It’s The Economy Stupid
Posted on September 25, 2008
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Governor Bush yesterday explained the financial situation to our country, and I think he did a great job telling us what the problem is. I think anyone curious, even myself, feel a little more educated on the issue. It made me think though, why the fuck should we be so worried?
The basics of it is that some banks sold more homes than they could afford, due to the government easing restrictions and backing up companies like Freddie and Fanny everyone was selling as many houses as humanly possible. The banks then throw all those mortgages into a pool (securities) and let the market decide what kind of value they have, they were able to give such a great rate, like 8%, because they assumed all those people buying the houses would afford the variable rates. The problem now is that 8% rate started to look more like -30%+ and so no one wants to touch these mortgages because they can’t figure out when such a stock would bounce back if it ever does. So the banks are stuck with all these ’securities’ that no one wants to buy and because of that they might be less likely to give out extra credit, they need to make sure they have enough money on hand if a large number of these mortgages fail.
This ‘bailout’ package is about the government influencing the market, the reason why people don’t want to touch these securities is that these companies made HORRIBLE decisions with their money and gave out a home to anyone with a pulse. It sucks, on one hand to have millions of seniors lose a huge chunk of their retirement would be devastating, on the other it’s equally as cruel to bailout companies that made horrible decisions. It all started, as Bush said, in the last decade when credit restrictions eased up and people started using it for everyday life, only Bush’s solution is for people to continue to use credit for everyday life.
I get that you need credit when starting a business, but you shouldn’t depend on it to move your business forward (don’t get me wrong, it helps, but you should have a little capital after the first year or you’re doing it wrong). You shouldn’t be risking more money than you have, I see this all the time with independent book publishers who take in your payment and get back to you in a few weeks with the material, we don’t all need credit. The problem comes when giant corporations used their credit power to borrow money to put into these mortgage securities when they couldn’t afford the risk, this bailout only hurts our chance to make a comeback and keeps the people who have the power in power even though they fucked up. It will suck to take a giant hit to our jobs, but we’ve been experiencing that for the last 8 years, bring it on. Let’s start some new companies, let’s get back to school and learn the industry jobs of the future, let’s take Al Gore’s statement about civil disobedience seriously. It’s not that we have to jump in front of the construction worker trying to build the coal plant, we need to build the solar panels and the wind turbines right next to them.
Even with yesterday’s news about how dire it is that we stop the political process to socialize our banking systems McCain isn’t done campaigning while Obama actually took the day off. KOS
Barack Obama
No public events scheduled
John McCain
New York, New York
Clinton Global Initiative Annual Meeting
8:45 am (EDT)
Don’t get me wrong, what Clinton is doing here rocks but just who is McCain fooling here, he can’t make the time for a debate Friday after everyone goes home but he can get up at the crack of dawn to hang out with President Clinton instead of trying to solve this economy problem. I’m going to go back my head against the wall until this is all over.
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