Bailout Trivia

[Casper]

So the federal government is planning on spending $700,000,000,000 to bailout the failing banks.

 

$700,000,000,000

 

There are 303,824,640 (July 2008 est.) people in the US.

 

That's $2303.96 per person. That's every man, woman, and child.

 

There are 242,677,893 people age 15 older.

 

That's $2884.48 per person.

 

Let's break that down a little further.

 

Currently there is $10.5 trillion in mortgage debt in the US. $10,500,000,000,000. The average mortgage debt is $250,000, so let's assume there are 42,000,000 mortgages in the US. Instead of bailing out the banks, why not give that $16,666.67 to each person with a mortgage. Apply it directly to the mortgage to help pay down the principal, thus bringing back some of the home's equity, allowing people to more easily refinance their idiotic home loans (interest only, arms, etc).

 

Ah, but not everyone needs that $16,666.67. Only about 30% of the mortgages on the market are subprime. So, 30% of the 42,000,000 total mortgages is 29,400,000. That's $23,809.52 for each subprime loan. That would definitely help!

 

Now remember ladies and gents, these total numbers of mortgages are estimated pretty high, so likely the dollar amounts would be much higher.

 

Imagine that, the government could chose to help damn near every American citizen, but is instead choosing to bailout a few banks.

 

Still have faith in our government to do the "right thing"???

 

And for those already opening up Snopes, I just wrote this. This isn't a spam email forward or any shit like that.

[OSUGT]

Ben,

 

Good points. I've also been hearing about the "mark to market" accounting system that was implemented after Enron. In effect, banks must list assets at current market values as opposed real projected value. If this system were eliminated, wouldnt bank balance sheets look more attractive to investors?

 

What makes me sick about this whole plan is that the likelyhood of the govt making a profit with our tax dollars seems super high. We will never see a dividend and guys like Warren Buffet make millions to billions on our backs.

[87GT]

Yes give me $16K and I will drop it on my principle right now. Then I can afford to refinance and get a lower rate then what I have now.

 

Shit is stupid when I get letters saying "you are approved for a new mortgage up to $155K" and the rate is always higher then what I have right now. I guess I am lucky on my mortgage but I could do better...

[thorne]

Ben I've been saying the same thing. IF banks where to just take anyone behind in a subprime get them on a locked rate moved there behind to the end of the loan and make them even it would help

[TTQ B4U]

I can't even watch the news anymore it sucks so bad. I'm actually predicting a commit will strike the earth and kill us all.

[Casper]

I would just like to add this is why I should be president, among many other reasons.

[Brrcats]

I want to give my money to subprime home owners as much as I want to give it to the banks with this bailout, which is not very much.

[Casper]

I want to give my money to subprime home owners as much as I want to give it to the banks with this bailout, which is not very much.

 

Giving the money to subprime home owners helps you a LOT more than giving the money to the lenders. Let the lenders fail. It was their gamble. By giving the money to the subprime home owners, we'd be able to curb a lot of the foreclosures, ultimately saving our home values.

 

Or like in fight club, let's just destroy all credit. Everyone starts over fresh. That would be nice.

[Main3s]

I would just like to add this is why I should be president, among many other reasons.

 

http://i537.photobucket.com/albums/ff333/Swizzfire/FlagAmerican.jpg

SATAN 2012

[Casper]

http://i537.photobucket.com/albums/ff333/Swizzfire/FlagAmerican.jpg

SATAN 2012

 

I won't be old enough.....

 

But 2016.....

[jeffmeden]

So the federal government is planning on spending $700,000,000,000 to bailout the failing banks.

 

$700,000,000,000

 

There are 303,824,640 (July 2008 est.) people in the US.

 

That's $2303.96 per person. That's every man, woman, and child.

 

There are 242,677,893 people age 15 older.

 

That's $2884.48 per person.

 

Let's break that down a little further.

 

Currently there is $10.5 trillion in mortgage debt in the US. $10,500,000,000,000. The average mortgage debt is $250,000, so let's assume there are 42,000,000 mortgages in the US. Instead of bailing out the banks, why not give that $16,666.67 to each person with a mortgage. Apply it directly to the mortgage to help pay down the principal, thus bringing back some of the home's equity, allowing people to more easily refinance their idiotic home loans (interest only, arms, etc).

 

Ah, but not everyone needs that $16,666.67. Only about 30% of the mortgages on the market are subprime. So, 30% of the 42,000,000 total mortgages is 29,400,000. That's $23,809.52 for each subprime loan. That would definitely help!

 

Now remember ladies and gents, these total numbers of mortgages are estimated pretty high, so likely the dollar amounts would be much higher.

 

Imagine that, the government could chose to help damn near every American citizen, but is instead choosing to bailout a few banks.

 

Still have faith in our government to do the "right thing"???

 

And for those already opening up Snopes, I just wrote this. This isn't a spam email forward or any shit like that.

 

That's basically how the "bailout" is set to work, but who really benefits is up in the air. If the money goes to the banks, they can afford to stay afloat and the government have to see out the string of bad mortgages, either by writing them off (when someone goes bankrupt and defaults) or by writing them down (when someone convinces the lender to refinance.) Some people are just as well off at this point if they give up and go bankrupt. They are so far upside-down on their mortgage that even a $100,000 won't bring them back into balance. Remember the key here is risk. If a bank has a 400,000 loan outstanding on a $200,000 house (which is so common now its sick,) the risk is absurdly high that they will never see even half of their money. Even if the person could afford a 300,000 mortage instead of a 400,000 one, there is still too much risk in writing it down. And, what's the point in the borrower holding onto that mortgage? They can get out now and all it costs them is a little bad credit for 7 years.

 

So the banks are going to stay afloat one way or another, the question is: who wins? If the govt buys the mortgages straight away from the banks at an inflated value, the banks clearly win (In a "moral hazard", corporate socialism kind of way). This is what Paulson and the Bush administration argued for at the start. On the other hand, if the mortgages are bought up in exchange for a stake in the bank's success, there is a marginal chance the govt can recoup the losses on buying the mortgages. Then, the banks kind of win and the govt kind of wins (in a general socialist kind of way). And finally, if the govt buys really bad mortgages and at the same time forces banks to refinance any mortgage they think will end up retaining a homeowner, the banks kind of win, the F*d homeowners kind of win, and the govt's (or the rest of the taxpayers') only consolation is that the housing crisis will be that much closer to being over. This option may be the least socialistic of them all, since it goes further toward sticking the banks with the mess they created, for the long term.

 

So which scenario would you vote for?