This is going to be one of those “are you kidding me posts?”
President Bush has sent a bailout proposal to Congress seeking authorization to spend up to $700 billion to buy troubled mortgage-related assets (banks). The government’s plan is to bail out (buy a large percent of the company) of all of the banks that are on the verge of collapse because so many people decided to take out a mortgage on a home that they could not afford during the housing boom and figured that they could flip the house for a profit. Those people are called speculators. They are the same type of people causing the price of oil to go up so high. As we know the housing bubble burst and now people are not able to sell their house for the amount they thought they were going to and are stuck with a house that they can’t afford. Now that these people can’t afford to pay their mortgage payment, other homeowners interest rates on their mortgages are going up and they don’t know why because they were to stupid to do even a Google search for what an “adjustable rate mortgage” is before they devoted 30+ years of paying off a loan on a house.
The reasoning for doing this, other than preventing our country from going into another Depression, is that the government will be buying up stock ( about 80% ) from these companies and selling them off down the road for a profit.
Now, I feel that this is an unfortunate thing that we (tax payers) have to do because of human stupidity, but its necessary. If we don’t buy these banks, the Chinese government or Chinese banks will. They have already been in talks with a number of them.
If the thought of possibly paying your house payment to a Chinese company doesn’t scare you here is something that will, and it’s ACTUALLY happening:
From CNN
The administration’s proposal also requests that Congress authorize an increase to the nation’s debt ceiling. Currently, it’s set to rise to $10.6 trillion for fiscal year 2009 - which runs from October 2008 through September 2009. But the proposal requests that limit be increased to $11.315 trillion to allow for the purchases of mortgage-backed assets.
The debt limit theoretically is a ceiling on how much debt the country is allowed to take on. Budget experts say the debt ceiling acts as a break on spending mostly because of political pressure, because lawmakers don’t like to vote to raise it. But lawmakers are free to change it if they have reason.
