Wow…i was told the figuer was around 4k per person (man.women,child)…now you are saying 35k!!!
Let me play Devils Advocate…if you let the financial system crash…who would purchase our debt? The debt sold to foreign governments…is effectively backed up by the USA (in name and reputation).
Also…remember, that money is not real money…it is FIAT currency which means that it is not peged to anything. The Federal Reserve Bank prints that money. Also…remember that 90 percent of the Currencies in the market place are FIAT currencies with no underlying value.
In the Words of Gordon Gecko…“It’s bull~@! You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you’re not naive enough to think we’re living in a democracy, are you buddy? It’s the free market. And you’re a part of it. You’ve got that killer instinct. Stick around pal, I’ve still got a lot to teach you.”
Posted by jason on September 22, 2008 at 08:57:55:
Is anyone keeping track of what is going on with this proposed bail-out bill that will give the government a $700 billion line of credit, secured with tax-payer money, to essentially buy and own any and all troubled mortgage-related assets in an effort to halt foreclosure rates? $700 BILLION! Does anyone have an opinion as to how this might affect real estate investors? Short-sale opportunities?
How about the effect of our currency crashing? I sense that most of the world now views the dollar as worthless currency. How can the government guarantee debt when we cannot ever possibly ever pay what we now owe without even considering the effect of bailing out every bank and large corporation in the country?
This country is like the fat, slouthful king that is now going to by slayed by the peasants!
Posted by ken in sc on September 23, 2008 at 06:19:17:
I think it is going to be just like the RTC, back in the S&L “Crisis” days. The givernment will take over these problem loans, and either re-work them so they pay, or sell the assets (paper or RE) at a loss, which we all will absorb via taxes.
I belive we will see some great buying oppotunities with this. I for one am planning on increasing my rental portfolio in the next couple years. My hope is the government will allow investors to buy and provide the financing with a reasonable downpayment. THAT would be nice!
The effect will be that bank REO’s will all go to the Gov rather than to investor. In essence, the Gov will be replacing you in the investor business. If this happens, get another career.
Re: Nobodys talkin bout the flip side - Posted by Natalie-VA
Posted by Natalie-VA on September 24, 2008 at 08:11:59:
Hi Wayne,
I hate the idea of this bailout, but I realize that if they don’t do it, money is going to stop flowing. It’s already difficult enough for people to get mortgages. If there’s no bailout, it might become impossible to get mortgages, car loans, revolving credit, etc. Spending in our country could come to a standstill.
What do you think the chances are the the government will actually sell the paper at a loss to the same institutions they bailed out, letting the lenders make money off of it?
Posted by JT-IN on September 23, 2008 at 06:52:16:
Joe:
Yep, the dollar is taking a hit in trading, but don’t run for the shovel yet to bury the currency.
Just like the comments about our economy cannot have Fannie, Freddie, AIG, et al fail… the rest of the world cannot afford to have the dollar fail either. There are simply too many dollar investments by foreign gov’ts as well as the impact that a failure would have on their own currency.
If the dollar goes down hard, which it hasn’t yet done, you will see central banks from other countries buying dollars to defend its value… it just has to happen. Yes, there will be inflation, which is described as the artificial stimulation and over supply of the money supply which devalues the underlying currency. The crash of the dollar serves no one’s interest, unless you are shorting dollars… BTW, This can be done by buying the ticker symbol “UDN”, if interested in doing so…
“givernment” - not a type for sure - LOL - Posted by JT-IN
Posted by JT-IN on September 23, 2008 at 06:44:10:
“givernment” - Now that is an appropo term to describe that bunch in Washington… LOL
“the government will allow investors to buy and provide the financing with a reasonable downpayment”
Much like VA did with the glut of properties properties that were concentrated 5 to 7 yrs ago near FL (and other states) military installations. They provided a 7% fixed rate with 1K down, then sold off the loans to C/W, et al… Today the dp will be more and maybe shorter terms than a 30 yr fixed… but this is entirely feasible and it would solve the problem.
The big problem is that way that the brokerage firms applied the securitization of the mtgs… the leverage is a little different than what we know as RE investors. There is likely a lot less security there in dollars than converts to paper… when it all shakes out, so there will be losses to the givernment in a large number. There are talking heads stating the giv’s could make money on the transaction, but I am not buying it. There is still too much fraud and fuzzy math to be uncovered, and when all that is known, the story will be quite different, IMO.
No idea, but I don’t think it will be good. I think getting a biz line of credit for buying purposes will be much more the norm IF you can get biz line of credit.
I think having money in the deal will be the norm, 85% loans will be the max, creative financing will be dead for awhile. Why? things are tight and when it’s tight you play hardball.
Posted by Wayne-NC on September 24, 2008 at 09:32:20:
The lesser of two evils. Natalie, interesting thought. That is like a stock buyback program. Companies do that all the time. The only way that would happen is if the companies actually knew that the paper was worth more than what they are buying it for (of course in order to make money as you say). That would make sense and would be good to know. If that happens a follow up question I would ask is the proverbial what do they know about that paper that we don’t. Insider buying? From what I understand, the paper will be converted into bonds and made readily available to anybody and backed up with a government guarantee, for whatever that is worth in the future. Here’s another thought. If the government actually MAKES money on this bailout would you like that? First off, they don’t know what to do with it judging by past experiences and government profits is an oxymoran! If the government was in charge of the sand in the Sahara Desert it would run out of sand! But of course they know that if it ain’t broke, fix it until it is! That is what’s happening now.
You are correct in stating that foreign investors have a vested interest in keeping their American investments solvent. But, has the U.S. lost, or losing it’s status as a safe haven in world investing? In my mind the euro is a safer currency that represents a number of nations none of which have taken the role of world policeman with the associated financial costs.
The federal deficit is real and this bank bailout is going to cost real money. How about all of the money spent on the economic stimulus plan? If individuals ran their personal financial lives as this government does they would be bankrupt and in prison. Ponzi schemes are illegal except for those that make and enforce the rules. The piper must one day be paid.
Posted by Eric in FL on September 23, 2008 at 10:11:22:
JT,
I was saying this exact thing to a friend of mine concerning the VA properties which I did extremely well with. If they are the same kind of terms I will significantly grow my rental portfolio. I don’t see how they can unload most of these dogs without doing it. And coincidentally the significant portion of the inventory will be in Florida and Arizona again. Looks like I will have to help bail out these poor stiffs again. Smile…
“givernment” - not a typo for sure - LOL - Posted by ken in sc
Posted by ken in sc on September 23, 2008 at 06:59:22:
Give-ernment…I kinda like it. Started as a typo but it may stick.
I agree 110% that the Giverment will LOSE money, big time. The combo package of the lack of real assets to support these loans (due to lower RE values and bad loans to start with) and the fact that the givernment will be running this “business”, will add up to a major loss. In fact, the only way to take this without shooting oneself is to buy some of the properties in order to profit, so one can pay the tax bills that shall be forthcoming.
I was too young and inexperienced to take advantage of round 1, the RTC. Hopefully this will be my chance.
Let there be a catastophic event - Posted by JT-IN
Posted by JT-IN on September 23, 2008 at 10:00:54:
or terrorist attack and keep an eye on which currency does what; (the dollar or the euro). Lots of folks want to talk the euro up but, when the chips are down the money runs for the safety and broad shoulders of the US Gov’t and the dollar.
Posted by Dustin on September 23, 2008 at 09:46:00:
Everyone is scared and somewhat rightfully so but the funny part is that proposals by both parties are much more than this bill will cost. An example is Obama/Clintons healthcare plan which would cost over 1 trillion but no one is scared about that because much of the scare is because of media and poiticians dramatizing it. To not be one side I will give another example. Bushs medicare “fix” is estimated to cost 1.2 trillion. Both dwarf the 700 billion bailout. I am not for the bailout but perspective is needed.
I guess the 700 billion bailout is easy to jump on currently. My mind cannot accurately comprehend these figures. If there are 300 million people in the U.S. that means that the liability for EVERY man woman and child is roughly 4000.00 for the medicare fix? I am not sure exactly how much the defecit is but I assume it is the same or greater. Now lets throw in the petty change of the bailout and economic stimulus and could we be approaching 10k per person?
How many families could cover their share if Uncle Sam knocked on their door tonight? Oh, let’s not forget that social security has been raided and will be insolvent in maybe 10 years. How are we going to bail that out?
I am afraid that the housing collapse and the banking crisis is just the result of greed and slouthfulness in our society as a whole. We have gorged ourselves on Mcmansions, Suvs and 5 dollar lattes while the rest of the world has been supporting our lifestyles. I wish I had answers for how to get out of this problem, but it will just get passed on until it really does collapse and the currency is only good for starting fires to keep the Mcmansions warm. (oops, forgot that most only have “fake” fireplaces)