TKF wrote:I hate to bring politics into this, but I like what ralph nader suggested:
Nader also calls for changes to the bill that would include:
Provisions for homeowners to stay in their homes in default, or rent them at market value.
A cap on executive compensation and disgorgement of ill-gotten gains.
A stimulus package for infrastructure repair and upgrade to generate new community jobs.
Comprehensive regulation of and disclosures by the financial industry and Wall Street to prevent this from occurring again.
Prudent margin requirements on derivatives trading and a tax on securities derivatives transactions.
Shareholders control over the corporations they own.
Tougher criminal enforcement against culpable firms and executives.
"Why should the American taxpayers bail-out fraud, recklessness and criminal irresponsibility?" asks Nader. "Why should the American people trust the judgment of the very administration that has gotten us into this mess?"
Nader expressed strong agreement with William Greider of The Nation who recently wrote that "If Wall Street gets away with this, it will represent an historic swindle of the American public -- all sugar for the villains, lasting pain and damage for the victims."
very good points, I saw a documentary on Ralph nader, this guys probably has been one of the most influential and important individuals in this country over the past 40 years, and he flies under the radar continuously...
I'll try to keep my reply Neutral cause it's a good thread, and I don't want to change the subject, but while Nader's ideas are all good, they probably aren't enough to help the situation.
The problem is twofold.
one is home's have devalued, so that people who own homes have less money than they had 2 years ago, sometimes quite a bit less, and in many cases, mortgages have tightened so it's harder to refinance, and even with lower interest rates, homeowners often can't get a new loan - that creates a cash flow problem.
Two is something called Mortgage Backed Securities. A mortgage backed security is like a bond, it pays money (the money comes from mortgage payments). Essentially the banks who loan money so people can buy houses, often sell those loans to investment banks, who turn them into investment packages (called Mortage backed securities) - and these are sold to mutual funds, to pension funds.
Now, the investment banks are holding, but are no longer able to sell a bunch of mortgage backed securities, and that's part of the reason their prices are plumiting, because many of these companies overinvested and overrisked themselves. It's not criminal, but it is deregulation which when things are good, enable wealth creation, but when a bad market correction happens - this kind of investing amplifies the correction. The last 4 presidents (Reagan was the first, but deregulation has only increased since) have all told wallstreet - this kind of Genga Investing is totally legal - so you can't really go after CEOs of Lehman or Bear or Wamu for doing what is legal, and doing what those companies stock holders expected them to do. As long as they kept the books honest, then there's no crime. There was an underappreciated risk that everybody involved took, but no crime, unless you consider the crime of irresponsibility and that blame can fall to many - including presidents Reagan, Bush 1, Clinton and Bush 2.
Now because of this crisis, new regulation laws will be put in place, but that won't immediately fix the problem.
Bush's plan is to essentially purchases these unsellable securities from the investment banks - not sure the purchase price involved - if that represents the 700 billion, or if the 700 billion represents the expected loss on this purchase. That will do quite a bit to stop the economic hemoraging becuse once those securities are purchased, the investment banks will have money again and they will be able to loan money again and that will grease the wheels of the economy.
The democrats want to push for home owners being able to stay in their homes, while the Bush plan is to simply buy the securities and let the homeowners struggle, and many republicans, as I understand it, are fighting the size of the bailout - calling it an unfair burdon to teh tax payers.
The problem with the Nader plan that you wrote - above, is that it's all good ideas, but it does nothing to prevent further billion dollar bankruptcies and further layoffs and continued economic downturn while the country slowly recovers.
The Bush plan is a much better shot in the arm, but the downside to the Bush plan is that it's a HUGE bill to ask the tax players to burden - however it has advantages to the average tax payer too, and the other downside to the Bush plan is that it doesn't help the struggling homeowners keep their homes.
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as far as how this affects me, I was one of those foolish people who, when the stock market was high and interest rates were low, I put 40% of my money in REITS because it seemed like a good investment. My savings and my mom's savigs, cause I watch her money too have both taken beatings. I'm in school so it's not affecting me job wise right now. I guess, cause I have savings I'm better off than a lot of people, but I wish I'd invested differently. I've taken a financial beating.
I also took a beating with the tech stocks, and I lost my job at CSFB with the banking crisis that followed 9-11, so I don't seem to withstand crises very well.