So if no bailout means people can't get loans to buy homes they can't afford or expensive cars, TVs

[mtnsnake]

then everyone's going to have that much more cash in their pockets...living under their modest affordable roofs for the time being, driving something that doesn't cost $35,000, and watching a television that doesn't take up an entire wall.

Financial crisis solved.

[Robbien]

1. But that is Un-American

How unpatriotic is that?

[Warpy]

2. It also means people on shitty wages

aren't going to be able to charge food, car repairs and medical expenses.

When you're poor, that funny noise the tuna wagon is making can wipe you out, making it impossible to get to the job that pays shitty wages.

I wish it were as simple as you think it is. It isn't. The problem is the derivatives market, not that Joe Sixpack can't pay the minimum on his credit card.

On the bright side, nobody is talking about bailing out the hedge funds that created the problem.

[seabeyond]

3. i have been putting off buying a new car. my think is now is the time

to buy the car i want i can get a really really good deal.

well, not now now.... alittle from now

[Clovis Sangrail]

4. good luck getting a loan /nt

[mtnsnake]

5. Why does everyone always think "loan"? Why not wait until you can afford to pay for it?

Besides, you're going to pay way more for it if you get a loan than if you wait until you have the money to pay cash for it. Either way, you're paying for all of it, so why not wait until you've got the money??

[seabeyond]

7. and you are right. i could get a loan i think, but this one i want to pay cash. BUT

last two cars we bought it was under deals where loan was not interest

the saturn i bought was no interest deal.

i have one credit card i use for everything and pay at end of month. it is a card that has NO interest just a yearly annual fee of 50 bucks i could probably get knocked off.

but you are right mtnsnake, this is basically what it is about. my want is never great enough that i wrap myself in something i am getting screwed in

[mtnsnake]

17. I think you'll be a lot better off if you wait & pay cash, seabeyond

Even though there are deals to get cars with no-interest loans, sometimes that just enables people to get into more debt because they all of a sudden have "the price of the car" to play with for other purchases and it can give feelings of false security. If they're forced to wait until they have the money to pay for things, then they won't be tempted to blow their paychecks on other luxuries.

Once you wait however long it takes and pay cash for a vehicle, you will be able to pay cash for every future vehicle you buy because you'll be putting the money aside BEFORE you buy it as opposed to after you buy it.

Good luck, whatever route you take. :)

[seabeyond]

23. this is important stuff

yes, .... that is the problem. get a no interest then all of a sudden you upscale. i did not. i dont like spending money.

and that is why i am thinking sometimes soon may be the time, because this time i do have the cash and might knock off the price with people desperate to sell a car. buyers market now, or soon

but i think the point you make is so very important. i lived strugglin to make it each day or not making it each day. i hated it.

i refuse to live that way again.

we do fast food once a week, but more once every two weeks. sons told me we went to a restaraunt twice all last year. i cannot stand ploppin down a 100 to feed a family of four. bush has really cured me of letting my money go on frivolous stuff.

[DeschutesRiver]

92. The only car loan I've ever taken when when I was in my 20s

and I paid it off early. We have never taken another one in 30 years.

We are personally waiting until next spring/summer to take a good look at the used car market - by then there may well be give away prices. Of course, if not, we can keep using the older vehicle we already have without a hitch.

You may be jumping the gun a bit in buying now - could you wait at least until closer to the end of the year?

[seabeyond]

93. easily. and you are right.

thanks

[ananda]

81. three months ago I got a car loan

Three months ago I got a hybrid, and I was
going to pay cash for it.. but the dealership
offered me a 1.9% loan, explaining that I
could come out ahead because I could put the
money in a CD for a higher percentage. So,
I went ahead and financed the car on a three-
year loan, and then I went to the bank and opened
a CD at somewhere between 4 and 5 percent for
four years.

I don't know if dealerships, or anybody, is
offering that kind of thing now.. but it was
pretty sweet at the time.

Somebody explained to me that I must have a high
credit rating for them to have done that.

It's true that I had no debt at the time and no
financial difficulties.

My only difficulty now is wondering what's going
to happen with the markets and financial institutions
which affect everything down the line.

I would like to see a rational approach to solving
this economic crisis, not just for the short term,
but for the long term as well.. meaning regulations
and policies that do not mean that taxpayers are
funding the predators that robbed us in the first
place.

[seabeyond]

96. cd's are now at that number, unless you go more than a year

but that is another thing to consider using cash, you are right

[Clovis Sangrail]

105. many people will never have $26k in a lump sum to buy a car

and for those who do locking that money into a hunk of metal is often a bad idea.

Assuming you actually *had* the $26k...
If you make payments on a $24k loan at 7% and dump the other $24k into a new lathe or milling machine or whatever that allows you to generate more than the interest, that auto loan would enable you to essentially pay less for the car than if you'd bought it straight out.

That reasoning doesn't hold true for everybody... but it very definitely does for many.

[snooper2]

73. If you have good credit you'll get a loan

it's that simple...

I.E., why Bank of America and Wells Fargo are still going strong...


You do know that Wachovia was the #1 holder of options mortgages

[seabeyond]

94. hubby and i were just talking about that today during his lunch. he does

computer work, with banks too, and had talked to a couple today and what he is hearing, i agree.

[WorseBeforeBetter]

110. Borrowers with good credit ratings are still getting loans. (n/t)

[zabet]

14. It is a great time to buy a Nissan around here...

One of the local dealers is offering a deal!!! Buy a Nissan pick-up and get a Nissan car free. (cannot remember which Nissan car it is). A two for one deal.

[seabeyond]

26. wow. i was looking at nissan

or honda. i am looking to find one i really like that will last forever. i dont put a lot of mileage on my car. so i want this one to last a decade.

i was gonna do toyota. decided to just spend the money. they jack up so much cause of quality i have not been able to do. then i found out last couple years quality went down and still jacked up price. i hate paying htese inflated price.

i hear the two are nissan and honda

i have also been kinda waiting to see what they come out with alternate fuel

[zabet]

30. If I hear the commercial again today...

I will send you the dealer info. Even if it is not in your state or area, you can still buy from them and have the vehicles delivered to a Nissan dealer in your area. They continually send vehicles back and forth between dealers due to buyers wanting something not right there on the lot (color wise or accessory wise). (One of my long time friends has worked for Ford for umpteen years and clued me in on that)

[emilyg]

98. "alittle from now"

I think I'll use that on my grandsons when they want something.

[seabeyond]

102. ya well

lol lol... i have little ones, or they were not so long ago, one still kinda sorta, wink.

[AllieB]

6. Too simplistic an explanation.

It also means that many small businesses who rely on credit to stock their shelves and meet customer demands won't be able to get it. A small business owner posted here yesterday that his credit line was rejected by three banks though he runs a profitable business. Some businesses may also not be able to make payroll. Consumer overspending is just a small part of this crisis.

I know we need a bailout-just not the one written by Paulson and gang.

[SteelPenguin]

33. yeah small businesses could be in trouble

I own a small business and we made payroll this month, but we have something close to 6 figures in billables that we were owed that haven't been paid. If those businesses go under, or if they delay those payments, we have a revolving line of credit to help us make payroll should we be waiting on other people to pay. The whole thing is a house of cards and even though we're in great shape, as far as a fledgling small business goes, we could be gone *snap* if everyone else folds. If two of the other businesses that owe us money are relying on loans, and THEY can't get money to pay us, then we close our doors in a month, and nobody who worked for us is buying new TV's....

We're not alone, as far as small businesses. While we have the credit still available to us, we've never had to use it other than some initial capital expenditures, and have been a fairly conservative company as far as our growth, etc. Still this crisis could wallop us, because we're reliant on numerous other companies, and have no control over what THEY are doing.

[hack89]

8. And all the people who sell TVs and cars will be out of a job.

what problem does that solve? Consumption means employment in our economy.

[mtnsnake]

10. while others will get chances to make livings repairing old cars, houses, & TV's

Nature takes its course, people live within their means, better for everyone in the long run.

[hack89]

13. Social Darwinism is not a progress value

So punishing innocents who may have lived within their means but still loose their jobs is OK?

[girl gone mad]

20. Invest in new green energy jobs..

unemployment programs, etc.

[Scout]

31. times change you know

jobs come and jobs go ... hell, whole industries come and go with changes in technology.

just ask typesetters, strippers, platemakers--people who worked in printing until technology wiped out whole departments full of people. you had to learn to use computers, or be able to teach customers how to do their own typesetting on their pc, if you wanted to keep your job. then changes in the press department wiped out the helper jobs, and the folding department jobs.

was technology punishing the innocents then?

[hack89]

46. The callous cheer leading offended me - that's all. nt

[Iggo]

75. STRIPPERS????

Oh, not THAT kind of stripper.

You had me worried there for a second.

[ThomWV]

18. And those who manufacture Cars, houses, and TVs will be out of work

Which means both Tokyo and Detroit will suffer, and from there it spreads even farther.

[sammytko]

45. houses still have to be repaired, TVs aren't made here

people shift skills.

[Scout]

28. sorry, i'm not going to start overconsuming, and living even further beyond

my means than i've done so far.

i'm not gonna start buying new cars any more often (if at all) and i'm not going to run out and buy a huge fucking tv.

"drown yourself in debt, but you'll be guaranteeing jobs for those who sell luxury items"

not me, thanks very much.

[tama]

36. Consumption

means destroying the environment, Earth's carrying capacity to support future generations.

[NickB79]

95. It's the great dilemma that no one here at DU likes to confront

Our entire capitalistic economic model is based on the idea of infinite growth into the future, despite the fact we live on a planet with finite resources. We've really worked ourselves into a box here, and no one knows of any alternatives to get out of it.

[tama]

100. Alternative:

hectare of land for each individual.

[vanderBeth]

9. ..and get loans to run their business and finance their education.

:eyes:

[girl gone mad]

12. The price of tuition will go down.

Profitable businesses will become more valuable.

[vanderBeth]

24. Did you just make that up?

Even if tuition does goes down, some people would still need money. I don't imagine cost of living going down either.

[Citizen Jane]

51. Tuition drives a lot of people's salaries.

Universities are taking multiple hits in this because of their endowments. If tuition goes down, the number of grad students and part time/adjunct faculty that can be supported will go down and education will suffer as a result. This is not to mention the cuts that will be made in all support staff who basically keep the schools running.

Very scary.

[TZ]

87. No its gonna go UP!

Most public universities rely on funding from the govt..and with hard times that gets slashed and tuition GOES UP...Oh and no credit means no pell grants or other student loans..But I guess college is luxury for the rich....:sarcasm:

[girl gone mad]

11. Pretty much.

It means Americans will finally be forced to stop spending money they don't have, because no one has money to lend to them anymore.

We'll have to go back to earning a decent living through hard work.

That's why it's so important that we use this 700 Billion wisely.

[Serial Mom]

16. Sounds good, but Americans work harder already than any other industrialized nation

We put in more hours, less holidays, less vacation time, than our counterparts in Europe and the East.

So we the little people should now work harder and how can it be a decent living if our businesses are cutting jobs and salaries while what little we did have in 401s be cut in half or 2/3's?

[girl gone mad]

19. Absolutely right.

And we will have to demand fair wages and an end to unfair trade and outsourcing rather than relying on credit cards to pay the bills.

[hack89]

22. You can't demand fair wages for jobs that don't exist

Small business are the economic backbone of this country - with no credit there are no new businesses, no expansion of businesses, no new jobs.

It isn't all about big corporations.

[girl gone mad]

27. Profitable small businesses are not in danger.

It will be harder for start ups and failing businesses to get loans, but it isn't all doom and gloom. There will still be opportunities.

Whether it's about corporations or small businesses is beside the point. Deep recession is unavoidable at this point.

[SidDithers]

85. They are if their cash flow goes in the shitter...

small business management is less about profitability than it is about cash flow. I can be profitable, but still go out of business if the large company that owes my company $75,000, takes 90 days to pay instead of 30.

Sid

[Serial Mom]

76. Exactly - the regular people will the be ones without jobs and cash!

How the helll can we demand better wages? Screw the wall street guys - we all have to look at the impact on us! Homes in neighborhoods foreclose, many up for sale, prices drop, city collects less tax dollars, services drop, jobs cut, and the spiral continues!


Unemployment is 600,000 higher this year! And that stat NEVER counts the people who have fallen off the unemployment lists because their benefits ran out!

[tama]

38. Materialism

is soooo much fun!

[ThomWV]

15. You make the very same mistake in thinking Congress does

Just because you will owe less doesn't mean that you will have more. A bill you do not get does not equate to cash in your pocket and indeed if you will notice the real problem we have is not that people are paying out so much, its that they don't have the money to pay out at all.

[Fleshdancer]

21. NOT if you don't get your paycheck.

If your company relies on short term credit to cover payroll and that well dries up, the you don't get paid. Lose-lose all around.

[girl gone mad]

29. It's illegal for an employer to refuse payment on work done.

I'm certain there would be recourse.

[OKNancy]

34. LOL - well what if it's a really small employer and they have no money!

I don't know how I'm going to meet payroll tomorrow and pay the awful rent due!
My business is tanking after doing just fine for 32 years.

[girl gone mad]

37. We've been in a recession for a while now.

Despite the denials that were coming out of Washington.

Americans are broke. We can't afford to pay back the debt we've taken out over the last decade, and no one wants to loan us more.

[Fleshdancer]

41. No company wants it to come to that

but if the money isn't there, then either it will take longer for people to get their checks or companies will be forced to lay off their employees...or both.

FWIW, I'm not convinced the bailout plan will work. However, I do think this credit crisis has consequences that are far more significant than people not being able to buy crap they don't need.

[girl gone mad]

52. I don't see a clear way out of it in the long term.

There's some possibility that we could delay it.

Americans are tapped out. Wages have declined while the cost of housing and medical care have soared. Wall Street Bankers wrecked our credit markets using complex schemes. The party is winding down.

[OmmmSweetOmmm]

25. OMG! They're going to have to live like me!

[Honeycombe8]

32. I think it also means that people can't buy houses and cars they CAN afford, 401k's disappear...

banks fail, tens of thousands of people become unemployed and get unemployment insurance payments until they run out. Everything those workers WOULD have purchased they then do NOT purchase. Which in turn causes some of the businesses who rely on them to fold. Which in turn causes more people to become unemployed. Which costs the governments more money to pay unemployment payments until they run out. Then the businesses who didn't fail before, now fail, with more unemployed people not being able to buy goods and services. Which in turn causes more people to become unemployed. And so on and so forth.

In the meantime, the stock market has dived, taking trillions of dollars in retirement plan funds with it. Which in turn means that there will be millions of senior citizens who cannot retire and stay in the work force, making it harder for even more people to find jobs. And becomes a drain on the economy, as senior citizens fall into desperate straits economically, as well as suffering for those elderly folks who cannot work any longer but don't have funds to pay their bills...unless Social Security is still around and is enough.

My 401k is just a shadow of what it was last year. My job relies on the existence of AIG and some of these other companies. My 401k was managed by Merrill Lynch.

It may be something you are direct risk of experiencing before you fully grasp the consequences and the difference in this crisis from ordinary crises.

[mtnsnake]

39. I don't mean to sound harsh but

we are paying the price for investing our hard earned dollars into OTHER PEOPLE'S schemes. We need to invest more in ourselves instead of taking chances with other people messing with our money.

[PVnRT]

49. That's a nice slogan, "investing in ourselves"

But what do you mean by it? More education? Mattress-stuffing?

Pretty sentiments won't get us through this mess. Like it or not, you WILL be affected if it's allowed to continue, regardless of your Spartan lifestyle.

[mtnsnake]

55. No, what I mean is

that if you want to invest in yourself, invest your extra money into something such as affordable land that YOU pick out, or invest your money into a small sideline business that YOU run, or invest your money into something that YOU pick out like gold or antiques or art, or a bunch of different ways....but definitely not risk your money by giving it to some money expert who's going to make his commission whether or not your investment goes up or sinks like a rock. I don't mean to invest ALL of your extra money into something like that, just some of it so we have more control of our lives as opposed to OTHER people controlling our lives. Refusing to take loans for luxuries would be a great start in how to invest in yourself.

[mrreowwr_kittty]

88. What kind of business would you be starting?

The kind that is so crucial that people won't stop patronizing it when they are tightening their belts?

[Honeycombe8]

109. Exactly. Small businesses are the first to fail in a bad economy. Life savings out window. Kumbaya

[Honeycombe8]

108. You must be young, right? I have a job where I work 5 long days, sometimes 6 or 7.

I barely have time to care for my pets and home, much less "invest" in a moonlighting business.

Now on to reality. After you read several investment books, you will realize that land, while a good investment for the long term, is not what's called a "liquid" investment. When someone retires at, say, 65...he may not be able to sell that land and turn it into money. Like right now. If someone were retiring, and all her retirement funds were tied up in land...she's out of luck. Her retirement funds have dwindled in value, and being able to sell it at a profit is iffy at best (if she can find a buyer for that land she bought years ago).

Buying land that increases steadily in value over decades is iffy. A lot of it is luck. Luck in location (did the city grow out that direction? Did a pig farm open up nearby?).

Buying land isn't "investing in yourself," anyway. It is just another investment vehicle like mutual funds. Totally dependent on the market and the economy. Like right now.

I didn't give my $ to a money expert. I put it into mutual funds in my 401k. I did this myself. Online. This is what's called a conservative investment vehicle (because of the funds I selected). It's even insured by the SEC, since it's in a 401k (insured from the management company going belly up). But it is not insured against losing value. Which is what has happened. It, like land, is totally tied to the economy.

If you own a small business, you are even more reliant on the economy than if you had put that $ in a mutual fund. If the economy tanks, your small business will be one of the first to fold. (big companies are the last to go) There's nothing quite as risky as owning a business.

I have no debt, so your comment about loans for luxuries does not apply to me (and many of my generation). I have no debt. None. I've paid off my house and car. As I said, I've played by the rules. It's time for the government to step in and save my future by buying some of the bad paper from those companies...not to help THEM, but to help the economy.

[Honeycombe8]

57. Where do you advise I put my 25 years' of savings for retirement that is fully safe...

and doesn't involve other human beings?

A bank. Well, that is in essence giving money to the bank to loan to other people. It caps off being insured at $100k.

Interest fr a savings account is guaranteed a loss of money in savings, since it doesn't pay enough to counter inflation.

My savings is in the company 401k. It is "insured" in a way. But the value has dwindled to almost nothing because of the failure of the Dow companies.

This is complicated stuff. There is NOWHERE to save for the future that does not involve SAVINGS INSTITUTIONS AND FINANCIAL INSTITUTIONS.

These people who voted against this bill? They just lost their jobs. We older voters show up to vote.

[snooper2]

74. Put half of it in gold

and put the gold in a safe deposit box

[Honeycombe8]

107. Ha. Gold pays even less than a savings account, over the long term.

Plus commodities are extremely risky. Know any millionaires who got rich from gold? Buffett? Nope. Gates? Nope. Soros? No. Cramer? No. Trump? No. Any of the congress people? No.

Gold is for the gambler and the unknowledgeable investor.

[Unvanguard]

35. Not just that. Credit is essential to the functioning of the entire economy.

It's a fundamental element of the market capitalist system: it ensures that the people with the most socially useful uses for capital and the people who actually own the capital can be matched up.

Even if you never yourself take out a loan, you almost certainly still benefit a great deal from other people taking out loans.

[mtnsnake]

43. Yeah, everyone's gotta have the biggest & the best and they've gotta have it now

Can't afford it? Take a loan.

Sorry, but I think all this rampant credit has helped lead to our demise, not our functioning properly.

[PVnRT]

47. Have you bothered to actually read anything?

Credit is not just people buying the luxuries you hate. It's companies trying to make payroll and capital investments, ESPECIALLY small businesses that will be hurt.

[mtnsnake]

50. I'm not claiming to be any kind of expert

I'm just giving my opinion that loans are the reason that so many people get into such big trouble and that people would be better off if they lived within their means and actually paid for something when they bought it, not a bunch of years afterward. Just my personal philosophy, I suppose.

[PVnRT]

54. This. Is. Not. About. Personal. Credit.

Please address what I and others have actually said, instead of saying the same thing over and over.

[Starbucks Anarchist]

61. "I'm not claiming to be any kind of expert."

:rofl:

So you have no idea how this could affect PAYROLLS because businesses can't get short-term credit?

[vanderBeth]

53. Don't bother. He can't seem to differentiate between irresponsible and wise borrowing/lending.

He just thinks all credit is people buying crap they don't need.

[mtnsnake]

56. I'll tell you what, Mr Expert. You live your life the way you want & I'll live mine the way I want

...free of suffocating debt.

[vanderBeth]

59. Fine. I too hope to be free from "suffocating" debt soon.

I knew I shouldn't have gone to college. Me and my silly college education. It was way to extravagant and such a foolish move to make. :silly:

[mtnsnake]

62. Sorry, vanderRock, if I upset you, but that wasn't what I meant

I meant luxuries that we can't afford.

My apologies anyway.

[vanderBeth]

68. It's cool.

No worries. I think people are living out of their means, too.

[MiniMe]

67. It could be kind of difficult if the company you work for can't borrow the money

to make the payroll. If the banks aren't lending money to each other, that is exactly what will happen. Every company borrows money from time to time. A lot of companies have seasonal ups and downs, and during the downs, they have to borrow to keep the company going. That is the way business works, and all companies do it.

[Unvanguard]

58. True, EXCESSIVE credit can be a problem.

But your attitude here amounts to throwing the baby out with the bathwater... or to go in a different analogical direction, missing the forest for two or three particularly ugly and malformed trees.

Without credit, economic development and innovation is very heavily dependent on the particulars of the distribution of wealth. If I have excess capital and you don't, but you have a great idea for how to use that capital and I don't, we have no place to meet in the middle for mutual (and general social) benefit. Resources thus come to be used very inefficiently, which harms everyone: it means we all get much less for what we put in.

And that's just the abstract angle. That's leaving aside all the innumerable ways in which the particular way our economy functions depends upon the general availability of credit; when something so convenient is available for so long, people (and most businesses) get used to using it. Sure, perhaps we can adjust, but the adjustment will be very painful--and as usual with painful adjustments, it will be painful for everyone, those with the least resources most of all.

[Two Americas]

79. not in the least bit true

Credit does not "ensure that the people with the most socially useful uses for capital and the people who actually own the capital can be matched up."

Socially useful is not a consideration in the process.

The notion of "the people who actually own the capital" is a little misleading as well. People provoide cxapital. Capital could never exist outside of or prior to labor.

Labor creates capital, capital does not create labor.

[Unvanguard]

91. It is true, under a few (sometimes false) assumptions.

But my point was not to defend a market capitalist economy, it was to highlight the importance of credit to its functioning in a way that serves anyone at all.

[Historic NY]

40. they make it sound like there isn't any money out there......

what it is is no one is buying? Hey if you told me tommorrow that I could have a .05% loan I'd still not buy anything. Why take on more debt? When I see multi-thousand dollar bank accounts making cents in interest, what incentive is there to save or to spend. We're charged higher rates but get little in return. We went through this before but at least interest rates encouraged saving. Didn't the cheap money get us into this jamb? Banks are still offering loans and credit but they are not taking on risk, that seems sensible to me. Don't be snowed by the no business loans crap. If your business is viable and has colleteral you can get a loan. Your just seeing thing tighten and thats normal. Builders are still building near me and there are plenty of ads for loan, home equity in the papers. Its risk assessment something that went out the door with all those subprime loans. Hell thats a just good business practice.

[pnwmom]

42. But no bailout would mean greatly reduced credit for businesses

affecting everything from the grocery store you go to, your hospital, and your own employer or your small business.

The Great Depression took place in an agrarian economy, so many people were able to achieve a subsistence life-style on their own property. It would be harder now, with much more of the population in large cities.

[Two Americas]

64. not so

The programs of the New Deal were heavily focused on agriculture and they were a stunning success. Operating expenses and land costs were as much of a problem then - probably more - than they are now. Government guaranteed loan programs stabilized agriculture and are still working effectively today.

Food costs less today even for people whom do not, live on a farm, and food was the only subsistence advantage provided by people living on the farm. Also, by the 30's we had enormous urban populations to feed.

There is absolutely no reason to think that similar programs to the ones that worked from the 30's through the 70's, some of which have yet to be gutted or privatized by the right wingers and still work, could not be implemented today.

I do not think you have supported this idea of yours that times have changed so we must reach for a private solution.

Your talk of people losing jobs is fear mongering in my opinion. You merely keep repeating it and have not supported it.

The government can become - may inevitably have to become before we are through this - the employer and lender of last resort. That has worked in the past.

If you are arguing against Labor and for capital under all circumstances, against government intervention on behalf of the people in any case, and for propping up private and free market solutions as the preferred approach at all times, you should do so openly.

[pnwmom]

71. Okay, let's pretend that a return to the small family farm is likely.

How do you solve the problem of the credit liquidity crisis? If no one will lend the money to the small family farmer to buy the farm, or the equipment, or to pay for help, how does that work? If no one will lend the money to a small business, how will it survive? Do you understand that almost all businesses today use bank lines of credit to manage their finances?

[Two Americas]

72. yes

I do understand that almost all businesses today use bank lines of credit to manage their finances, and that the crisis is real. I used farms as an example, because that has always been true in farming. You can't manufacture and sell year around, and it is capital intensive. Margins are thin, and accumualtion of capital difficult. It is an extreme example of the challenges you are describing.

As you say, more people were on the farm back then, which means more people had these challenges, not fewer.

[Two Americas]

77. Farm Service Agency

History of FSA

Stabilizing farm income, helping farmers conserve land and water resources, providing credit to new or disadvantaged farmers and ranchers, and helping farm operations recover from the effects of disaster are the missions of the U.S. Department of Agriculture's Farm Service Agency (FSA).
Congress set up a unique system under which Federal farm programs are administered locally. Farmers who are eligible to participate in these programs elect a three- to five-person county committee, which reviews county office operations and makes decisions on how to apply the programs. This grassroots approach gives farmers a much-needed say in how Federal actions affect their communities and their individual operations. After more than 60 years, it remains a cornerstone of FSA's efforts to preserve and promote American agriculture.

The Farm Service Agency traces its beginnings to 1933, in the depths of the Great Depression. A wave of discontent caused by mounting unemployment and farm failures had helped elect President Franklin Delano Roosevelt, who promised Americans a "New Deal".

One result was the establishment in 1935 of a Department of Agriculture agency with familiar initials: FSA, which stood for Farm Security Administration. Originally called the Resettlement Administration, and renamed in 1937, its original mission was to relocate entire farm communities to areas in which it was hoped farming could be carried out more profitably. But resettlement was controversial and expensive, and its results ambiguous. Other roles soon became more important, including the Standard Rural Rehabilitation Loan Program, which provided credit, farm and home management planning, and technical supervision, and which was the forerunner of the farm loan programs of the Farmers Home Administration.

Another related program was Debt Adjustment and Tenure Improvement. FSA County supervisors, sometimes with the help of volunteer committees of local farmers, would work with farmers and their debtors to try to arbitrate agreements and head off foreclosure. The idea was to reach a deal by which the bank could recover as much or more than it would through foreclosure by allowing the farmer to remain in business.

FSA also promoted co-ops and even provided medical care to poor rural families. Although the scope of its programs was limited, poor farm families who took part benefited greatly. One study estimates that families who participated in FSA programs saw their incomes rise by 69 percent between 1937 and 1941! Annual per capita meat consumption increased from 85 pounds to 447 pounds in the same period.. Milk consumption increased by more than half.

http://165.221.16.19/pas/aboutus.htm

Farm Security Administration

In 1935, President Roosevelt created the Resettlement Administration, a federal agency responsible for "low-interest loans to poor farmers which would enable them to leave small or marginal tracts and become owners of productive lands; land-renewal projects, such as reforestation; removal of certain families from cities where the economy would not sustain them to communal farms and well-ordered rural villages where they could become self-sufficient; and sponsorship of camps for migrant farm workers" (Stryker 7). Rexford Tugwell, a longtime friend and adviser to the president, became its director. In July 1937, after the RA proved unable to relieve the suffering of American farmers, Congress passed the Bankhead-Jones Farm Tenancy Act, which provided $85 million in loans, spread over three years, "to help tenant farmers buy their own land, animals, seed, feed, and machinery, as well as help existing land-owners to rehabilitate their properties" (Watkins 296). The law also established the Farm Security Administration, which absorbed the responsibilities of the RA, to implement the plan.

http://xroads.virginia.edu/~MA03/pricola/FSA/FSA.html

[tama]

101. Socialism with land reform

if you want to give all equal chance.

[ellie]

44. My husband

talks about this all the time; how people's lives are entirely financed and people just don't own anything outright anymore.

[mtnsnake]

48. I would love talking to your husband

because we are definitely in the minority when it comes to buying on credit or living within your means and waiting until you can pay for it.

[mtnsnake]

60. Sorry, I didn't mean to piss anyone off. I was just trying to help by stressing

that I think we'd all be better off if we lived within our means and paid for something when we actually bought it instead of taking loans for anything and everything under the sun. I don't believe in being a slave to debt. I'd rather live with what I can afford than have what I can't afford. Taking a loan means I can't afford it, but that's just my own personal philosopy.

Love you all and good luck. Gotta get to work now so I'll catch ya'll later. :)

[vanderBeth]

66. Yes, living within our means is necessary

SNL offers a radical new program for this:

http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php

[LeftishBrit]

63. So if anyone suffers in a recession, it's their own fault for being too extravagant...

and if individuals would only be more frugal the problem would be solved?


You may not mean it that way, but frankly the way you put it sounds Thatcherite!

I think there should be much tighter credit limits for individuals; but that's only a small part of the problem.

[CreekDog]

65. except for the large numbers of people who buy food and housing selling or designing those things

moran.

[TZ]

99. Didn't you know..its materialistic to want to have a house and a car

and GOD FORBID you want a actual PENSION (or 401K plan in my case). Only poor people are good people!:sarcasm: :banghead:

[tama]

103. Well

that's what Jesus said, anyway.

[Kip Humphrey]

69. Heaven forbid we end up saving our money when we're supposed to go shopping!

[DefenseLawyer]

70. This is just a really twisted view

Do you really think the average American drives a $35,000 car? Really? You need to get out of your cul-de-sac for a day or two and see the country.

[AllieB]

78. The State of MA may not be able to pay out benefits to towns and cities because it relies on credit.

The 400M that it pays out to local towns is in jeopardy. You are being intentionally obtuse not reading the responses above and doing some research yourself on this crisis. It just doesn't affect those in the capitalist system. It affects the money your town gets to clean roads in the winter, repair infrastructure, and take care of those in need.

[Historic NY]

104. Your state borrows, interesting NY floats bonds which its sells,

Road plowing etc. are usually paid for by taxs collected any state that is out borrowing to meet expenses well is in trouble to begin with. What happened to revenue that they stuff into their coffers. My fire district sold over 5 million in bonds 20yrs in less than a day to build a new a station and thats small potatos. Bonds are an investment that many people will buy because they upfront say what they will pay in the end. I think your confusing credit, bonds and wall street there is a big difference. This is exactly what the crafters are hoping to do confuse people into thinking the sky is falling, it ain't. Ny has been making some deep cuts which are necessary I know they put some money into the markets but not regular operating monies. In a few days things will unwind, the market is rising up again. governemnt are mostly a sure thing for investors cause its backed up by the taxpayers. The markets well that a whole different ball game.

[progressoid]

80. Or one of those needless college educations

[K8-EEE]

82. I can't really agree there -- I'm not sorry we bought our home

Like most people we felt overwhelmed (and cleaned out!) by the process and at $200,000 it seemed unaffordable in 1989. But now I thank God for our (relatively) small $1,000 mortgage payments. In Los Angeles, the crappiest 2 br apt. in town will run you more than that. And they can kick you out -- they can go condo on your ass or whatever.

I did resist the temptation to trade bigger/better and refi it to the hilt, and that I'm also grateful for.

I guess my point is, if it stops people from buying an AFFORDABLE home and forces them to pay outrageous rent to slumlords then it's really not that great.

[MadinMo]

83. I suggested yesterday to a co-worker that his out of work construction friend

begin building modest bungalows for rental. I think all the McMansion folks are going to have to have a place to live.

And yes it is a good thing that people will have to learn to live with paying cash. It will be painful for some of them, but in the long run it will be good.

There is no reason for credit/loans to be easy to get anyway. Other than to enrich the creditors.

[mrreowwr_kittty]

89. They should change zoning laws to permit multiple families to live in McMansions.

[LanternWaste]

84. Additionally, and from what I understand...

"people can't get loans to buy homes..."

Additionally, and from what I understand, it also means students not getting college loans, entrepreneurs not getting small business loans, companies can't afford payroll increases (raises and additional employees), or the family driving that $350 twenty year old gas hog not getting the loan to finally get a reliable, fuel-efficient, environmentally friendly auto.

From where I sit, as many positives that can be perceived, there seem to be just as many negatives. But then again, I'm no economist and don't pretend to understand with any degree of precision the how's, why's, who's, and what's of a global economy. :P

[mrreowwr_kittty]

86. Consumer spending is 70% of our GDP.

People fail to understand that. We have gone from a manufacturing economy that exports more than we import to a country where the majority of our commerce is services and we import most of our goods. If people stop buying crap, millions of businesses will fail overnight. Joblessness and poverty will cascade through the nation.

[mmonk]

90. Except if business can't get credit, it might not be able to make payroll.

Then people will do without the loans, homes, expensive cars, TV's, and their job.

[ogneopasno]

97. And hoping that an emergency doesn't happen.

Those of us who save credit for emergencies or big purchases -- like the $12,000 septic upgrade I was just required by the county to put in -- get screwed. But, you know, whatevs. It's more fun to look for easy breezy answers and pronouncements.

[hughee99]

106. Except for people involved in the making and selling of

homes, expensive cars and TV's.