Paul Montgomery ([info]paradox0220) wrote,
@ 2008-09-30 14:27:00
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Interesting number game
"The U.S. mortgage market is estimated at $12 trillion with approximately 9.2% of loans either delinquent or in foreclosure through August 2008."

So roughly $1.1 trillion delinquent or in foreclosure.

$700 billion proposed to be given to corporations by Congress which recently failed in its current incarnation.

Heck, you could bail out almost 64% of the folks in trouble directly with that kind of money and buy their house for them. Did I do some math wrong or does all of this seem pretty crazy?

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[info]goulo
2008-09-30 07:55 pm UTC (link)
I think you're forgetting that a large portion of the bailout needs to be used to richly compensate many executives for their fine hard work.

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[info]decibel45
2008-10-02 03:01 pm UTC (link)
Actually, no... buying the homes outright would be about the worst thing we could do:

a) Now the goverment gets to play landlord. Or kick everyone out of those homes and then try and sell them. What's the opposite of a bubble? It would TANK the housing market (far more so than it is now) for years
b) Buying those homes means the people who wrote these dumbass mortgages WIN. Completely, 100%. Because they get all their money for these turds that they wrote.
c) The real crisis here isn't so much mortgages or personal lines of credit; it's commercial credit. Banks won't even loan to other banks. Which mean's they can't provide credit to businesses. Not only does that hamper (or, more accurately, stop) economic growth, it also has the real potential of forcing a lot of businesses to close their doors. My company, for example, is highly dependent on our lines of credit. If we were to suddenly lose access to all of our credit it would have a huge impact on opperations, and would almost certainly lead to dramatic reductions in headcount.

BTW, I agree with shooting the bill down on Monday. I think people are rushing into this way too fast, just like we did with the PATRIOT act. I suspect that the government will need to do something, but it's also critical that it does it right. To put that in perspective, Warren Buffet feels that if the government handles this right, it would actually make a profit from the bailout, which it absolutely should. Though, sadly I'm betting that if it was able to do that there's be a huge uproar about 'profiting off of a crisis', even though it's the fiscally correct thing to do. We (the taxpayers) would be effectively issuing a loan to these companies, so we should damn-well get a return on that investment.

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[info]paradox0220
2008-10-02 04:35 pm UTC (link)
Rereading everything, I don't see an actual suggestion to buy the houses outright. What I was originally pointing out is that the amount of money we are talking about is so huge, that action was possible. I agree that it would be a horrible thing to do but the key is to get the government to really talk about what they are trying to do. My perception at least is that they are trying to play this whole thing off as helping the poor mortgage holders when really the goal is very different.

My take on "the real crisis" is that the US has fundamentally been living beyond its means and that it is catching up with us. Many of our assets are way over valued and a correction has to take place (while our government tries to hold that time off).

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