Question: How does the Bail-out plan solve the issue of CURRENT falling house prices due to...

[uponit7771]

..the CURRENT glut of inventory on the market?!?!

I haven't heard anything in the plan that STOPS house prices from falling our at least sets a floor.


I understand that if we don't fund the markets it makes it harder(but not impossible) for institutional borrowing (I can get a 15k low rate LOC easily) and can freeze up payrolls months from now but that doesn't solve the issue of people losing 2 - 3% avg equity in their homes per month because of the amount of inventory on the market now.


Thank you in advance for your input

[blondeatlast]

1. It prevents a wholesale foreclosure glut which would further endanger both housing prices

and the banks.

Why am I even responding to you?

[uponit7771]

6. How does that STOP the house prices from CONTINUING to fall with the CURRENT glut of inventory?!

[maui9002]

26. Home prices will still far regardless of what is passed (or not passed) by Congress

What the rescue plan would do, arguably (and I support the proposal with certain revisions), is stabilize the credit markets, prevent more banks and other financial institutions from failing, and thereby protect the jobs of lots of people who are likely to lose their jobs if nothing is done. The best way to describe it is that the economy is like an airplane: we're going down, pretty rapidly, and we're trying to manage either a soft landing or at least a hard landing rather than a crash. If the rescue plan can restore some confidence in the credit markets, I think it will go a long way to softening the impact of falling home prices and lead to a faster turnaround in home prices than would otherwise be the case.

What still surprises me is the continuation of the "I don't want my tax dollars to be used to bailout Wall Street" line of thinking. Most of the "fat cats" everyone is pissed off at aren't in trouble and whether you like it or not, your tax dollars are already being used to stem the tide. Whom do you thinks pays for FDIC insurance, for unemployment benefits, for reduced tax revenue at the state and local levels (which leads to a reduction in services or an increase in taxes on those who still have jobs or property to tax), and for all the other programs to assist those who lose their jobs or homes (food stamps, welfare payments, etc.)? It's us, buddy. One way or the other, we pay. And if I'm going to pay, I'd like to try to do something where I might get paid back--as in buying assets--at a steep discount--that include loans that will be paid off or real estate backing those loans.

[iamjoy]

8. How?

How does it help people keep their houses? It seems to me this is about rescuing corporations from their bad business decisions, but not helping protect people who had bad luck (or made the wrong choice).

It will help things from getting worse, maybe, but I don't see how it will help anyone upside down on their house and struggling to make payments.

[mikelgb]

2. Bailout steals from money from the Treasury and gives it to Goldman Sachs

[slick8790]

5. Doesn't your knee ever get tired from jerking so much? n/t

[mikelgb]

18. um it was a litte sarcastic but not at all knee-jerk, jerk

[uponit7771]

19. Yeah, I don't know why some are attackin on this issue

[slick8790]

20. I disagree.

The amount of knee-jerk hatred some on this board seem to have for business and corporations seems only exceeded by their lack of understanding of the current economy.

This is primarily going to be a CREDIT crisis. Yes, these banks and investment houses fucked themselves with bad investments, but letting them fail or stop lending money would be a catastrophic disaster. If small business/homeowners/expanding industry/the state of massachusetts cannot get credit, then the economy slows, stops, and we're stuck in a no-growth depression.

If you have a better idea of how to restore solvency and lending power to these companies, and thereby fix the economy, then i'd like to hear it. Like it or not, we are a capitalist nation and without lending capital, we fail.

[mikelgb]

21. I support the progressive caucus plan.

and the principles put forth by Kucinich

[uponit7771]

10. Right, a "trickle" down economic bail out is what it sounds like. A bottom up approach seams logical

...and for Wall Street to pay for it seems just

[Raineyb]

3. Considering the highly overinflated prices of houses

why would you want to sustain deliberately overinflated prices in the first place?

Regards

[uponit7771]

11. I wouldn't want to support them but how does the current plan stop them from the free fall right now

...now because of the CURRENT glut of inventory?!

Thx

[joeglow3]

24. Short, it won't.

However, you should never buy a home as a short term asset. My house value has dropped, but I am not too concerned as I am not planning on moving for at least 5-10 years.

[Beregond2]

4. I don't see that as a problem.

Anyone stupid enough to pay three times what a house is worth deserves to lose their shirt. And that includes a lot of my relatives, who wouldn't listen to me. The best thing that could happen to this country is for housing to become affordable again.

[uponit7771]

12. Even if you screw the people who HAD to pay for the inflated houses how does that sure up the equity

...that these loans were rolled up in if their prices keep falling 2 - 3% a month?!

[WatchWhatISay]

7. Simple supply and demand

The more money that's out there to lend, the more buyers can qualify for a loan, so the more demand there is? If you've got three buyers interested in one property, you're in the drivers seat. On the other hand, if you are lucky enough to get the attention of the rare qualified buyer, you better be prepared to be negotiable.

[uponit7771]

13. There's NOTHING keeping people WITH GOOD CREDIT from getting a home loan NOW. The issue isn't people

...with good credit unable to get loans it's the fact that there are a TON a houses in almost EVERY market that has a bottom line price on it.

I can STILL get a 15k LOC with low teaser rate for a year even TODAY, credit for the home buyer is STILL available.

[WatchWhatISay]

25. Just because you see ads for mortgages and other types of credit

doesnt mean you'll get it. Only the "creme de la creme" are actually being approved and only if they have a substantial downpayment and the property appears to be a good risk. There is no way some people who were getting approved a year ago, would get approved now. That's what supported those inflated prices, that people who weren't well qualified could get a loan anyway. So prices are falling because there are fewer qualified buyers.

[Perky]

9. Frees up loan ing capacity and helps with the housing inventory, creates more of a buyer's market

There should be no floor on prices. Prices were artificially high.

[uponit7771]

15. If there's not floor then how in the world is the market supposed to price shares with wrapped home

...loans in them?

Isn't that the root of the problem is the falling house prices are making it hard to tell what the equities are worth?

[Perky]

16. that is the fundamental problem, No one knows the value of the Assets being bought

But that was no the OP's question

[TexasObserver]

14. No bill can stop the fall of house prices.

[uponit7771]

17. Well, if they split up the 700 billion into the 112million homes and dedicated the check to home ...

...equity that would most likely set a floor for the prices because the loans could be refinanced with a lower price.

I understand even that lower prices could fall but that would soften the blow and at least wall street would have a better way to valuate the wrapped home loans

[TexasObserver]

22. too many homes, not enough buyers = declining prices

I'd be fine with a $700 billion bill, distributed among 200 million adult Americans @ about $3500 each, provided that each person must either (1) pay the amount on existing bank or mortgage debt, or (2) deposit the funds into a lender for at least one year, under a certificate of deposit. The cash all goes into the banking system, either to reduce consumer debt or to produce savings, which savings add liquidity and loanability to banks.

[Zenmaster]

23. House prices are becoming NORMAL. They SHOULDN'T "fix" this issue.

The housing boom of a few years ago was abnormal and helped add to the problem of the current crisis. They shouldn't do anything to "solve" the issue of falling house prices, because THEY SHOULD be falling.

Yes, this means that some people are going to lose equity, but its equity that they never should have had in the first place. As has been stated over and over, we are in an economic turmoil that has no perfect solution, or even any good solution. No matter what we do, or do not do, people are going to be hurt by it.

But the housing market was way out of whack a few years ago, and house prices were out of control. In many places they were double what they are going for now. You can't stop the prices from falling because the houses just aren't worth that much.

But its becoming a NORMAL market. They aren't falling to dangerous levels, or anywhere that anything SHOULD be done about it, even if we could.