The Bailout is Bullshit!

Ok, seriously now, y'all have to stop this Bailout from ever happening. This is the most ridiculous shit I've ever seen in my life. Let's review this for a second:

1) You have a consumer-based economy that relies totally on consumer's wealth, which means that it relies on home-ownership wealth, because that's where the american people have their wealth concentrated, in their homes.

2) You have a stagnating economy where everyone told you that the only safe bet is investing and flipping houses, and that one can make millions doing just that without much effort really. So many people start buying houses they can;t afford thinking that they will be able to flip them to other people and make a quick buck in the process, and they are aided in that with banks making mortgage taking very easy.

3) You have banks and lending institutions that wanted to raise their revenues, but no serious economic or manufacturing expansion was being sought out by the industry leaders (with industry moving to India and China and all) and thus no business loans, so they start focusing on giving out personal loans and mortgages. Realizing that there are so many real eligible homeowners out there, they start to give out mortgage loans to people they know can't afford it, hoping that most will eventually be able to afford them and that this will somehow diversify the risk and give them some method of hedging against any economic crisis that may occur if the bubble bursts. But just in case they can;t do that, they will lump a couple of those mortgages together, call them "financial instruments" or "derivatives", and then will sell them to Insurance companies, making the cash now, but with the gurantee that they will collect the money for them and cover the loans that fail to keep making payments. They figured, hey, how many of those could exist anyway? And then they took that money and gave it out as more bad loans, because, what's the worse that could happen?

4) The Insurance companies realize that they have a lot of money, and they need to invest it in order to be able to pay the insurance premiums for those customers who died, houses burned, whatever. So they take the cash they collect from their customers and decide that they need to invest it in something profitable, long-term and secure. Where to invest, where to invest? Oh boy, I know, the housing markets. And those Banks are offering to sell us those financial instruments comprised of hundreds of mortgages on a discount, and will promise to cover the loans if the customers failed to pay up. That sounds like a great deal, and a very secure one at that. And no, we won't check to see if those mortgages are good or bad, after all, the banks must've did their homework on this. They just don't dole out money to anybody who asks. Right?

5) And so far we have the making of the housing bubble: People who want to make a quick buck start buying houses they can't afford and sell them to other people for profit, who in turn buy them on mortgages they really can't afford, and take them and try to sell them to other people for profit, who in turn buy them on mortgages they really really really can't afford take them and try to sell them for profit, until that is no longer possible because the price has hit a ceiling and no one is willing to pay that much for that house anymore. So those plucky home investors find themselves facing one of two choices: 1) Either face foreclosure on the house, and thus lose whatever money you made on it, and the bank ends up with a piece of property that no one wants to buy at its current price anyway, and the investors's credit rating gets fucked and possibly affects all his other loans and mortgages, or 2) they sell the house at a loss, take a second mortgage on their own home, which they they really can't afford now, so they start getting behind on their payments, face foreclosure, lose their own house to the bank and become homeless. And when that happens, they will look at you with sad eyes and say "I don't know how this happened. They told me that house prices always go up".

6) And now the banks are freaking out, because they now have lots of overvalued property- thanks to all those bad loans- and little cash, so they start going after those who have been paying their mortgages on time and up their rates, cause, hey, we gotta make our money back one way or another. So those who have been financially responsible start getting fucked, many of them unable to make those payments now either, so they also lose their houses, and the bank ends up with more property no one wants to buy, and thus faces bankruptcy and possible shut down.

7) And now the insurance companies start to freak out because the banks are unable to collect the mortgage payments, and are unable to cover the price of the house and are entering the arena of going concern- i.e. they might just get bankrupt and shut down. So they start going through their books to see how many such bad mortgages they have bought in those financial instruments anyway, and low and behold, it's in the billions. They better start calling other financial institutions for help, quick. Wait, everyone did this? Fuck, I guess it's time to ask the government for help. They have money up the ass anyway.

8) The executive branch of the government realizes that the people paying their campaign contributions are about to go bankrupt, and shut down. So they freak out. They also freak out more when they are told that when this will happen, those companies will bring down the stock market, which will bring down the whole world economy, unemployment will rise and everyone will suffer. So those companies, regardless of their reckless behavior, need to get bailed out immediately. How much of a bailout you say? 700 billion dollars? That sounds about right to me. Send it to congress!

9) The nice people in congress are divided over the Bailout: Should they give it to the companies that were irresponsible in their lending, buying bad mortgages and not really checking them? Or should they bail out the people who knowingly took out mortgages they can't afford in order to make some quick profit and never saw this logical end coming? The question of the day becomes "Which irresponsible group should we help out?" , instead of "Why are we helping those irresponsible people anyway?" or "Ain't 700 billion dollars just a tad too much money to spend on failing irresponsible financial institutions, especially that this is the taxpayer's money we are talking about here?"

10) And finally, there is you, the good ole responsible working American, who didn't try to make a quick buck and who took only mortgages he/she could afford. Suddenly you find that the rates on your mortgage went up for no reason, so your house is in jeopardy, followed by an announcement by your bank that it is going bankrupt, and those savings you've put in there? Ehh, might not be there anymore dude. Oh, and the part of your savings you've put in the stock market or let those financial institutions invest for you in their mutual funds (part of which, naturally is invested in the housing market), well, that's going to shit as well. But don;t worry, the government will take the money you gave them, and give it to all of those people instead of spending it on government programs- such as education or road maintenance, or medicare- like they told you they would. And if they can;t afford to make such a payment, they will issue bonds to other countries which you later on will have to pay anyway. Don't you just feel blessed to live in the greatest country in the world now?

People, wake up. Fuck the financial institutions, let them fail. Fuck those people who gambled with your future, let them be homeless. And fuck the government that wants to bail them with YOUR MONEY, it's your money anyway, and having it used to reward stupidity and recklessness is surefire way to waste it. There is no averting this economic crisis, it's here to stay and it will be a while before it goes away. Deal with it, and move on, because all of this bailout talk is nothing but a short-term solution to a long-term problem. Just do nothing, and let the market correct itself.

Trust me, you will be better off, in the long run, that way!

0 comment on The Bailout is Bullshit!

  1. Melissa in NorCal
    September 23, 2008 at 7:32 pm

    The government told the lenders they had to give the loans to all sorts of people who had no business buying a home. They are partially to blame. I don’t know that there is any other way Sam. It blows. I saw cowokers who make half of what I make get into to homes twice the one I can afford and ofcourse, they are up the creek without a paddle. They owe huge mortgages on properties they can’t afford and they can’t sell them. The people were stupid, the bankers were greedy and retarded and the goverment should have maintained a handsoff policy. We’ll see how it all pans out, but it won’t be pretty for anyone for awhile. Others countries that are gloating, I’ve got news for you. Everyone will take a hit. The largest economy in the world can’t just stop buying things and have no effect on worldwide sales. Everyone will suffer from this as far as I can tell.

    Reply
  2. Adam B
    September 23, 2008 at 7:54 pm

    I don’t think anyone is gloating, at least not outside Iran… ;)

    We won’t get hit so hard, because we have more security mechanisms hindering these kind of incidents.
    Those are the same mechanisms, by the way, that hinder us from cashing in big time on lucrative deals where the US face no such restrictions…
    Big rewards, big risks and vice versa.

    Reply
  3. Mike Nargizian
    September 23, 2008 at 11:22 pm

    yeah that’s all great and I agree except for a few problems -
    1) If AIG holding parent goes down then that could flush down all the other companies in the umbrella including the insurance companies insuring Property and Casualty as well as Life Insurance etc…
    2) These banks hold normal people’s and moderately wealthy people’s money in Money Markets… imagine if you parked a few hundred thousand or a few million in money markets there and then amid the mad rush to get out you come in towards the back end and the bank or insurance company then has to freeze assets and stop paying them out…. you took no risk and you got fucked…
    3) This has spillover effect into the general economy and could lead to a huge recession….
    4) And this is my personal thing – you have a situation where China and/or the UAE etc… could then own Wall Street Banks… and its now foreign countries owning and running Wall Street…

    The bailout is bullshit… and the idea that 2 guys suddenly control 1 Trillion dollars and all its discretion is a scary 1984 fing JOKE!
    Congress wants out of there so they can run for re-election – the economy and situation needs some action or it snowballs fast – and the solution is a hasty bullshit corrupt bueaucratic band aided rubber stamped fing mess that probably makes it worse…. and more importantly breaks a 100 year precedent of captialism…..

    FING SCARY!!

    Reply
  4. Joanne
    September 23, 2008 at 11:23 pm

    If Big Daddy bails out its rotten kids, how are those rotten kids ever going to learn? They’re not going to learn…..and history will just keep repeating itself ’cause those rotten kids know Big Daddy will put up the dough.

    Reply
  5. Mike Nargizian
    September 23, 2008 at 11:28 pm

    Joanne -
    It’s even worse… with the bailout the fing rats at the Banks will make out even more like bandits… the smart insiders know how to work the system no matter what the fuck Paulson thinks how smart he is….

    Even worse – the idea that moronic poliiticians running for re-election that have to sell that they did something to the moronic public are going to “solve” this problem is a sad joke… they’d only make it worse even if it were not election time – with election time at bay they’ll do and say anything – even give a TRILLION DOLLAR blank check.

    Mike

    Reply
  6. debi scott
    September 24, 2008 at 3:48 am

    i contacted my rep and congressman and said NO to the bailout. this whole thing stinks. they waited until it was catastrophic to get government money? two weeks ago everything was just fine… at least thats how they acted and what they said. i watch cnbc every day and there was nothing said about a crisis on the horizon. i got rushed into a deal by someone telling me that i had to make up my mind in 24 hours because someone else wanted their services. it feels like someone is twisting my arm and making me bend over minus lubricant. i don’t care if the whole system crashes and burns because it most likely will regardless of how much “free” money we give those vultures. so let it burn and let the new system rise from the ashes.

    Reply
  7. Gard
    September 24, 2008 at 3:49 am

    Oh believe me SM, there are a ton of furious people over here! For that matter, after grilling and frying the Paulson and Bernanke, the Senate is STILL not convinced that they should give that money, both Democrats and Republicans. Now the FBI is investigating all those companies and their leaders for fraud, so shit has really hit the fan. From what I saw today, Congress isn’t buying the need to throw a blank check out there. I know I’ve done my part and emailed all my reps about this shit!

    Reply
  8. Esther
    September 24, 2008 at 5:34 am

    Excellent explanation- both clear and funny

    Reply
  9. steve parla
    September 24, 2008 at 2:15 pm

    SM you hit it right on the head. Fuck those wall street crooks. They I rob the public selling them their over valued stocks, while they get their big salaries and cash out their stock options. If people are dumb enough to put their money in the stock market they should take their medicine like everone else. It is no different than going to Las Vegas. Now the Fed says you can’t play the don’t on the financials. Only in America. We need to flush all this garbage out and let these companies fold to right this ship. America is broke and all the jobs are going to Asia. Fat ass American’s only want to eat. The bail out is a major crime and should not even ve considered. All they want to do is keep their game goind. Wall Street is nothing more than Las Vegas gambling and a sophistiocated PONZI scheme. Get the help out of the market and save your money like they did in the old days.

    Reply
  10. Eric
    September 24, 2008 at 2:43 pm

    Paulson has over 700 million in assets and was the CEO of Goldman Sachs. Paulson was appointed by Bush. This is nothing more than a huge plot by the super wealthy and Bush to orchestrate the stealing of 700 billion in taxpayer money. Its Bush’s grand finale, he and his banking partners and Paulson will all profit incredibly from this. Its Bush’s last stand, to grab as much money as possible from taxpayers and give it to the super wealthy right before leaving office.

    Also, if I miss a payment on a house, the banks come take it. But when the bank misses a payment, we give them back the money and say “do-over”?? We are basically saying, “You squandered that trillion dollars, so here’s some more money out of my pocket so that you can loan it back to me for interest” How rediculous.

    Reply
  11. christina/ohio
    September 24, 2008 at 3:54 pm

    Melissa is right. When President Clinton overturned parts of the Glass-Stiegel act in 1999 it forced leanders to loan without asking for income nd alos forced them into no loan zones where banks wouldn’t never given loans out before. This bailout is BS and should not happen. It will be a rough 3-4 years but by bailing them out to continue in this fashion under these regulations then we are heading for an even worse problem later. I just can’t get over that the top two who took money from Fannie May/Freddie Mac are Sen Dodd and Sen Obama but somehow this is the republican’s fault? I don’t think so! On top of this we now have to worry that we might end up with a President with the same policies as Jimmy Carter did so not only will we go from recession but with Obama’s help we could ahve a full fledged depression.

    Word of advice to other American’s, if you live within your means you’ll be ok but if you are mortaged and credit carded to the hilt good luck! Rates will be going way up as well as unemployement for a while.

    Reply
  12. BOB
    September 24, 2008 at 3:56 pm

    I bought a house I could afford in 2000. If my neighbour was too stupid to do the same and now has to forclose why do I have to contribute to his bailout? I’m perfectly willing to buy his forclosed house at a reduced rate and rent it out to him now.

    The goddam banks were giving mortgages to illegal aliens last year. Fuck the banks. Financial irresponsibility is supposed to end in hardship.

    Reply
  13. jim
    September 25, 2008 at 5:06 am

    email your congressmen to vote no on this corrupt power and money grabbing bailout…

    https://forms.house.gov/

    this is the biggest scam i think I have ever seen.

    if this bailout gets railroaded through congress, kiss the dollar goodbye. 700 billion dollars printed out of thin air dumped into our economy will cause $50 milk by next year.

    More money to by limited goods equals same limited goods costing a lot more money….simple super inflation.

    Reply
  14. Brian K.
    September 25, 2008 at 6:37 am

    Thanks #11(Eric), you hit it right on the head. These asshole CEOs ETC… wont be a seeing a paycut anytime soon, despite their fuckups. Pay these assholes minimum wage for awhile until they figure out how the fuck to do their jobs. Or maybe they are doing their jobs by stealing easy money!!!!

    Reply
  15. wildchild
    September 25, 2008 at 7:21 am

    Where are the PEOPLE of the United States of America. If my company – myself- has problems (and we have) , should I expect someone/taxpayers to bail me out of my problems? If I asked my friends, my family, my coworkers to bail me out of several millions dollars I’d lost- they’d tell me to fuck off and and demand that I pay them back for everything they’ve ever given me- including they’re time, devotion, effort and endless sacrifices to help me build a business. These people have helped me fulfill a dream of owning my own business, now I have to tell them to eat it- I have no money and I’m waiting for the government to bail me out so I can pay my investors (and my private jet pilots). Unfortunately….my friends, my family, my coworkers – I’m selfish and will take the government’s money and leave you all in the dust. I will not lead my life like this- my business will thrive and I PERSONALLY will pay back my friends, my family, my coworkers- it is my promise to them when I started this company and I will fulfill that promise. If this bailout goes through – I have no hope for upstart / small businesses in the United States of America. Fear is easy to spread. If there is no accountability for one’s business actions, then there is only business chaos by those with the most to money to lose – buy a lotto ticket and get the fuck out of the US if this bailout happens.

    Reply
  16. Twosret
    September 25, 2008 at 2:52 pm

    Rejoice Bush voters war is good and the economy is great! all Bush voters should pay through the nose for this.

    Reply
  17. J.P.
    September 25, 2008 at 4:44 pm

    I agree 100% with the monkey. More Bush and “congressional” propaganda. Where does it stop? The bailout is bullshit and I personally called my US representative and Senator and told them that if they supported this bailout that I would support any candidate that ran against them, not only with a vote but also through contributions.

    Reply
  18. Rogerandout
    September 26, 2008 at 2:12 am

    I am a bit relieved that someone is as angry as I am about this bailout.

    This bailout is going to happen. So, let’s assume that we the people are buying nearly one trillion dollars of worthless “stock”. If this “stock” ever earns money, how can we make sure that all taxpayers get back their share of returns? How can we make sure these assholes send us a check periodically when they start making money on the original 800 billion? Because if we don’t insist, whatever money they make will be squandered.

    So, if we are buying worthless stock why not also insist we get the returns as and when it happens? Why not insist on quarterly returns and reports? Why not lay off anybody who we don’t think is managing funds well?

    We should start acting as stock owners and stay in the driver’s seat.

    Reply
  19. jukers
    September 26, 2008 at 6:36 am

    brilliant post, sm. awesome summary. the only expressions you left out, that i’ve had running through my head all week are, the crime of the century and the height of hypocrisy.

    Reply
  20. jukers
    September 26, 2008 at 6:55 am

    and happy lailat el adr everybody. :)

    Reply
  21. leo
    September 27, 2008 at 5:19 am

    Twosret @ 17,

    Actually, it would be Clinton with his “house in every pot” daydreaming.

    Reply
  22. Becky
    September 28, 2008 at 8:18 pm

    Yeah!
    Amen, brotha!
    Why doesn’t the government just print more money and give it to people then?

    Reply
  23. Adam B
    September 30, 2008 at 2:55 pm

    How odd that SM hasen’t commented on the bailout rejection…

    Reply
  24. Joe
    October 13, 2008 at 4:40 pm

    This is fucking disgusting all these monkies on wallstreet are powered by fear. The money is ALL going to bankers, ALL of it. Trillions all over the world..holy fucking shit!! All this money is pure dept all of it..all this money was artifically injected into the the system. The US and the rest of the world borrows from the World Bank and Federal reserve that means” Cha ching” if your Bernake and fuck you if your the rest of the world. This is totall fucking shit….the american people are going to be rammed in the ass…we the americans of the Republic of Amerika are screws totally screwed. I have NO confidence is the “surge” of the market because it is totally artifical. No gold standard nothing to back it. I promise you that only 4 people in the whole world are like wow that was a good deal the rest of us are just their cattle to be used. Protesting won’t work nobody showed up for the IMF meeting because people no longer care our voices no longer matter presidents are chosen by bankers and politicans not the people and when you do protest you get tossed in jail if you don’t pay your government fee.

    Reply

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