Bailout effects

Discussion in 'The Watercooler' started by klmno, Sep 29, 2008.

  1. klmno

    klmno Active Member

    Can someone clarify the effects of the bailout deal (for lack of better term)on us common people? Does this mean it will be harder or easier for a person with a good credit history to get a loan or refinance their house?
  2. bby31288

    bby31288 Active Member

    Its funny, I'm not sure either. But I think its going to be harder either way, good credit/poor credit.
  3. muttmeister

    muttmeister Well-Known Member

    According to what I've read and heard, without the bailout, credit may pretty much dry up altogether but with the bailout, some credit should be available for those who are well qualified.
  4. busywend

    busywend Well-Known Member Staff Member

    Without the bail out there is almost nothing to lend. What little there would have been would only go to the very highest in credit ratings - and probably not a very attractive rate. Then automobile sales would plummet, houses, remodels, etc - anything we typically think to borrow for.

    With the bail out the average person should be able to continue to borrow money to purchase automobiles, etc. I am not sure what the interest rates will do. I doubt there will be any variable rate loans like were offered a year or so ago that so many people are foreclosing on now.

    The only way it can work is if the rates do not go sky high and people continue to buy and live as they would if the economy did not tank. That means keeping your retirement money in the stock market. If people go running is all for nothing. by the way - that was not advice in any way, shape or form. It was simply a statement of 'what if' - and only in my opinion! LOL!
  5. flutterbee

    flutterbee Guest

    Personally, I'm pretty damn angry over the bailout. They created the problem, let them fix it. Politicians are always saying, "The market will fix it." Well, let the market fix it.

    We don't have money for education, health care, extended unemployment benefits (and unemployment is expected to continue to rise to numbers seen in the early 90's recession), yet we have $700 billion to continue the excess and greed on Wall Street.

    I know that something had to be done or the economy would have crashed hard. But, there was nothing in there for the average citizen who is going to continue reeling from this downturn for some time to come. There were other alternatives. They just didn't look at them.

    But, to answer your question, klmno, it's supposed to relieve the current credit crisis. It's still going to be harder to get loans than it was a year or two ago, but it's almost impossible now.
  6. slsh

    slsh member since 1999

    I would think that with a good credit history, loans will still be available. I'm really dense when it comes to economics, but my impression is that this crisis was in part caused by adjustable rate loans being made to folks who didn't qualify for the usual fixed-rate loans and when the rate when up, they couldn't cover the costs (over-simplified explanation I'm sure, LOL). I do think that we're all going to be held on a much tighter leash now in terms of late payments and new loans, etc.

    I do think we're going to see a significant rise in inflation (a la late 1970s) with increased interest rates and higher prices. The treasury is going to have to eventually print more money to cover this bail out which will actually cause a drop in the value of a dollar and here comes inflation. Great if you're saving money but not so great if you're still paying credit cards off or trying to get a new loan. At least, that would seem the logical consequence of this thing but then again, logic doesn't seem to have a *whole* lot to do with the bail out in the first play, in my very humble and simple opinion. ;)
  7. busywend

    busywend Well-Known Member Staff Member

    It did not pass in the House. No bailout yet.
  8. busywend

    busywend Well-Known Member Staff Member

    The DOW just fell 554...............ugh!
  9. bby31288

    bby31288 Active Member

    husband and I are part of the adjustable rate problem. Against our better judgement, we let a mortgage broker talk us into an adjustable rate mortgage. We are now in foreclosure and have about 4 months left in our house. Sigh, our mortgatge payment went up to $4,200.00 a month. We stopped even trying to pay at $3,800.00 we just couldn't do it. This is all so sad. husband is very embarrassed by the whole thing. He of course feels like a failure for not being able to "keep a roof over our heads". I just feel dumb. I didn't do enough research on the mortgage before agreeing to it. Even though I had that moment that was like, ah this is probably not a good idea. What now? Do I expect a bail, we got into this mess. But my kids keep hearing about all of this foreclosure help on the news and stuff, they ask about it. I tell them there is none. They keep saying there is, but no matter who we call, and who we write to, we get nothing.

    I'm sorry for dumping this out. But suddenly I am very afraid for everyone. What is going to happen to everyone?

    I will never have the american dream again, and I'm only 41.
  10. DammitJanet

    DammitJanet Well-Known Member Staff Member

    Oh bby...Im so sorry. I honestly think the brokers were so gung ho they basically rushed people.

    Sorry you are caught in this.
  11. slsh

    slsh member since 1999

    bby - I'm so terribly sorry. Goodness ... honey, tell your husband that there aren't a whole lot of folks who could deal with that kind of mortgage and no way is he (or you) a failure or dumb. I'm usually a pretty pessismistic person and while things do look bleak right now, I believe wholeheartedly that this is just another stage in our ecomony that will rebound in time.

    I do want to clarify something - I do *not* blame the folks who took out the ARMs, I blame banks who were so anxious to give out loans they did so without (in my humble opinion) fully explaining in plain language what would be coming up in the future. I have to question the integrity of these institutions, you know? I truly feel horrible for folks who are stuck with these debts now. There but for the grace....
  12. Lothlorien

    Lothlorien Active Member Staff Member

    BBY, you may be one of the people that a bailout might just benefit. I hope that somehow you can refinance and get out of that debt. There is a house in my neighborhood that sold to a family who put 0 dollars down on a $500,000 house and took out an extra $100,000 on top of that. They defaulted on the mortgage within a year. House has been empty since.

    It's all part of the problem. The bank just handed this family $600,000 with nothing down and the house wasn't even worth that and now it's worth even less. This happened to millions of people and now we're billions and billions in debt and we are the lucky ones that have to bail out the banking industry who caused the problem in the first place. And the presidents of these banks......walk away with their multi-million dollar salaries intact. Lovely, ain't it?
  13. busywend

    busywend Well-Known Member Staff Member

    Not only did they not explain these loans, many financial institutions implied that the worst would NEVER happen. Not to worry...yeah right.

    BBY - do not beat yourselves up about this. And do NOT give up the dream of owning your own home. It will take a few years to clear it up, but it will be possible again some day. Even if you have to claim bankruptcy, within a few years people are able to buy houses again.
  14. bby31288

    bby31288 Active Member

    It wasn't in plain language, but at the same time, I will say I did have an inkling this could go very wrong. But at that time it felt like we had no other option. We let the mortgage broker tell us, what could go wrong with the market? We pushed our fears aside and signed away. As the payments got higher and we couldn't pay on time, obviously our credit score fell. As it fell we couldn't refinance. we are.

    slsh, I hope you are right, and our economy can rebound. I'm counting on it.
  15. amazeofgrace

    amazeofgrace New Member

    I am not even going to look at my 401K, it's too scarey!
  16. DammitJanet

    DammitJanet Well-Known Member Staff Member said it so well. Like a car salesman. They will do a quick talk thing on you to get you to sign and then you are sunk. They did it to me with my car. Problem happened to them when the loan company tried to verify the income that they falsified on my loan app. The crooks stuck a one in front of what I filled out as my monthly income. I would have never said I got what they said I got from Social Security because it is too easy to verify. Ticked me off though that they lied and tried to make it look as though I lied.
  17. klmno

    klmno Active Member

    Hey, Ladies! I just got home from work and read that they didn't pass it. I don't know what to think- they keep saying that if it doesn't get passed, we will go into a recession. Frankly, I thought we already were in a recessaion- I thought if it didn't pass that we could be headed for a depression. (And personally, I'm already in that depression!)

    I'm frustrated that things got to this point but do wonder if there isn't another solution besides this one that we tax payers have to pay for- even if they are telling us that taxes won't have to cover the entire amount. Has any one heard about the salaries those CEO's were getting? I heard that one man was paid something like 13.7 million and he only worked at the place for 18 days and it was the company that let him go- that's what I heard, I can't verify it. But this stinks.

    I'm not at all happy with our government right now- it's not a political statement- it's bipartisan.
  18. Stella Johnson

    Stella Johnson Active Member

    I haven't heard any politician explain exactly where this money is going to and who. They talk about the president getting this much, congress this much... but who and on what terms are they giving this to exactly. This is what makes me nervous.

    OK, so here is my take on the situation:

    Honestly I think if they leave it alone, it will get bad, but the market always corrects itself. Lots of banks will fail. Credit will become incredibly tight.

    As far as the regular person:
    Without the bailout credit cards will be either frozen or cancelled by the banks. They can't afford to have the money floating out there.
    It will probably be incredibly hard to get a car loan or home loan. May not be able to at all for a period of time. Then the auto makers will not be able to sell them since most people have to get a loan.

    Most of us work for large corporations. They run on credit lines. They use credit for payroll. If they don't have credit, layoffs will begin. Unemployment will rise.

    With the stock markets tumbling and the current recession I'm not sure that the bailout will really help this. Honestly I think the companies that receive the bailout will use the money to pay for past debt and still we will be in a credit crunch.

    Now, on the flip side.... More millionaires are made on Wall Street in times like this than any other time. If you invest now you are buying at a large discount from what these companies usually sell for. You have to be willing to ride out the storm though.:faint:

  19. Genny

    Genny Worlds Best Nana

    Well, I thought we were in pretty good shape to ride this bad economy out. But husband works for Wachovia - he has no idea at this point if he'll have a job in a few months :anxious:

  20. Stella Johnson

    Stella Johnson Active Member

    Yes, the CEO was from WAMU. Ridiculous.
    That is another thing that bothers me about this bailout. It states that the executive pay will have to be "reasonable". Obviously that is up for debate. There should be NO golden umbrella.
    They should get what everyone else gets for severence which is an average of about 6 wks pay. Period. They ran their company into the ground and the economy. You shouldn't get rewarded for that.
    Current CEO's should have their pay based strictly on the profitibility of the company. But that's my opinion.