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Damned, this is depressing...


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Fed Pledges Exceed $7.4 Trillion to Ease Frozen Company Credit

 

The numbers being thrown around today are simply staggering. Being a realist, I came to the conclusion several months ago that we were going to change as a nation. And, change in a way I didn't like. But, I figured we would at least emerge relatively intact, just different - less capitalistic, more socialistic.

 

But, damned, when are we going to stop? Are we really going to shoot everything we have? Will we actually take the United States government to bankrupcy trying to prevent a depression? A depression which would solve itself over time if it were allowed to.

 

I have played by the rules all my life. Today, people I've never met are turning it all up-side-down. They're changing the game, as it is being played. People who pay their bills are being charged while those who don't are being rescued. Poorley run companies are given a second chance while the ones well run are burdened. People who don't want to work don't have to, and those who choose to work are required to compensate them.

 

The maddening thing is, I can't think of a single, meaningful thing that I can do to prevent it. It's like sitting on a crashing airplane, strapped into my seat, waiting for the inevitable. Sure, I go to work every day, and we have done exceptionally well this year, but I'm not even coming close to keeping up with the committments these nitwits in Washington are making on my behalf. I can't imagine how my kids are going to deal with the debt they are being obligated to. I think that we can all agree that there is no expectation that the federal debt will be repaid, which makes us permanent slaves to debt and there ain't no freedom in that.

 

I guess that I could just go for a ride, but frankly I don't feel like it. It's so very, very sad.

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A dollar here... A dollar there and pretty soon you're talking about real money. At the rate these appointed (not elected) officials are giving away money, inflation is just around the corner. Quite frankly, I have lost faith that there is any cure to this financial mess THEY got themselves into, that can be so easily solved by continuously and further bankrupting my family's future.

 

When retailers tally up sales figures in January 2009, we're going to witness even more demands on government intervention. It's going to be VERY difficult for our newly elected officials to say 'No' to the mom and pop business that make up the fabric of our communities when the Fed has been bailing out their banking buddies left and right. You can't keep throwing more money at this.

 

And to think we were all so concerned about the price of a barrel of oil just a few months ago. That's mouse nuts compared to this.

 

Mike O

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Calvin  (no socks)

Steve, the plane is not going to crash, not going to crash, not.... a golden parachute of massive proportion will miraculously appear and save everyone. I'm expecting a Billion dollar bailout check for closing/selling my business just before the downturn in the economy.

 

I haven't taken a look at my 401k losses yet...but the Billion dollar check I am expecting would make it easier to take. Ya know, sweeten up the pain a little.

 

I know what will brighten your spirits....... Go to the Mall purchase some stuff that you don't need... on a credit card...It works for me. If that dosen't do it, your'e beyond my level of expertise.. You will require a government doctor to straighen out your depression.

 

As for me, I'm off to the Mall, I've got to save some companies from bankruptcy.

 

 

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What we have here is a failure to communicate.

 

Maybe this will help.

 

Before we put the drunk in rehab, we have to give him several shots of vodka.

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When this whole thing started, someone suggested that we give every taxpayer/ citizen $75K to bail themselves out of their mortgages. If you didn't have a mortgage, then spend it on something else or invest it. Heck, buy a Chevy or two. Of course, it would have been a 75K loan forced on each of us, but we'd at least see the money.

 

I'm beginning to think that plan would have worked better than what we're trying now.

 

 

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Don't worry about it.

7.4 trillion is just a number.

Just don't think of it in terms that mean anything such as:

If you placed those dollars end to end they would only go around the world 28,847 times. And that's at the poles. If you lined them up around the equator that number drops to 28,798 times. :grin:

 

 

Hope this helps..

:/

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The first link originating the post indicates the available "credit line". The MSNBC link is indicating what has been actually borrowed...

Making neither number correct, as we can't see the future.

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Don't worry about it.

7.4 trillion is just a number.

Just don't think of it in terms that mean anything such as:

If you placed those dollars end to end they would only go around the world 28,847 times. And that's at the poles. If you lined them up around the equator that number drops to 28,798 times. :grin:

 

 

Hope this helps..

:/

 

You know, now that you mention it Billy, I think we're overlooking the fact that FOOTBALL SEASON is still just fine. In fact, it's available almost year 'round now so things are actually better. So what's all this worrying? Bunch a whiners I say. Couldn't smell the roses if they was walking through a rose garden. Go Frogs! Utes!!!!

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The first link originating the post indicates the available "credit line". The MSNBC link is indicating what has been actually borrowed...

Making neither number correct, as we can't see the future.

Since when did news articles have anything to do with fact?

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Don't worry about it.

7.4 trillion is just a number.

Just don't think of it in terms that mean anything such as:

If you placed those dollars end to end they would only go around the world 28,847 times. And that's at the poles. If you lined them up around the equator that number drops to 28,798 times. :grin:

 

 

Hope this helps..

:/

 

You know, now that you mention it Billy, I think we're overlooking the fact that FOOTBALL SEASON is still just fine. In fact, it's available almost year 'round now so things are actually better. So what's all this worrying? Bunch a whiners I say. Couldn't smell the roses if they was walking through a rose garden. Go Frogs! Utes!!!!

 

Right on brother! And besides, my Colts won last night. :clap:

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"The people have traded their votes for no more than bread and circuses..."

Junival (~100 ME)

 

So let the populace stick their heads back into the sand, and everything will be taken care of for them. Yeah - you'll be taken care of, alright...

 

We're from the Government, and we're here to help.

(Ronald Reagan reportedly called those, "the nine most terrifying words in the english language.")

(NB: if that attribution is deemed too 'political,' the admins are welcome to truncate, edit, or modify as required...)

 

 

//On edit//

Oops! I got my first quote wrong, at least per the "Bread and Circuses" entry at Wikipedia, anyway:

 

This phrase originates in Satire X of the Roman poet Juvenal of the late 1st and early 2nd centuries. In context, the Latin phrase panem et circenses (bread and circuses) is given as the only remaining cares of a Roman populace which has given up its birthright of political freedom:

 

. . . . ... Already long ago, from when we sold our vote to no man,

. . . . the People have abdicated our duties; for the People who once upon a time

. . . . handed out military command, high civil office, legions — everything, now

. . . . restrains itself and anxiously hopes for just two things:

. . . . bread and circuses

 

. . . . "... iam pridem, ex quo suffragia nulli

. . . . uendimus, effudit curas; nam qui dabat olim

. . . . imperium, fasces, legiones, omnia, nunc se

. . . . continet atque duas tantum res anxius optat,

. . . . panem et circenses. ..."

. . . . . . (Juvenal, Satire 10.77–81)

 

Juvenal here makes reference to the Roman practice of providing free wheat to some poor Romans as well as costly circus games and other forms of entertainment as a means of gaining political power through populism. The Annona (grain dole) was begun under the instigation of the popularis politician Gaius Sempronius Gracchus in 123 BC; it remained an object of political contention until it was taken under the control of the Roman emperors.

 

 

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Damned, this is depressing...

Yup, being depressed is the depressing part about a depression.

 

It's so very, very sad.

That it is. The world's a changin'. Wonder what the next era will look like? "Max Max" comes to mind...

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MSNBC Version - Less than 1 Trillion?

 

Same thing, different number?

 

I'm still confused.

 

The first link originating the post indicates the available "credit line". The MSNBC link is indicating what has been actually borrowed...

 

Not according to Bloomberg. The numbers quoted in their article are amounts already sent out the door. The only exception is the still unspent portion of the congressionally approved $700 billion. The trillions the Fed and FDIC have spent or put up as collateral are mostly undisclosed and, so far, unaccountable.

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Since when did news articles have anything to do with fact?

My point was that it's a little early to cry over '7.4 trillion' dollars.

 

Seth, when someone obligates you to cover a debt, you are obligated to cover that debt. The Fed has done this already on our behalf. We are obligated (collateralizing) these trillions they have lent. And, while it is true that these unknown borrowers may eventually pay everything back at no cost to the taxpayer, it is the taxpayer who gets soaked if they default.

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And, while it is true that these unknown borrowers may eventually pay everything back at no cost to the taxpayer, it is the taxpayer who gets soaked if they default.

Yes. The amounts may get paid back at no cost to the taxpayer and if they do not then the taxpayer does indeed get soaked. The point is that neither you, I, nor anyone else knows what the end game will be. I'll be the first to agree that there's certainly nothing very uplifting about it all, but I wouldn't be jumping off a bridge over a 7.4 trillion loss just yet either.

 

 

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Yes, that's exactly what I'm saying. The amounts may get paid back at no cost to the taxpayer and if they do not then the taxpayer does indeed get soaked. The point is that neither you, I, nor anyone else knows what the end game will be. I'll be the first to agree that there's certainly nothing very uplifting about it all, but I wouldn't be jumping off a bridge over a 7.4 trillion loss just yet.

 

Man, I wish I could live in your state of mind for just one day. I get to drive the red cardboard fire truck.

 

Are you really OK with trillions of dollars of debt being lended on your behalf? Put another way, considering that your share of the $7.5 trillion is about $24,000, are you ok with co-signing on an unknown borrower for an unknown collateral for an unknown length of time? Never mind that your share is likely much higher due to the fact that half the population could never swing that amount should the original debtor default.

 

Will you be alright when that number passes $15 trillion? $25 trillion? Do you have a line in the sand where it's too much?

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I think you're going just a little overboard on the numbers there, but no, I'm not OK with any of it. I'm never OK with being in a situation where you have to choose the best of several bad options. That doesn't absolve me of the responsibility to do so though and as much as I detest the idea of bailout/loan packages I think that they are a better option than simply doing nothing and accepting the potential of an economic collapse (which would cost me many multiples of $24k, FWIW.)

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You know, I've got that Grateful Dead song playing right now, the one with the monkey driving that big locomotive, No. 99, right on down the line, left the engineer with a worried mind.

 

Just coincidence I guess.

 

Lyrics

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As cliche as it sounds, at best, we are mortgaging the next generations furure. The responsible thing would be to let the irresponsible fail, no matter the cost to this generation, get well and rebuild a destroyed economy and let the next generation learn from our mistakes.. We have chosen to defer much of the pain/penalty to our kids in order to make our pain less..Either way we'll recover..It'll just take a lot longer and punish those who don't deserve it by taking on this debt. And that's assuming we are spared from a total collapse.

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The first link originating the post indicates the available "credit line". The MSNBC link is indicating what has been actually borrowed...

 

Not according to Bloomberg. The numbers quoted in their article are amounts already sent out the door. The only exception is the still unspent portion of the congressionally approved $700 billion. The trillions the Fed and FDIC have spent or put up as collateral are mostly undisclosed and, so far, unaccountable.

 

"The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers . . . ."

 

It seems pretty clear that that money is not out the door.

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As cliche as it sounds, at best, we are mortgaging the next generations furure. The responsible thing would be to let the irresponsible fail, no matter the cost to this generation, get well and rebuild a destroyed economy and let the next generation learn from our mistakes..

That all depends. One case is an inevitable economic collapse where we lose everything and the government ends up mortgaged to the hilt, in which case no expenditure of public funds would be the responsible action. Another case is that a collapse is prevented by government lending and much (or at least some) of the money lent is eventually returned to the treasury, in which case sitting on our hands and doing nothing right now would actually be the height of irresponsibility.

 

No one knows what the future holds and no one can be certain what actions are more 'responsible' than another. All we can do is the best we can with the information we have right now.

 

 

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As cliche as it sounds, at best, we are mortgaging the next generations furure. The responsible thing would be to let the irresponsible fail, no matter the cost to this generation, get well and rebuild a destroyed economy and let the next generation learn from our mistakes..

That all depends. One case is an inevitable economic collapse where we lose everything and the government ends up mortgaged to the hilt, in which case no expenditure of public funds would be the responsible action. Another case is that a collapse is prevented by government lending and much (or at least some) of the money lent is eventually returned to the treasury, in which case sitting on our hands and doing nothing right now would actually be the height of irresponsibility.

 

No one knows what the future holds and no one can be certain what actions are more 'responsible' than another. All we can do is the best we can do with the information we have right now.

 

Like I keep saying, I'm confused.

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We were headed toward a similar mess some years back, and elected a leader who brought specific economic and sociological principles to bear which pulled us out of the recession we were in and the depression we were headed for. But as a society, and even those who one would normally think would have adhered to those principles, we have strayed from them, which some would argue has led us to where we are today. And to be frank, there were those who disagreed with those principles and thought that THEY had a better idea.

 

Well, the shoe is now on the other foot. Those who thought THEY had a better idea are now in charge, and it will be interesting to see, given that one set of principles have proven themselves correct, if another set of principles can provide the same kind of economic and sociological resurrection. If so, then the arguing will continue as to which is best, or which to apply under which circumstances. If not, then the matter will be settled and, except for the arguing, the path clear.

 

Either way, it's not going to be fun for a while. But some TRUTH may emerge from this.

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We were headed toward a similar mess some years back, and elected a leader who brought specific economic and sociological principles to bear which pulled us out of the recession we were in and the depression we were headed for. But as a society, and even those who one would normally think would have adhered to those principles, we have strayed from them, which some would argue has led us to where we are today. And to be frank, there were those who disagreed with those principles and thought that THEY had a better idea.

 

Well, the shoe is now on the other foot. Those who thought THEY had a better idea are now in charge, and it will be interesting to see, given that one set of principles have proven themselves correct, if another set of principles can provide the same kind of economic and sociological resurrection. If so, then the arguing will continue as to which is best, or which to apply under which circumstances. If not, then the matter will be settled and, except for the arguing, the path clear.

 

Either way, it's not going to be fun for a while. But some TRUTH may emerge from this.

 

Now I'm really, really confused, again. But it's good to hear from you Fernando, even if we do see completely different worlds.

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. . .even if we do see completely different worlds.

 

We probably see more things similarly than differently. There are many things on which we would both agree that we're in this together. The difference is probably based on where that ends, for each of us.

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Talk about depressing ...

 

http://www.msnbc.msn.com/id/27844894/

As long as the bundling of mortgages into securities, and independent loan originators continue to exist, these types of problems are never going to go away IMHO. And that horse is out of the barn and long gone.

 

Once the link between the borrower and the lender was broken, responsible lending (and borrowing too) died.

 

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Dave McReynolds

Just out of curiousity, does anyone know what happened to the USSR's debt when it collapsed? Did the debt just poof disappear, after which Russia kind of bounced around with their economy being run by the Russian Mafia for 10-15 years, until lately when they seem to be getting a handle on things again? Other than a lot of older people, like me, getting screwed out of their pensions and having to sweep the streets to get food, they seem to have taken it somewhat in stride, albeit with a certain nostalgia for the USSR. As I write this, it seems like a gross oversimplification, which it probably is, but what really happened there?

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Francois_Dumas

 

I have played by the rules all my life. Today, people I've never met are turning it all up-side-down. They're changing the game, as it is being played. People who pay their bills are being charged while those who don't are being rescued. Poorley run companies are given a second chance while the ones well run are burdened. People who don't want to work don't have to, and those who choose to work are required to compensate them.

 

The maddening thing is, I can't think of a single, meaningful thing that I can do to prevent it. It's like sitting on a crashing airplane, strapped into my seat, waiting for the inevitable. Sure, I go to work every day, and we have done exceptionally well this year, but I'm not even coming close to keeping up with the committments these nitwits in Washington are making on my behalf.

 

 

You know what's even more depressing !!??

 

When you did all the above, do NOT have any debts, did NOT play on stock markets, never bought things on credit and yet find yourself strapped in that aircraft because ANOTHER COUNTRY caused YOUR plane to crash....... :D

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When you did all the above, do NOT have any debts, did NOT play on stock markets, never bought things on credit and yet find yourself strapped in that aircraft because ANOTHER COUNTRY caused YOUR plane to crash.......

 

Despite the perceptions (and the opinions of the haters) there's no one country that caused this to happen. European banks are more leveraged in mortgage-backed securities than US banks. European countries have their own real estate bubbles. No one forced other countries to do business with anyone else.

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Francois_Dumas

Wasn't referring to the banks and major industries that obviously all have hopped on the bandwagon of over-producing and over-selling.

 

The real problem lies with the culture that thinks the sky is the limit irregardless of one's real income and spending can continue irresponsibly. Thinking a credit card can replace real money is one of the main causes of this current crisis and it was not invented nor embraced in most European countries.

 

Surely there are many parties, governments and companies 'to blame', but it is as Real Spin says: if you've done things in a responsible and careful way then this is very depressing indeed.

 

My opinion was echoed last night in an interview with mr. David Walker, who has been warning for many years already that the current (American) way of life is unsustainable.

 

When Googling for him, I found this:

http://de.youtube.com/watch?v=OS2fI2p9iVs

 

I, for one, think he's got a very valid point!

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I think you're going just a little overboard on the numbers there, but no, I'm not OK with any of it. I'm never OK with being in a situation where you have to choose the best of several bad options. That doesn't absolve me of the responsibility to do so though and as much as I detest the idea of bailout/loan packages I think that they are a better option than simply doing nothing and accepting the potential of an economic collapse (which would cost me many multiples of $24k, FWIW.)

 

Well, I don't think I'm going overboard with the number at all. Six months ago, we were talking about hundreds of billion dollars and, if I recall correctly, you were making the same claim.

 

My point is, and has always been, when is it too much? I realize that we're now playing with monopoly money, and there is no longer any conversation at all regarding the repayment of this debt. We just went through a boom period, yet all we were able to pay back was a measly $540-something billion on a $10 trillion debt. Now we're plowing through tons of new obligations and next year we'll be adding new tons of additional spending.

 

You make the point that this plan MAY work. I'll grant you that that is a possiblity. But, considering the fiscal track record of our federal government in good times, how do you expect a different result during hard times? Sorry, Seth, but I just don't see it the way you do.

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As cliche as it sounds, at best, we are mortgaging the next generations furure. The responsible thing would be to let the irresponsible fail, no matter the cost to this generation, get well and rebuild a destroyed economy and let the next generation learn from our mistakes.. We have chosen to defer much of the pain/penalty to our kids in order to make our pain less..Either way we'll recover..It'll just take a lot longer and punish those who don't deserve it by taking on this debt. And that's assuming we are spared from a total collapse.

 

Well said, Billy.

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"The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers . . . ."

 

It seems pretty clear that that money is not out the door.

 

Greg, you should have read a little further into the article. In the next paragraph it states:

 

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

 

The rest of the article breaks down the other amounts already lent or spent by the Fed, FDIC, and the Treasury. It gets pretty detailed, so I won't cut-and-paste it here.

 

BTW, today Bloomberg raised that number to $7.7 trillion.

 

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)

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Sorry, Seth, but I just don't see it the way you do.

That's OK, I'm no oracle and you may well end up being right. As I said I'm not at all happy with the ongoing 'solution' but I see it as the better of a set of very poor options. I absolutely share your concern about the national debt (especially since this is the second debt-funded $trillion-plus commitment this country has made since 2001), and the figures scare me as well. But even if government debt is the only standard for the decision it's not clear which will ultimately cost more, the potential cost of the bailout/loan package or the potential cost of an economic collapse and depression. All the possible outcomes have their ultimate costs and we're just grasping in the dark right now.

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Hi Seth! Usually you and I are more-or-less ‘on the same page’, but this time I have to say I’m a bit more with Steve. Primarily because personally I don’t think any of these measures are going to work.

 

I think the USA, and by extension western societies/countries in general, have reached the end of, out of lack of a better term, the - ‘living on borrowed money’ cycle. There is a real, and sudden, realization (at least in some circles) that a model of spending backed by no assets is ultimately unsustainable. Governments trying to pour billions of their currencies into the system trying to prop up debt-based spending haven’t realized it yet, mostly out of desperation, but some people are. In particular the ‘man on the street’, if for no other reason than it (living within your means) is being forced upon them by the drying up credit market.

 

The sooner we all, as individuals, groups, governments, and nations come to terms that a global reset (via a collapse) is both necessary and unavoidable, the sooner we will get past it. It will be very, very painful. But so will be continuing to trying to prop up a failed model. Longer and more painful IMHO.

 

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Usually you and I are more-or-less ‘on the same page’, but this time I have to say I’m a bit more with Steve.

OK, you're agreeing with Steve and I'm agreeing with John. Now I'm really worried... :grin:

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The real problem lies with the culture that thinks the sky is the limit irregardless of one's real income and spending can continue irresponsibly. Thinking a credit card can replace real money is one of the main causes of this current crisis and it was not invented nor embraced in most European countries.

 

I am with you on the view of the spending culture in the US, but I'm not sure what makes you think it's that different in, say, the UK, because it's not.

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"I was always taught when growing up that when you reward bad behavior all you get is more bad behavior. From the mortgage meltdown to the automaker debacle to cities and states going under, it's all bad behavior. It should not be rewarded. The problem here is that our culture of debt -- both personal and corporate -- has created a culture of dependency. Everyone is calling out to our central government to give them money. And horrors of horrors, many are willing to let the federal government take ownership stakes in these entities and have a hand in their management. That is the road to socialism. The first step to ending the culture of dependency is to tell these corporations, cities and states they need to start taking responsibility for their actions by dealing with the consequences they have created for themselves. If not, then we could accumulate a national debt that even our grandchildren will never pay off." --columnist and former Mayor of Cincinnati Ken Blackwell

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Francois_Dumas

I wrote 'most' European countries. And yes, there are debt-ridden individuals in all countries, even in Holland, but just not on the same national scale. Also the 'bad mortgages' are not a common thing in Europe.

 

Maybe England has been too closely aligned with the US as of late then?

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The sooner we all, as individuals, groups, governments, and nations come to terms that a global reset (via a collapse) is both necessary and unavoidable, the sooner we will get past it. It will be very, very painful. But so will be continuing to trying to prop up a failed model. Longer and more painful IMHO.

It sounds as though several share this thought, that a collapse will somehow 'cleanse' the system and lead to a society more to one's own preference (be it on the left or the right.) That has happened many times in the past but the results were seldom predictable, and only on the rarest occasion positive.

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thencamebronson

In my opinion, the biggest part of the problem is Congress. Taking handouts from Wall Street, the mortgage companies, and the auto comapanies (10 million from GM last year) they encouraged and even required mortgages be given to people who could not afford them or mortgages larger than they could afford. Wall St packaged them up to "spread the risk" and sold to investors around the world. These investors thought "It is backed by American Mortgages it has to be good." In many cases in order to get a buyer into a mortgage they couldn't afford they were talked into ARM's or even loans where no equity accrued.

 

Short version of what happened, too many people bought more than they could afford, maxed out their credit, and when circumstances changed (gas prices, ARM adjustments, etc) it all went bad, and congress is obligated to bail out their benefactors.

 

Thankfully, a new job and relocation caused me to sell my house in April before all my equity vanished. Also, very thankfully I have paid off all my debt, all my taxes, and only have a car paymnent.

 

The end result of this bailout will be inflation. In order to cover the debt they will drive down the value of the dollar thus lowering the actual cost of the debt. Your best investment now would likely be in the company that makes green ink for the treasury.

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Greg, you should have read a little further into the article. In the next paragraph it states:

 

. . .

 

The rest of the article breaks down the other amounts already lent or spent by the Fed, FDIC, and the Treasury. It gets pretty detailed, so I won't cut-and-paste it here.

 

BTW, today Bloomberg raised that number to $7.7 trillion.

 

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)

 

I did read the whole article. I'm not sure what's so hard about this. A pledge for up to $7.7 trillion does not mean that $7.7 trillion is out the door. If $3.18 trillion has "already [been] tapped," then $3.18 trillion is out the door.

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I wrote 'most' European countries. And yes, there are debt-ridden individuals in all countries, even in Holland, but just not on the same national scale. Also the 'bad mortgages' are not a common thing in Europe.

 

Maybe England has been too closely aligned with the US as of late then?

 

You're missing the point, Francois. The individual practices internal to other countries doesn't bring down the economies of the rest of the world. The rest of the world chose to partake in the financial instruments built out of the risky debt -- in EU countries, my understanding is that their banks chose to partake in more highly leveraged purchases than in the US. It's difficult to support then turning around and saying the fault has nothing to do with your own institutions but lies solely with the US.

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