Time for the Experts

Experts?? I don't understand how we fix a problem that was created by issuing too much credit by essentially issuing more. The argument that, "But you people must understand, our economy is run on credit" is fine, but our economy should/could be run on responsible credit, i.e., not lending or borrowing too much and paying back in a reasonable time frame - and I mean businesses as well as individuals. I work for a $20 billion company and we issue credit to worthy customers and stipulate that our invoices are paid within 30 days - promptly. This formula has worked for over 40 years for our company. We have excellent customers who purchase what they need and have discipline in their operation. Enforcing the simple, common sense practices of responsible credit lending is how we fix this problem, not by signing up for some enormous socialist bailout - or wait, let's call it "rescue" plan. But I'm no expert.

Cheryl, During 40 years on the job, both as an employee and business owner, there are two major points that stand out as important influences on the economy we endure (should be enjoy) today. First: Thirty five years ago, the UAW and other unions seemed to be constantly on strike for more pay and benefits and, in addition, the car companies refused to realize that smaller and more fuel efficient vehicles would be needed. Back then, I told anyone who would listen, that if the car companies and workers couldn't come to a logical and equitable arrangement, and if the big three couldn't use a little foresight, they would go down the tubes, Well, here we are, 35 years later and what do we have? Greed, ignorance and poor management (both unions and car companies) destroyed that part of America. Second: In the mid eighties, a fellow businessman told me that the Federal government was comparable to a business and, in fact, was the largest Business on the planet. Not like a Sears or McDonalds but more like a financial business. He was right, and that's why I voted for Ross Perot in 1992. Not because he was proficient at foreign affairs, but because I thought the economy could use a business perspective. In retrospect, it may have made a difference. Sears hires managers, with experience in a particular field, to run the business smoothly, make a profit and make sure the employees are productive and content. If they don't perform, they are looking for a new job. In the government, we the people hire the managers (Congress) and expect the same. However, we don't hold them to even the same requirements as the guy that sells you a new TV. An elected official just has to speak well, have money and a lot of friends to get elected. (slight exaggeration, but not much) Most (not all) of our elected officials have never owned or run a business, don't know how to read a profit/loss statement, yet we expect them to run the biggest Business in the world. If they don't perform, what do we the people do? We reelect them. A person with a glib tongue and lots of friends does not necessarily have the required attributes or the common sense and business sense to run OUR business. So, it boils down to this: we have met the enemy and it is us! Greed, ignorance and poor management are about to destroy the rest of America. The bottom line is this, if we, as a unified body, don't stand up and demand that those we elect to run our Business actually do their jobs, and if we don't make sure they have the qualifications to do the job, then who is at fault? This week,we will get the same partisan rhetoric, finger pointing and ignorant attempts to solve a problem that we pay them to know how to solve, or, better yet, pay them to never get us into in the first place. If that were my business, 90% of them would be gone long ago. Wait a minute, it IS my business. No matter what comes out of Congress this week, God help us because Congress sure as Hell won't. And you can take that to the bank, just like my first two points.

My opinion of wrong: when the economic and Wall Street MBA's have been guessing at the floor of the bottom of this downturn. Again they miss it. Now what do the jack do politicians know about real economics? Have they been out in real america where families have lost homes? Where smart employees in financial sector have been hit real hard? I doubt if Henry Paulson ever left the NYC-Washingto corridor to see how the real people all over have been hurting. Now congress wants to hop in the market play games. What do they have stock in Goldman and Sachs? Still I believe in the free market and real capitiolism. Serious mistakes have been made and those that made these serious mistakes must learn from them.

Something about this whole mess and the proposed fixes just don't make sense. Maybe you can answer a couple questions for me. Can mortgage securities be counterfeited? If so what would happen if the SEC found duplicate packages of securities in multiple institutions?

Make up your mind. From your 9/29/08 blog. "It was called a “bailout” and that was never it. It was called a “rescue” and that was not it". Today on TV you kept referring to it as a rescue. How can you change your mind within a two day period? I think you've gone politically correct.

I have been trying my best to follow this story for several days now, but have not heard an answer to the questions my husband and I have about how this 'bail-out' will affect our situation. OUR SITUATION (which I am sure many others are in as well) 1. We refinanced with a 3/1 ARM back when property values were going up. 2. Our rate is due to increase in 6 months and we will NOT be able to refinance because now our home is worth LESS than it was when we got the ARM, even though we have made what should be about $25,000 to improvements. 3. We will have no choice but to continue to pay on our interest-only loan until our property value increases by around $30,000. I know those number probably seem small compared to some areas of the country where homeowners face several times those amounts. However, I have a solution, which will help people like us to keep our homes and our credit, give a few stings to those big banks that financed us without regard to our best interest, and that will hopefully cost a lost less than $700 billion. ONLY for homes Valued TODAY at under $300,000 since that should include most lower-middle to middle-upper class and not give breaks to those who really don't need them. 1) Freeze interest rates for all ARMS through 2011. (I read somewhere that this may have already taken place but I cannot find out how to qualify) 2) Banks take a loss and re-adjust the loan amount to reflect the current market value of the home (if the home is upside-down and perhaps set a cap on how much difference that can be. 3) For homeowner behind 3 months or less (due to increased interest rates)--- have the bank write-off those payments and revise the payment back to the original amount. 4) The government/tax payers will allow for these ‘losses’ to be amortized over 5-7 years in the end reducing the taxable income for the banks. My husband and I worked toward home-ownership for 12 years. We had our ups and downs with our finances and did not have the best credit when we qualified for our home. It seemed too good to be true, and out of gratitude for however the system worked in our favor, we have tried our best to improve our financial situation. We qualified on 1 income and are still in our first home. We used our refinance money to pay off debts and in hopes of adding value to our home by adding 2 bedrooms and various other upgrades. We are frustrated that all of our efforts seem to be void. Because of the many foreclosures in our neighborhood, our home has lost around $50,000 in value. We should not be punished or penalized due to the greed of the finance companies and agents who assured us we would be able to refinance no problem once our ARM was up. To conclude, if this "bail out" does make provisions for those of us facing the above scenerio, why are we not hearing more about it? Thanks!

Cheryl, Perhaps it is time to consider how your actions affect your credibility (?) Your support for this bailout plan (which by any other name stinks as bad) means that: (1) you honestly believe it will work; (2) you don't know if it will work or not but are relying on the opinions of others; or (3) you know it will not work but are following orders from your superiors to sell it to the public. This plan will not work, cannot work, and will only make matters worse. What will you do or say then?

I have spoken to more than two dozen people re: the bailout bill. Not one of them were against it. If you have skin in the game, pensions, 401k, mutual funds, stocks, and you are against this bill then you are committing personal financial suicide.

I agree that it is time for the experts to step in and not a time for poloticians, or the media. I do not mean the experts that contributed directly to were we are. Those that were associated with Freddie Mac, Fannie Mae, or any expert that was part of an institution that dealt with sub-prime loans or are part of the day trading crowd. I think it is time to hear from the leading and well respected experts that have had alternative solutions to the $700,000,000,000 rescue plan.

Cheryl, If a 700 billion dollar (or more) package is passed, this will only drive down the confidence in the American people. It is my understanding that consumer confidence, too much interference from government, deficit spending helped contribute to the "Great Depression". It was argued, and still is, that if banks were saved from collapse it would have "shortend" the length of the great depression. What many believe is that our government is trying to soften the blow, but they are forgetting that Americans still drive the economy. We have no confidence and no real disposable income right now. We understand that spending another 700 billion will not do anything to PREVENT what is coming, it will only add to the debt that we will all have to pay back. We are saying that if the economy needs to reset, let it reset now not later when the deficit will be much, much larger to manage. I'm not saying that A Great Depression is at hand, but a hard recession could be at hand if the goverment does "too much" to save big business. Great Depression Arguement: Had there been a better distribution of income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups --we should have had far greater stability in our economy in the depressionn era. Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.

I think President Andrew Jackson summed it up best when he was dealing with a banking crisis of his day: “Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.” - Andrew Jackson, the seventh president of the United States, 1832, to America’s central bank

All anyone has to know is, the greedy executives of these companies made millions and millions of dollars, all the while "rating" these securities triple A in order to sell them, then back them with so-called insurance that companies like AIG could not possibly cover when their value tanked, and yet, we are going to "wipe the slate clean" to allow them to extend credit? And they keep all those earnings too? There are plenty of people at fault top to bottom, but to allow these criminals off the hook is a travesty to every upstanding, hard working American. Experts? I don't think so. Our government officials are just as culpable in this mess. It is clear the American people have had enough of the antics of President, Congress and greedy Corporate America. It cannot be overstated. This was nothing more than greed-greed-greed-greed, and more greed. It's disgusting and pathetic. Let the chips fall where they may. Economically I've been through far worse.

The so called "experts" have been nothing but wrong. Too much time in academia tends to do that. Instead of these textbook keynesian/quasi marxist approaches of inflating the middle class out of existance, why don't we do the exact opposite and deflate the bubble. Let the chips fall where they may. Return to sound money. Let savers win for a change.

I don't imagine we can reasonably expect experts to agree since economic theories are spread across continuums reflecting tight monetary controls and economic gov't controls to reg-free-market. Actually, I don't believe either of these extremes resolve emerging issues but I favor a middle position of controls for corps that by definition have no conscience (who owns the crystal ball?) or control an open society's economics absolutely- so free market with sufficient controls to catch as early as possible evolution of greed. So, we need a range of opinions to become an informed body politic (us!) and this range deserves giving voice to all points on a polarized continuum. I did some review on the Great Depression: no one agrees on what caused that Depression. My sense of the expressed ideas was that for the world economy to collapse requires many many variables to exist and interact: I noted this for myself to help me to stay a middling course as I listen to the opinions- political, banking, investment, economic- that have swirled around us for the past 18 months. So okay let the opinions tumble as they will. Listen, learn (look for definitions of any words that aren't familiar and there've been a lot of them!), reflect but DON'T PANIC!!! My husband and I are retired- and believe me we're watching this whole show! A failure of leadership: oh, yeah!!! From Bushie right down through the Senate majority leader and Senate banking chairman through House Majority leader. Not leadership!!! Vitriolic, self-focused, party before country- I join many Americans with a kind of shock: have I been asleep while these inepts are blathering? I think so- truly! Our job is to oversee the job these characters are doing while "representing us"? So I think I have to take my share of the blame. Sort of a citizen Exam of Conscience! Well, I don't think the package will do anything for the economy except to give a zip/blip to the market. Effects will come in slowly as the process muddles along- firmly politicized. Tighten belts. Live easy but lean! Have a good day everyone! The sun is shining here: thank God it's not a political decision! Pat

CC: Jason’s comments are spot-on, of course, but that is not the real problem. The ones responsible for this mess are the ones that look back at us in the mirror every morning. We keep electing the same dopes to Congress! Then we complain when they loot the treasury or take campaign funds from lobbyists. We need to vote the people out of office and to hold them accountable.

Please stop pushing the idea that the "bail-out" bill was defeated because people think that it will benefit the "fat-cats" on wall street. The American public is not stupid. People are against this bill because we are tired of bailing other people out ... PERIOD. Rich, poor, middle, upper, ... whatever ... tired tired tired tired tired .... enough! Among some of the Joe Public horror stories that I have heard will occur if this bail-out is not approved is that (1) only people with credit scores of 700+ will be getting loans, and (2) credit card companies may start have to reduce limits. Well (cue the Angel Chorus) HALLELUJAH!!!! Who really believes that the huge gains in the market yesterday (09/30/2008) were because people are filled with hope that a bail-out will be passed soon?? I, for one, think that it was (cue the Angel Chorus) HALLELUJAH!!!! that it failed. My name is Wes Brown and I approved this message.

The "EXPERTS"are the problem here. When they call in the experts, time to run for cover...hide your money!

Experts? Where were these experts before? They are only experts if others call them an expert. I agree with must of the other posts, Fox Business seems to be becoming one sided, why? There are many other experts, economists, business leaders, etc that do not agree with this bailout, especially for the goverment to buy the "bad paper". Mr. Wynn (Wynn Casinos) was on Fox Business last night and clearly stated he was against this bail out and thought the gov paying the paper was extremely bad. Today, the senate is voting after attaching the bill to another bill and making some minor changes. But it doesn't change the fundamental problems with the basic premise of the bail-out, nor address any real significant fix. There was nothing in the house bill or the senates, that REQUIRES any institution getting help to use the funds to increase credit availability. Nor does it address the fundamental problems of the housing market, and still pushing those future and upcoming problems onto the average homeowner. This is a bad precedent and we will now see other industries lining up, including the automobile and airline industries.

How can you claim these folks as experts? When did president Bush ever become an expert in regards to economics? I listened to experts this morning that said the bailout does not have to happen. Then on the same show more experts said that it does have to happen that the end of the world (Economic World) is fast approaching. Another words it seems that we really do not know, that what ever we do will be an experiment that we will all un-willingly take part in. We need to fix this problem from the bottom up not trickle money down from the top. We need to go back and look at why the Glass-Stegall Act was repealed back in 1999. This act was put into place to prevent exactly what has happened. Now we want to give banks a winfall (Citi) of 186 billion when they sell the tax payers all that junk paper once this bailout passes. Come on - when will we learn!

LOL, time for the experts? Aren't these the people who got us here or were they all on vacation for the last ten years? Time for the experts to be stripped and jailed if you ask me.

Hello Cheryl, Just you average blue collar guy here. All I have to say is this...what's up with all of the propaganda? Seems like weapons of mass distraction all over again. (I watched Cavuto tonight and now I am afraid of all of you zombies). Our leaders put the fear of god out there that we have to commit to what accounts to $450,000 for every working American? Just mail them checks out to us and we'll buy some stuff to take care of the real people out there that are actually producing things for everyone else. Not just telling me to "give me your money because I know how to handle it better than you". Confidence is key and I would be alot more confident financially with that $450,000 in my pocket. I enjoy the commentary on fox and look forward to watching further discussions on why going another $700,000,000 (thats alot of zeroes ani't it?)in debt is not the right path that we want to follow.

I think that your experts are a little one-sided. I thought Fox was supposed to be fair and balanced! Why don't you quote Jeffrey A. Miron? He states,

Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer.

I think the problem is, based on conversions I have had with friends, family, coworkers and even a complete stranger at the gas pump today, that many of us simply don't trust our politicians OR the media anymore. What has either group done to deserve our trust? Many politicians have lied and cheated the public for their own gain. Whether it is conservative Fox or liberal CNN, everyone is out for himself or herself and puts across their point of view and that of the political view they are aligned with (fair and balanced my butt, although CNN is worse). No one is believable anymore, and the people on the street are down right angry that the result of this "me first" attitude is the crisis we now face. And who can blame the guy on the street for now not believing any of the people who were charged with keeping an eye on the system to avoid the crisis we now face, but didn't? Furthermore, does anyone in the media or Washington think that the growing finger pointing is going to convince any of us that this is on the verge of changing? I personally hope that every single member of Congress gets fired when next up for reelection. Sure Washington will have some difficulties functioning with a bunch of rookies in office, but I'm not too happy with the way Washington has been running anyway.