To Bailout or not?

[Taskmage]

Re: To Bailout or not?

Yes.

[Feba]

Re: To Bailout or not?

Then yeah. That's racist.






Also, I recommend using the shot gun in a fanning spiral pattern. Keep them away from you, then worry about actually killing them.

[The Mauva Syndicate]

Re: To Bailout or not?

Taskmage: A lot of this has to do with what is called the Short Term Credit Market This is how big manufacturing companies stay in business. Most indsutrial orders come in at the end of the month. A Manufacturer uses short term credit to purchase materials, pay wages and benefits and overhead to produce the order and then it goes out sometime in the next month and is paid for, the manufacturer repays their short term paper and looks forward to the next cycle.

If our financial system collapses that stops. Dead. And most manufacturers go belly up. This is a recent development, in the old days we would have vast quantities of materials and such waiting around to be manufactured into widgets or what-have-you. But the modern factory system operates in what is called a JIT (Just In Time) system where the things you need are produced JIT for you to turn them into a widget or what have you.

There is also the huge loss of jobs from construction, both residential AND commercial. during this housing downtrun commercial real estate has been doing pretty well (not as well as it could,, but it hasn't at least been wallowing in its own dissolution) if commercial paper dries up, you can expect to see huge construction companies start to go belly up - collectively we wouldn't be able to build a birdhouse without credit.

But I for one am happy to see that in residential real estate at least we are returning to the days of 5%-15%(+++) down payment, and 30 year FRM's if you even want to think about a Mortgage. By forcing folks to plunk down 10k or more you invest them into their home and they are much less likely to just walk away from it in a downtrun (additionally you purchase a home with instant REAL equity not that fake paper equity that got us into this mess).

Yes a lot of people got into mortgages they couldn't afford on the hopes that the value of the property would rise faster than the ARM (tho, honestly that was mostly greed on the part of people and for that, I have no sympathy) - and for them, I think they should have to pay some of that back.

So yes, TM, if we don't do anything it will get worse A LOT worse.

Maybe

We think