of greater fools and hit its maximum tolerable debt load. The real economy is not shuddering because the masters in Wall Street can't grease the wheels; it's the other way around.
deleted 18y ago
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deleted 18y ago
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echair 18y ago
This is a victory for the stingy saver Not if he has his savings in stocks. In fact, if he followed the conventional wisdom and put (100 - age) percent of his assets in stocks, a 40 y.o. stingy saver just lost 5% of his savings today alone. Which is almost certainly more than his share of the $700 billion.
- byrneseyeview 18y ago
  Tax rates are negative, zero, or nominal for most people. There are perhaps 100 million people who pay a substantial amount of income taxes in the US (I am fudging around various numbers to make the math easier, here; see http://www.taxfoundation.org/research/show/1410.html http://www.taxfoundation.org/research/show/1410.html for information on how many people simply don't pay taxes). So that's an average of $7000 per serious taxpayer. $7000 is 5% of $140,000. Do you think a typical 40 year-old taxpayer has a $140,000 equity portfolio?
krschultz 18y ago
Not exactly true, there are plenty in good financial standing who had prime mortgages on their single residence, a place they have owned for 10+ years, that because of the depreciation in the market can now no longer sell their home without owing a huge amount to the bank for the difference. That means you can't sell your home if you have to, what if your job tells you that you have to move? What if you have to sell your house to use the cash for medical bills? There are a lot of people really hurting from this, just because we're a bunch of hackers living in apartments saying HAHA now I can buy a house! Doesn't mean that families who made previously responsible decisions are not getting really hammered. To say "GOOD!" to this is incredibly callous and most likely a sign of great ignorance to what is really going on.
- burnout1540 18y ago
  Unless you live in an unbelievably depressed area like downtown Detroit (and maybe not even then), home prices in America are substantially higher than they were 10 years ago. So anyone who has had a fixed rate mortgage for 10+ years (unless they've been treating their house as an ATM) is looking at a profit if they sell their house. In fact, according to the Case-Shiller index, homeowners in the 20 largest metro areas of the U.S. have seen their homes increase in value by over 60% between January 2000 and June 2008. Of course, this is down from 106% as of the summer of 2006. Falling house prices have definitely put a large number of homeowners underwater, but these people either bought in the past few years or took out one or more HELOCs (home equity line of credit).

run4yourlives 18y ago

this is a victory for the stingy saver who doesn't obsess over vacation homes and luxury cars. Unfortunately, 90% of America isn't described in the above sentence.

fallentimes 18y ago
Well, in a way, they sort of had it coming with their negative savings rates and all. Personal accountability really does go to die in the States although other countries are approaching our levels. Fat? Liposuction. Ugly? Plastic surgery. Don't want to exercise or eat right? Pills. Poor? Welfare. Don't know what you're doing with massive gobs of money? $700 Billion Bailout!?
- krschultz 18y ago
  What are you talking about? There are plenty of people who put 20% down on a fixed rate mortgage, are paying that off perfectly, and the market value of their house is now below what they paid for it. Those people are going to get hammered if they sell the house and owe the bank tens of thousands of dollars. In that situation you just don't sell your house. But what if you have to sell your house? Medical bills? Job changes? Want to retire? It's nice that you think you are superior to all this vain people, but this crisis is not about vain people getting fucked. It is about responsible people have their American dream burned to the ground by morons with oversized sub prime mortgages and the banks that lent to them. This goes beyond hurting the people who caused the mess!
  - fallentimes 18y ago
    Houses are not an investment vehicle. If you buy one, it should be the for the long-term. Otherwise - don't. And I do feel for the minority of people with special circumstances. I do not think I'm superior; I just try to know what I'm doing before acting. The people who took out those loans knew what they were getting in to, and if they didn't, they should have. If it sounds too good to be true... I'm well aware that this affects everyone in some way. We're at a point where fixing liquidity is crucial and something needs to be done, and we need to make sure to profit from any money lent. I really like what Sweden did: http://is.gd/3iO2 http://is.gd/3iO2 I just worry our government is going to react instead of decide.
    - krschultz 18y ago
      You keep speaking on the premise that it is contained to sub-prime mortgages. "The people who took out those loans knew what they were getting into" What about the other 90% of people who live on the same street as the asshole with the sub prime mortgage who are now unable to sell their house if they need to because the sub prime one is at auction for half the price they need to get? Liquidity isn't going to fix that, we have a problem with too many houses on the market and too few people buying them. If you have enough money you can still get a prime mortgage, people just don't want to buy right now.
      - fallentimes 18y ago
        No, I don't. I was talking about all houses and all mortgages when I said: "Houses are not an investment vehicle. If you buy one, it should be for the long-term."
nihilocrat 18y ago
Yeah, I bet those 'stingy savers' didn't go to college, and thus accrue the student loans that are practically required to get an education these days.

transburgh 18y ago

What about those who are young and hacker-ish that have not had the chance to save (I mean compared to someone that has been working for 20 years)? Times might get a little tough.

tomjen 18y ago
Well, we will hack through it.
kirse 18y ago
Well, if you're worth nothing you have nothing to lose, that's the way I see it.
- mechanical_fish 18y ago
  This is precisely correct. Not a joke at all. To first order, this is great for you. Stocks are going on sale. You want to do your saving immediately after the massive crash, not before. Of course, that's just the first-order analysis. The second-order problems are potentially, um, annoying: If the economy tanks you might not earn any money to save next year. And your joy at being able to invest in a bear market (because you've got plenty of time to wait for the recovery) might be dampened by the sight of your parents moving in with you to save money because their retirement fund just evaporated. (They don't have time to wait for a recovery.)
  - netcan 18y ago
    I think that the better statement is 'volatility creates opportunities.' For example, depressed real estate markets can create high demand for rentals. You might be able to make money each month on a mortgaged property (a real novelty in Australia for example). And if rental demand is high, prices will probably eventually recover. The issue is that a recession by definition means most people are worse off.
run4yourlives 18y ago
You guys are much better off. Those of us with houses and bills are going to hurt. Those of us with stretched lines of credit and a penchant for living above our means are really going to hurt.

biohacker42 18y ago

The Fed can still print money and screw us savers.

jeremytliles 18y ago

Ok, here's the thing: even if you disagree philosophically with the legislation that they put together, you still would be wise to be very worried about the overall state of the economy due to tight credit. Many businesses (good, solid, profitable businesses that employ hard-working people) fund their operations via credit markets that have seized up. Absent some kind of intervention (and I for one would like to see more ideas on the table), even your ideal "prudent" person will probably suffer. Just because you've done everything prudently on your own micro scale doesn't mean macro events can't hurt you.

davidw 18y ago
I can't pretend that I understand this whole thing, and am quite suspicious of anyone that says they do, who does not report on it more or less full time and have a good grasp of economics, but... one analogy that's come to mind is a car stopping. In one case, with the brakes, in another, by hitting a rock wall. The end result is still a stopped car, but there are some other differences that might be of interest to the occupants. In any case, most of the discussion that's worth anything is coming from economists, of which there are a wide variety to read. Most people on sites like this one don't seem to have the expertise to say much that's useful, either for or against (and that includes me, thanks). http://economistsview.typepad.com/ http://economistsview.typepad.com/ http://econlog.econlib.org/ http://econlog.econlib.org/ http://www.marginalrevolution.com/ http://www.marginalrevolution.com/ http://www.economist.com/blogs/freeexchange/ http://www.economist.com/blogs/freeexchange/ http://economix.blogs.nytimes.com/ http://economix.blogs.nytimes.com/ http://delong.typepad.com/ http://delong.typepad.com/ http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd18c.html http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd1... As you can see even those guys are peddling their own ideologies to various degrees, along with everyone else with vested interests - and that's a lot of people, because 700 billion combined with a potential collapse of the economy is pretty high stakes. This doesn't make it easier to understand.
- run4yourlives 18y ago
  That's a great analogy. There's a brick wall looming up ahead, and we just cut the line to the brakes.

natrius 18y ago

The bailout isn't to help taxpayers get credit. It's to help businesses get credit so the prudent will still have jobs in a month. Everything may go on sale, but you can't go on a shopping spree when you're unemployed. The vast majority of the bailout criticisms I've heard are woefully uninformed.

kingkongrevenge 18y ago
You can't wave a magic wand and create real reserves to lend. Real credit comes from reserves of savings. This is about stopping a deleveraging process in the financial markets, not about ensuring the flow of credit to businesses. That's just the propaganda. Credit demand is collapsing as an economic bubble bursts and this is DRIVING the deleveraging. Not the other way around. If the economy were truly starved for credit you'd see 8% rates on CDs as banks scramble to raise reserves to lend out.
- natrius 18y ago
  "Credit demand is collapsing as an economic bubble bursts and this is DRIVING the deleveraging." You're going to have to explain that more. How does lower credit demand force deleveraging? I was under the impression that the deleveraging is being caused my huge losses on heavily levered investments. "If the economy were truly starved for credit you'd see 8% rates on CDs as banks scramble to raise reserves to lend out." The markets for debt have just taken a huge beating. I'm guessing the banks aren't meeting the demand for credit because it has just become more difficult to sell debt. If they are having issues with the loans they've already made, it's easy to see why they aren't rushing to issue more. I can't prove that the economy is starved for credit, but it's clearly the conventional wisdom. If you're going to call that propaganda, you need to prove that the conventional wisdom is wrong.
  - kingkongrevenge 18y ago
    > I can't prove that the economy is starved for credit You can get a loan at very reasonable rates right now if you meet the criteria. That's just a fact, and I'm not in a mood to give you documenting links. Outstanding credit continues to grow at only a slightly lower rate than before. There is not a credit shortage. There is a shortage of viable uses for credit. There is huge overcapacity in retail, housing, etc. People who can't reasonably be expected to pay back loans can't get them right now. Which is basically a good thing. Businesses can't get loans to expand because nobody in their right mind thinks many kinds of business SHOULD be expanding. The macro-economic conditions are driving the markets, not the other way around. The financial firms are suffering because the REAL economy ran out of greater fools and hit its maximum tolerable debt load. The real economy is not shuddering because the masters in Wall Street can't grease the wheels; it's the other way around.

deleted 18y ago

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deleted 18y ago

[deleted]

echair 18y ago

This is a victory for the stingy saver Not if he has his savings in stocks. In fact, if he followed the conventional wisdom and put (100 - age) percent of his assets in stocks, a 40 y.o. stingy saver just lost 5% of his savings today alone. Which is almost certainly more than his share of the $700 billion.

byrneseyeview 18y ago
Tax rates are negative, zero, or nominal for most people. There are perhaps 100 million people who pay a substantial amount of income taxes in the US (I am fudging around various numbers to make the math easier, here; see http://www.taxfoundation.org/research/show/1410.html http://www.taxfoundation.org/research/show/1410.html for information on how many people simply don't pay taxes). So that's an average of $7000 per serious taxpayer. $7000 is 5% of $140,000. Do you think a typical 40 year-old taxpayer has a $140,000 equity portfolio?

krschultz 18y ago

Not exactly true, there are plenty in good financial standing who had prime mortgages on their single residence, a place they have owned for 10+ years, that because of the depreciation in the market can now no longer sell their home without owing a huge amount to the bank for the difference. That means you can't sell your home if you have to, what if your job tells you that you have to move? What if you have to sell your house to use the cash for medical bills? There are a lot of people really hurting from this, just because we're a bunch of hackers living in apartments saying HAHA now I can buy a house! Doesn't mean that families who made previously responsible decisions are not getting really hammered. To say "GOOD!" to this is incredibly callous and most likely a sign of great ignorance to what is really going on.

burnout1540 18y ago
Unless you live in an unbelievably depressed area like downtown Detroit (and maybe not even then), home prices in America are substantially higher than they were 10 years ago. So anyone who has had a fixed rate mortgage for 10+ years (unless they've been treating their house as an ATM) is looking at a profit if they sell their house. In fact, according to the Case-Shiller index, homeowners in the 20 largest metro areas of the U.S. have seen their homes increase in value by over 60% between January 2000 and June 2008. Of course, this is down from 106% as of the summer of 2006. Falling house prices have definitely put a large number of homeowners underwater, but these people either bought in the past few years or took out one or more HELOCs (home equity line of credit).