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| Yes | 25% | 13 votes | Total: 52 votes | |
| No | 75% | 39 votes |
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Add to FavoritesYes to the Us government bailing-out the mortgage giants, but the ramifications are still causing jitters for everyone concern, US government has given into the outcry over the multimillion dollar wall street agreement, to impose limits on the remuneration package of bankers, who benefited from the $700bn bail-out of financial institutions, people are angry about executive compensation undermining the effectiveness of the takeover program, most people are unenthusiastic about the bail- out, they think the whole thing is a major economic disaster.
History tells us that short selling could redefine the situation before the alarm signs are ultimately triggered, rather than leaving events to the last minute, when induced selling will create more panic over lost of earnings, decisive proactive action must be taken long before arriving at the point of credit crunch. Fannie Mae and Freddie Mac were calculable for risky mismanagement, but so are many others.
Panic in the market will always force undercapitalized institutions to merging acquisitions, been taken over is a prospect far better than a broken enterprise muddling along for months, possibly years in uncertainty, as in the case with Lehman brothers, Fannies Mae and Freddie Mac, and many other institutions who are in financial disarray bringing up the rear.
Bailing out financial institutions with public money is never going to be an easy decision, because the bill definitely will fall back squarely on the shoulders of the tax payers, causing more squeeze to the strings that are already pulled tight, but the government has a responsibility to its citizens to help in times of crisis, the treasury plan to set up $700bn to buy mortgage back securities, the idea holds no guarantee that in the end improvement will be maintained, throwing good cash after bad planning will not fix the problem, regulation is needed to nip credit crisis in the bud before its allowed to access more risky solution.
Buying bank stock perhaps is better than the proposed government bail -out which still needs more work on the plans in order to see them work, critical flaws will be exposed if the treasury pays too little for the bad assets, bankers will get away scot free at the expense of taxpayers, but it is only by paying over the top can bailout bolster banking capital, therefore fresh inspiration is needed to fix the extravagance of bonus driven culprits.
If it is possible, US government should find a way to get banks out of the difficulty they are in without fleecing taxpayers, the market price of assets is depressed below the true value of selling, which is determined by probability of default, on the assumption of the cost of the default and the discount rate at which the value is calculated. US treasury might get less than $700bn with strings attached; asking the American people to foot the bill while other people are lining their pockets is definitely a turn off, even if it is paying for performance for success.
The market can be much lower due to been depressed, short selling produce liquidity discount paying more than the market, but less than true value known after the event, tackling capital inadequacy directly always produce better result than government bail-out. Congressional Democrats will try to look for an alternative to insure treasury against losses, they might insists on a bill of provision to protect taxpayers, but common sense goes out the door when the stakes are big.
The longer it takes for the problem to be solved, the more costly the idea becomes, recently US federal reserve move quickly to inject $30bn through currency swaps with other central banks, the fumble is applied to Europe as well as the United Kingdom, there may be some strategy in prolonging the delay resulting in a fresh run off on bank shares and increase in more bank failures, which inevitably will threaten world economy with a deepening recession.
Learn more about this author, Gerry Legister.
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No
by Lou Rountree
The government should not bail out anyone to correct the current financial crisis. The free competitive market is the solution to a correction for the financial woes of the US and foreign countries. The capitalist financial system is inherently self correcting and should be allowed to correct the financial problems of today.
The federal government should exercise existing regulatory procedures and punitive measures should be taken to convict those who were complicit in the greatest scam ever committed right before the eyes of the US citizens. If there is no cause for prosecution under current laws new laws should be made for full protection of the US citizens where the real estate, banking and insurance markets are exercising business. It is hard to believe that no one knew that there were practically free mortgages to obtain even if a purchaser is not financially qualified to obtain the mortgage. Therefore, the new enforcement should have big teeth and adequate punishment for those who wish to con the public en masse.
The initial amounts of the citizens money in the form of federal dollars from taxes has created a multitude of demands for bailout of everything from the airlines to the auto companies in addition to financial companies such as banks, savings and loan and the accompanying insurance companies that get involved in the mortgage industry. In the instance of the auto companies it is obvious that they are in trouble after negotiating with the unions. These negotiations have provided wages and salary with benefits which make employees a member of the higher echelon of pay scales. In fact, they have also made the American auto companies more non competitive with the foreign auto companies and this is the reason for their financial failures. Add to this the environmental and safety requirements for American automobiles and you have another reason for failure in an International market. This is the same purchase which occurs in businesses and with homebuyers every day and there are no guarantees of insurance or profit. Ordinary citizens sign a contract and they are expected to eventually pay out the contract even if they lose their job, their home suffers destruction from Acts of God or they just plain old default on payments. Evidently if you are a sitting congressman in this country you may steal any part of the money involved in mortgage businesses with complete impunity. This is especially evident if your name is Barney and you are a liberal democrat in the US Congress.
It is disgusting that there are no real men present to provide inputs demanding retribution for the cons in the Fannie Mae or Freddy Mac escapades. Instead everyone realizes that the World financial situation has been affected and they display a mental state which looks for the first easy solution to the problem. Unfortunately that solution is to bail out the troubled with the citizen's money. There are even promises that the money is a good investment and the citizens will be paid back with gains on their investment. When have you ever seen the federal government give money back to the ordinary citizens of the country? They may put it in a temporary fund until they can decide where to spend it next for the utopia that they have promised for too many years.
What this country needs now is a real hero who can recognize the cause of our problems and have the intestinal fortitude to follow through with corrections, regulatory procedures and criminal accusations and prosecution. We do not need a bunch of opportunistic attorneys scheming to make a profit for them and the rest of the Washington gang in congress.
There should also be citizens who are intelligent enough to realize that they are about to be sold out by the current ruling Washington politicos and subjected to the precarious events after we are turned into a socialistic society. Instead we have citizens trained to swallow the liberal media brainwashing hook, line and sinker. Civil disobedience is recommended and failing that a good revolution would be justified. It would also be patriotic.
Learn more about this author, Lou Rountree.
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