Bailout or Rescue?
If this wasn’t a voting year or if we weren’t this close to an election, the Bailout or Rescue Bill would have been passed. It has become politicized. Many didn’t vote for it, in my belief, because they want to be able to say, “I didn’t vote for it,” in case it fails. There are many candidates that are having their voting record on Iraq thrown in their face. So where it seems many of them agree in the bailout, they want someone else to vote for it. They know we will still go through hard times and it will be easy to say they weren’t a part of it since everything can be spun.
Public outcry has been huge which gives the candidates more reason to take pause this close to an election. So it comes down to pandering on the side of politicians and an uninformed public. The lack of knowledge is the fault of the government. They came out with a long explanation with WMD’s in Iraq and we couldn’t find them.
This time they aren’t explaining anything to the public, leaving it to the media, and the media is becoming more and more biased. Internet may be the worse. I can find several articles explaining the Rescue Bill differently which doesn’t help anything. What I think we need is an hour program put on at 6pm (PST of course) where the President presents Warren Buffet to explain what is going on. He is a wise man who understands the nuances of the market and economy. He dodged the internet bubble while others mocked him for being an old guy that was out of touch with the “new” market.
Here is what I understand about our current situation. When a house gets foreclosed upon, the bank has to take money equal to the value of that house out of the financial markets. They are unable to loan it. If they can’t loan it then they make less money and the person or business who needs it is left without the ability to grow. If there is less money to lend, and the banks seems to be hoarding it due to uncertainty, there will be more forelosures. There is also the idea that empty homes don’t provide property tax t the community but I thought that would still be paid by the bank.
Why don’t banks just drop or reset the interest rates for the homeowner to save the foreclosure? The majority of loans are held by investors not the actual banks, they just service the loans. If they unilaterally reset the loans then they would be taking them over and have the liability. Countrywide made a statement awhile back where they said that they were going to reset rates for their client and a help them, blah, blah, blah. The issue, which I am sure surprised many people who get a Countrywide statement every month, is that the service many more loans that they actually hold. I forget the percentage but it actually wasn’t at offer to the majority of people they helped. More spin and PR.
I am sure there will be some that want to argue some of my points. But my point is that the government is not doing a good job explaining to us why and how this all works. The news keeps repeating that we don’t even know if the Bill will work. Then why give up $700 Billion. They want to be Mommy and Daddy and tell us not to worry our little heads about these important things but at the same time beg for our vote.
