Stop paying

[GWBcasualty]

I feel that this crisis will have unavoidable consequences that are only delayed and/or made worse by the bailouts.

Maybe everyone should just stop paying, at least the unsecured debt, in order to accelerate our journey through the path of debt destruction.

Imagine if everyone or almost everyone would stop paying... there would be no other choice than to hit the reset button and destroy all debt at once. Either through debt cancelation or through the issuance of a new currency that will make the old debt ridiculously low (ie: 1 new $ = 100,000 old $)

I think we will get there eventually and an acceleration would save a lot of grief to a lot of people.

[Minnymouth]

A body can DREAM, but I wouldn't hold my breath on it.........

[StartingOver08]

Looks like the troll is back....

[fltoo]

ferslig=commonman=sweet potato=troll

[HRx]

You would think Obama would be sending some money our way, that is why we all voted for him. Promises....

Yikes...this is the reason you voted for Obama?

[lrprn]

Ok folks, let's head back to school for a quick refresher in how our economy actually operates. You can't hurt the banks and big financial corporations like AIG without hurting ourselves. Our part of the consumer economy directly depends on the financial health of banks and those large corporations that are getting govt bailouts - that's the sole reason they are getting them.

If you doubt that, then take a look at what happened in Japan in 1990 when they went through a financial collapse much like the one we are seeing now in the US - http://en.wikipedia.org/wiki/Japanes...t_price_bubble

Japan took the hard line route and let their banks and other large financial institutions fail. It took them more than ten years to sluggishly recover with high unemployment and millions of citizens struggling just for their daily existence during that time.

Do you have until 2018 or longer for things to get better in the US economy? I sure don't. That's why Obama is trying to speed up the recovery by bailing out the banks and financial institutions now. The alternative is many years of recovery rather than just a few. Which would you rather have?

[JRScott]

Actually I would disagree on some points lrprn.

Obama, much like those before him, is trying to shore up the short term while sacrificing the long term. Everyone here has learned you can't keep borrowing money you don't have dependent upon some future earnings you may never get. The biggest problem is that the government overspends even before the financial crisis by 30% a year. This sets a poor example for the people and is why a lot of us end up here.

While talking the good talk, Obama is making a hard walk for us in 10 years. When the majority of the baby boomers have reached the age for social security, medicare and medicaid we are in for a world of hurt. The massive increase in the debt will lead to larger payments. The US debt is set up for interest only payments with balloons in 10 years. The interest payment will exceed defense spending within 3 years at current spending. (Social Security and Medicare/Medicaid have already surpassed it).

Obama isn't alone in his guilt, every president for the last 100 years is to blame.

In 1910 the United States had 2.6 billion in debt.
Today they announced the debt has exceeded 11 trillion dollars.

The two largest increases occurred between 1910 and 1920 (debt increased by 10 fold) and 1940 and 1950 (debt increased by 6 fold). That of course would have covered WWI and WWII, but also represents the time when the government became more involved in people's lives oftentimes stepping on states rights to do so.

If Obama remains president and continues to spend at his current pace, and he'll have to to meet his agenda (in fact his numbers are very low projections, actual costs will be 3-4 times what he says.) then we will have the largest increase in federal debt since WWI in the next 10 years.

It is unsustainable.

The current debt ceiling will be reached in less than 2 months unless Congress authorizes more debt, which sadly they probably will.

[FLBK7]

MSNBC.com

Can we bail out of the bailouts?
What if we let companies that are 'too big to fail' do just that?

The Associated Press
updated 1:49 p.m. ET, Thurs., March. 19, 2009

NEW YORK - What if the U.S. government got out of the bailout business?

The idea certainly seemed all right with throngs of Americans who were outraged by news that American International Group paid out millions of dollars in executive bonuses after it was rescued with taxpayer cash.

But would no bailout be even worse? Financial analysts and federal officials have warned that doing nothing to save AIG — or banks or the auto industry — would be a catastrophe, an economic domino effect of bank losses, stock market chaos and job cuts. No one — at least no one in the government — has the stomach for that.

Here's what might happen if companies deemed "too big to fail" were allowed to do just that.

AMERICAN INTERNATIONAL GROUP

For bailout backlash, it's hard to beat AIG. The government has made four separate loans and cash infusions to the crippled insurer, including $30 billion earlier this month. Total tab: $170 billion.

Public outrage reached new heights when word spread that AIG had paid executives $165 million in bonuses. President Barack Obama ordered his treasury secretary to grab back what he could, and one senator even suggested the recipients kill themselves.

So why not pull the plug? Because AIG has 74 million customers and operates in 130 countries, and letting it implode would positively unhinge financial markets around the world.

AIG built a murky, unregulated business issuing insurance for mortgage-backed securities and other debt held by banks. When the housing bubble popped and those securities went bad, AIG was left on the hook for billions of dollars in claims it couldn't pay.

Letting AIG die would make all of that insurance worthless. Banks around the world would be forced to take massive losses. Some could collapse, unnerving markets, driving up unemployment and maybe turning the recession into a depression.

The U.S. got a taste of that scenario in September, when bad debt forced investment bank Lehman Brothers into the biggest bankruptcy in U.S. history. Thousands of other firms were exposed to Lehman's complex financial contracts, and the resulting fear and uncertainty sent stocks plunging.

And that was just a small taste.

"AIG is about five times bigger than Lehman Brothers, and we learned that Lehman Brothers should not have gone bankrupt," said Mark T. Williams, professor of finance and economics at Boston University and a former Federal Reserve bank examiner.

It's not just AIG's life at stake. Over the weekend, the company named the trading partners who indirectly benefited from the taxpayer rescue. Those partners included Goldman Sachs ($12.9 billion) and Merrill Lynch ($6.8 billion).

So by bailing out AIG, the government is essentially bailing out those and other financial institutions whose fate depends on AIG's survival, said Sung Won Sohn, an economics professor at California State University, Channel Islands.

"If the money dries up, we'd see a lot more bad banks," Sohn said.

AIG itself has predicted nothing short of a financial apocalypse unless it stays on government life support.

In a bleak report to the Treasury Department late last month, AIG said its collapse could batter credit markets, bankrupt the U.S. insurance industry, depress the dollar, increase U.S. borrowing costs and shatter consumer and business confidence everywhere.

"The failure of AIG," the company warns in the report, "would cause turmoil in the U.S. economy and global markets, and have multiple and potentially catastrophic unforeseen consequences."

"What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means," the report adds.

Not everyone buys the doomsday scenario. Some critics, including billionaire investor Jim Rogers, say keeping the company on the public dole is ruining the U.S. economy.

And Phil Kerpen, director of policy for Americans for Prosperity, an antitax lobbying group, said the government "should stop throwing good money after bad" and allow AIG to go into bankruptcy.

"There might be some contagion. There might not be. But we know for certain that the course we're on now isn't working," he said.

The government says letting AIG fail simply is not an option.

Federal Reserve Chairman Ben Bernanke, speaking to legislators earlier this month, warned that the damage to the world economy of an AIG failure would run into the "multiples of trillions."

That doesn't mean the government hasn't at least considered a world without AIG. On its Web site, the Treasury Department tracks what it calls "Systematically Significant Failing Institutions." There's a single company on the list: AIG.

THE BANKS

So far, the government has invested $200 billion total in about 400 banks, and it says it stands ready to spend even more. Two titans of the industry, Citigroup and Bank of America, have received $45 billion apiece.

And the banks may actually be stabilizing. JPMorgan Chase, Citigroup and Bank of America all say they were profitable in January and February. Citigroup stock, which traded below $1, has bounced back to more than $3.

For now, the government has a 36 percent ownership stake in Citigroup. If the government pulled its cash and investors lost confidence and drove the bank into bankruptcy, financial markets would be devastated.

The Federal Deposit Insurance Corp. points out that no American has ever lost a penny in a failed bank. But the FDIC has also never handled a failure as big as a Citigroup or a Bank of America.

Bert Ely, an independent banking analyst in Alexandria, Va., said pulling the plug on the banks could have a destructive impact on markets similar to the convulsions unleashed by Lehman Brothers' collapse.

Letting Citigroup and Bank of America go down in the same way would be "like taking a house that had some damage and burning it down," Ely said. "It's economic arson."

The concern, not unlike with AIG, is that letting a big bank go under would leave its trading partners saddled with huge losses, shattering confidence and leading investors to pull out the money they have left in the market.

But others say keeping the bailout money flowing is only making things worse.

Bill Seidman, a former chairman of the FDIC who ran the government bailout during the savings and loan crisis, said he does not believe letting failing banks die would trigger a brutal domino effect.

He's calling for a temporary nationalization that would end bailouts for insolvent banks, clean up their balance sheets and sell them back into the private sector.

"I don't think we would bring down the system by doing that," he said.

The White House isn't taking that chance. Obama's 2010 budget proposal sets aside up to $750 billion more in bailout money if banks fall deeper into the abyss. That's on top of the $700 billion bank bailout launched by the Bush administration.

In the meantime, the administration is urging patience.

"It is surely tempting to say the hell with them all," White House economic adviser Lawrence Summers said in a speech last month. But he added, "You can't responsibly govern out of anger."

THE AUTOMAKERS

General Motors and Chrysler have received more than $17 billion in government loans and asked to borrow $21.6 billion more. Their financing arms have received $6.5 billion on top of that.

The auto industry contends the failure of either of the two would set off a chain reaction that could ultimately cost 3 million jobs and suck $400 billion out of the economy over three years.

That's because hundreds of companies that supply parts to the Big Three, not to mention dealerships, would also be hurt. In fact, the Center for Automotive Research in Ann Arbor, Mich., heavily funded by the auto industry, contends that just 239,000 lost jobs would come from the automakers themselves.

The industry contends that if just one of the Big Three failed, 1.5 million jobs would disappear in a year. Ilhan Geckil, senior economist for the Anderson Economic Group, which also studied the impact of losing an automaker, said Michigan's unemployment rate would probably rise from the current 11.6 percent to as high as 14 percent.

The good news: The job pain would be eased somewhat because both the surviving Detroit automakers and foreign automakers who have plants in the United States would start to pick up the slack.

And some doubt the job losses would be so dire to begin with.

Susan Helper, a professor of economics at Case Western Reserve University in Cleveland who has studied the auto industry, says the chain reaction would be smaller — although suppliers of parts for certain car models might be out of luck.

"I think the auto supply base is fairly intertwined," she said in an e-mail. "I think it's unlikely that every single supplier would be forced to stop production."


Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/29762648/

[JRScott]

They shouldn't have bailed any of them out. These institutions could have filed Chapter 11 bankruptcies and restructured themselves. Yes it would have been painful at this time, and there would have been several Chapter 7s as well. However if I have a choice of taking the pain now or putting it off a few years down the road, I'd rather have it now when I'm a bit younger and can take it a bit better.

We've already basically sold the next two generations down the river with the massive unfunded entitlements, no need to shift more of the burden to them. We need to take care of todays problems today, as tomorrow will have its own troubles and problems.

[MomIcantFindmy]

Actually I would disagree on some points lrprn.

Obama, much like those before him, is trying to shore up the short term while sacrificing the long term. Everyone here has learned you can't keep borrowing money you don't have dependent upon some future earnings you may never get. The biggest problem is that the government overspends even before the financial crisis by 30% a year. This sets a poor example for the people and is why a lot of us end up here.

While talking the good talk, Obama is making a hard walk for us in 10 years. When the majority of the baby boomers have reached the age for social security, medicare and medicaid we are in for a world of hurt. The massive increase in the debt will lead to larger payments. The US debt is set up for interest only payments with balloons in 10 years. The interest payment will exceed defense spending within 3 years at current spending. (Social Security and Medicare/Medicaid have already surpassed it).

Obama isn't alone in his guilt, every president for the last 100 years is to blame.

In 1910 the United States had 2.6 billion in debt.
Today they announced the debt has exceeded 11 trillion dollars.

The two largest increases occurred between 1910 and 1920 (debt increased by 10 fold) and 1940 and 1950 (debt increased by 6 fold). That of course would have covered WWI and WWII, but also represents the time when the government became more involved in people's lives oftentimes stepping on states rights to do so.

If Obama remains president and continues to spend at his current pace, and he'll have to to meet his agenda (in fact his numbers are very low projections, actual costs will be 3-4 times what he says.) then we will have the largest increase in federal debt since WWI in the next 10 years.

It is unsustainable.

The current debt ceiling will be reached in less than 2 months unless Congress authorizes more debt, which sadly they probably will.

No offense JR but your post doesn't make sense to me. Your saying that debt increased 10 fold twice and 6 fold once and those were the largest debt increases in history. Where are the quotes supporting this? This claim would negate the surplus monies at times over the last 100 years. Certainly if you have a surplus and then enter into a negative that would be more than 10 fold.

I am not advocating debt or spending I am just needing clarification to avoid the suspicion that the post is "right-wing fear".
Where do you get the number for today's deficit exceeding 11 trillion dollars. I could not find that on the CBO website. http://www.cbo.gov/budget/budproj.shtml
Also can you show us where the government has overspent by 30% a year? Are you implying that they have always done that?

You also said, "this sets a poor example for the people and is why a lot of us end up here". WOW, that is a huge leap!!! I cannot imagine blaming government overspending, as you just did, for your choices and overspending. (If, in fact, that is why you are here...many of us are not). Personal responsibility and not blame is key to moving on. We don't use the government to set examples in personal choices. Government by definition is not a "human" entity. Such is the reason I cannot blame a 6 year old punching another 6 year old on the play ground on the government. I cannot say, "well the military strikes therefor that sets a poor example...." doesn't fly!

Finally I would say please post all of your quotes so they may be verified.
1. Government overspending by 30% a year (even before the financial crisis)
2. Interest only payments on debt for 10 years then balloon payments
3. Interest payments exceeding defense spending within 3 years
4. Today's debt exceeding 11 trillion
5. Increases in debt 10 fold
etc etc

If you are right then you are right and I would be interested to read it. I need facts though and not random claims by dot coms, blogs and journalists

[JRScott]

You have to understand that there has not been a surplus for over a hundred years. The last time the United States was debt free, Andrew Jackson was President. Until the 20th century though the debt was kept manageable.

In the last 60 years only 4 years had budget surpluses, once under Nixon and three times under Clinton. All other years they spent more than they took in.

Where the shepherd's lead is where the people go. The government is the shepherd of this nation. That's where I get to blame the government. See they were irresponsible with the trust of the nation. In 1939 for example they started robbing the Social Security Trust fund. The largest portion of the intragovernment debt is the 2+ trillion dollars they stole from the fund and promised to pay back later, however there is no way to pay it back and even if they did you lose the compounded interest it would have developed over the last 60 years. As such within 10-15 years there will be no way to continue Social Security as it exists today, there simply won't be the funds to do it.

The last 20 years the government has continually voted on legislation they did not write themselves (staffers write the majority of the bills not your senator or congressman), that they did not read, and thus had no real idea what they were voting on. In that same time the President has continually signed bills he did not read. The Constitution gives him 10 days to sign or reject a bill inferred in that is the duty to actually read the bill, which is obvious Obama hasn't been doing, but he's not alone Bush, Clinton, Bush and even Reagan at times didn't read the bills and it possibly goes back much farther than that.

It's very easy to show how they overspent if you want to do some research. Go back and examine the revenue for 2007 and then the amount spent, do the same for 2008. In essence its been going on since the start of the century. It's even worse once you consider how much they raid the Social Security fund for each year to make it look better. If you account for the raiding of Social Security then even Nixon and Clinton didn't have positive budget years. Basically how I did it is I found a budget game kinda for those years and others. I lowered spending til it was balanced or had a slight surplus in the budget. To do that in 2008 prior to the TARP etc, you would have had to cut spending 30% accross the board, and that was still raiding Social Security. Almost a third of the money spent in 2008 prior to the economic bail outs came from raiding Social Security (Just as it has for the last couple of decades really).

I'd also suggest at looking in more places than the CBO, the government doesn't want you to realize how bad they've made things. They all hope they'll be retired before it hits the fan....

Here's a link to the National Debt Clock

http://www.brillig.com/debt_clock/

here's a link to Wikipedia entry for US Debt

http://en.wikipedia.org/wiki/United_States_public_debt

If you look down the page you'll see a charge listing debt from 1910 to present.

The debt increased dramatically from 1910 to 1920, however it was cut down by about a third by 1930s. However then it almost triples from 1930 to 1940. Then increases six fold from 1940 to 1950.

[Mi Bankruptcy]

Here's what I know, I am in my mid 30's. I was in 2nd Grade when the U.S. Debt hit 1 Trillion dollars. So, in a little more than 25 years it has skyrocketed. The link above proves it. I also don't like all the fear mongering language that is used when describing this financial mess. Look at the article posted above. Words and statements such as:

implode would positively unhinge financial markets around the world,
recession into a depression,fate depends on AIG's survival,
financial apocalypse unless it stays on government life support,
potentially catastrophic unforeseen consequences
financial markets would be devastated
calling for a temporary nationalization that would end bailouts for insolvent banks

I copied those words/statments above verbatim from the article. These are words used in most news shows everyday.

Guess who leaked or released information about the AIG bonuses? Reread those 6 statements. Oh yeah, nice how congress OUR government can get together and tax bonuses at 90%...

[CompTweaker]

Good post. What is causing the banks to need a bailout? The 'experts' say that 'toxic debt' is causing the banks to fail because if everyone paid back their loans then the banks would not be having problems. Do you agree?

Going back to the beginning of the thread, should we all be getting our free money from BK or forclosure now because the government is going to save the banks anyways or should we all try to pay off our debts so that the banks do not need a bailout?

Tough decisions for tough times.

oh my, looks like the persistently judgemental "ferslig" is back.
So tell me, whats the bug up your arse that makes you come back under different names in continuous failed attempts at making someone feel bad for filing bk? you must have a very boring life.

[lrprn]

oh my, looks like the persistently judgemental "ferslig" is back.
So tell me, whats the bug up your arse that makes you come back under different names in continuous failed attempts at making someone feel bad for filing bk? you must have a very boring life.

Huh?? Please tell us all what in the following post by mymom that you replied to is blaming or offensive?

Originally Posted by mymom
"Good post. What is causing the banks to need a bailout? The 'experts' say that 'toxic debt' is causing the banks to fail because if everyone paid back their loans then the banks would not be having problems. Do you agree?

Going back to the beginning of the thread, should we all be getting our free money from BK or forclosure now because the government is going to save the banks anyways or should we all try to pay off our debts so that the banks do not need a bailout?

Tough decisions for tough times."

The answer - nothing is offensive or blaming in this post. Why the slam, CompTweaker?

Next time if you are going to make an accusation like this, PM the moderators with your suspicions instead and let us handle it.

If your comments were directed at someone else on this thread rather than mymom, who is it?

[CompTweaker]

Next time if you are going to make an accusation like this, PM the moderators with your suspicions instead and let us handle it.

Different interpretations of what was read I guess....I apologize if I was wrong, but "mymom" seemed to leave the same footprint as ferslig.