This Bubble Needs To Burst

This bailout plan with do nothing but keep the housing and credit bubble inflated. The grim reality is that this bubble needs to burst, everyone is overextended on credit or on their mortgages, and are paying interest out the wazoo trying to maintain a lifestyle that they simply can not afford. There will be untold hardships for most people, but I think it's time that this country got back to a real economy, one that is based on real goods and services, not one that is mostly paper wealth, not one where money is generated from money. Money should be generated from actual products, and the services that are needed to produce those products. Not money made off of investments services or sky high interest rates that suck the real money out of the pockets of those who actually worked to produce a real product and service, only to leave them with little or nothing.

I hear people saying they are scared about what not doing a bailout would do to the average person, the person who worked hard all their life in order to live the american dream and have a secure retirement. Look around you, many in the middle class have ALREADY lost all of that. And continuing to let wall street and megacorporations transfer all the wealth from the bottom to the top ensures that the future for most Americans will be grim at best.

Our free market system needs to be completely overhauled. A stock price should be based on actual profits (or losses) of a company. It should not be able to rise on a rumor, or even on real events that promise future profit, it should only rise when the actual profit is realized (or drop when the actual loss is realized). What happens in our markets, is high rollers pour their money into a stock on news or a rumor, drive the price up quick, sell for a profit. Then an investor (person like you or I who doesn't 'play' the market on a daily basis) ends up buying a stock at an inflated price, so that even if the company continues to profit, we start out at a loss on our investment as the high rollers sell off after the excitement of the rumor or news subsides. That just simply shouldn't happen. Investors should be able to put their money into a company, and only make money if the company profits, or lose money if the company loses.

Same with commodities markets. Investors should not use the commodities markets as their casino in order to gamble and make money on every tidbit of news, and drive up prices which ends up hurting and costing everyone else. Only those who actually take delivery of the commodities and make actual products to sell should be able to determine the price of that commodity. That is the only way to get close to a 'fair' price.

But this country has turned to pure greed, and have made our entire economy one that is based on making more money from money. All these complicated derivatives and other finance products that serve as nothing more than a way to make money for nothing need to be eliminated. Our financial system should not be a casino, where the big money owns the house, and the rest of us just keep gambling on a company's future, only to find out time and time again that the deck is stacked and the odds are always with the house.

We need an economy and financial system that is real, not generating profits out of thin air. Of course, the money doesn't come out of thin air in actuality, it comes straight out of your pocket. When the government has to bail them out because of their excessive greed, it comes out of your pocket. When the price of gas and food rises, it comes right out of your pocket. When interest rates charged to the consumer knows no skyward limits, it comes right out of your pocket. When banks charge fees that rival those of payday loans, pawn shops, or title loans - it comes right out of your pocket.

So we need to decide, are we going to keep gambling on our future and prop up a system that will eventually collapse on it's own weight no matter how much money the government pours in to it, or do we bite the bullet now, endure hardships now, so that we can get back to a system that will provide true wealth and offer a sustainable dream for ALL Americans, not just a few at the top.

What this is about is making this a controlled implosion. I agree with many of your other points, though.

I tend to agree in principle. However, I don't want my disabled parents losing their entirement retirement benefits they need to live on.

Is that those who caused it and are sitting there with inflated books and wallets need to go down with it. It makes me furious to think that we have to put our money on the line to bail them out and allow most to keep the fortunes they swindled from working class America.

No, I don't want to see our parents and the elderly suffer as a result, most are in no position to be able to handle a severe recession (or worse) as it is.

Can I afford to pay cash for a car? Not at this moment, but am saving up to buy a car because that is my only option right now. My old car died, and the cost of repairs was more than the car is worth, so I am carpooling and doing what I have to in order to get around until I can save up for a new one. I don't live in a area with decent public transportation, so I have to have a car, although will continue carpooling to save on fuel costs. I could probably get a loan for a high interest rate, but refuse to give these greedy pigs another dime if I can help it.

I can't get a loan for a new house, I will be renting for the foreseeable future. I had to sell my house after it went into foreclosure. Countrywide offered a workout plan, which meant taking the 2 months mortgage payments I was behind, and $3000 foreclosure fee, and spreading that out over the next 6 months and adding it to my normal mortgage payment, which in effect almost doubled the payment for the next 6 months. I was out of work for 3 months after a layoff which got me behind. And I know everyone says that we should have at least 6 months of living expenses saved up, but that's easy for someone to say who doesn't have to live paycheck to paycheck. So, knowing that I would not be able to keep up the terms of their 'workout' plan, I agreed to a quick sale and avoided outright foreclosure, but had to give up my house in the process.

Yes, I am expressing my anger at this whole thing.

I understand the need for a controlled implosion, and I realize that there are not many alternatives other than what we have before us at this point. It just pisses me off that as a country, we have allowed the greed and excesses even get us to this point. Stagnant wages and increased cost of everything have made it difficult for people like me who do not have extraordinary income to even have a comfortable lifestyle.

cushion for people who fall into trouble. The terms given to you by Countrywide were designed to make you fail. In spite of that, it sounds like you are doing good.. you are surviving. However, people should be able to do more than that. BTW, I don't know ANYONE who has six mos of expenses saved. No one.

I agree that we need to get back to a "normal economy". Your article is excellent on that point.

I don't agree with the bailout in its entireity. HOWEVER.. if we don't figure out a way to prop up the banks and the credit market immediately, we will be in a position that no one wants to be in or even knows how to deal with.

Let's figure out a way to prop up the economy so at least the "little people" can continue to live.

and their FDIC-backed accounts in "main street" banks safe. I could care less if the Investment banks, which benefit mainly the top 10% of this country, crash. Let them go bankrupt. That's what happens to businesses when they fail, and investment banks are little more than casinos. This bail-out for the super-wealthy is ridiculous.

I was not a victim of a bad loan (as in an ARM or interest only, or just simply one that I couldn't afford). I was well qualified for my loan and had no problem paying it, provided I was working.

I was layed off at a company that I had just started working at (only way to get ahead even a little these days is to switch jobs) and so only had 4 weeks severance pay. It took 3 months to land another job, and by then I was behind. What I was 'victim' to, was the fact that mortgage companies have no long term interest in a loan.

This is due to the fact that they will most likely sell it off to someone else in the near future, and even if they didn't, the most important thing is to prop up their company stock, which means that their profits in the immediate quarter matter more than any long term profit. So they had no interest in working with me by just adding my 2 payments to the end of the loan and giving up a little profit now in order to be able to maintain the loan, and see a long term profit on my mortgage. And all companies are run this way, A CEO is not likely going to be with a company forever, and so they do whatever they can to see short term profits at any cost, knowing that they will walk away with millions even if their decisions eventually lead to the company's demise.

FDIC Special Assets Banks have done this before, but usually on the scale of a few billion dollars. There will be charges, but some of it can be renegotiated and saved over several years as RE recovers some (certainly not all) of its value. The word is that WaMu RE equity loans are being written down 23% as Morgan Chase takes them over.

We don't need for credit and liquidity to dry up to the point that business go bust. Too many jobs will be lost. Then we have a real problem.