Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: SilentZ who wrote (422078)	10/3/2008 2:02:17 PM
From: tejek	Read Replies (1) \| Respond to of 1575740

There are no guarantees but its very likely that most of that 700 billion will be recouped when the toxic properties are sold off after the loans have been renegotiated. What's "most?" What's to say they're not going for pennies on the dollar? How are they going to sell for a solid price in the current environment? That's the good thing about this plan.......you don't have to sell them in the current environment. You renegotatiate the loans so that the people can stay in their homes and keep making their monthly mortgage payments. The more you can keep in their homes, the less foreclosures we'll have. The less foreclosures means less housing inventory for sale. Less inventory will lead to price stability. Price stability will lead to increased sales. Increased sales will lead to higher prices. That's when you sell the loans for a small profit along with the profit you accrued from the small interest payments made each month. In that way, the $700 billion gets repaid in part or in full. >>and I want to see these "too big to fail" firms dismantled carefully. >I am not sure what you mean by that statement. We can't have firms the size of AIG that we have to bail out because they're "too big to fail." We need to carefully de-merge firms like that (as well as our huge banks) while they're doing OK. Obviously, that'll take away opportunities for execs to make nine-figure salaries, but so what? We'll all be safer. AIG was a problem because they were not forthcoming as to the quality and location of their assets and the problems they were incurring. Size is not the problem.....transparency is.

To: SilentZ who wrote (422078)	10/3/2008 4:33:50 PM
From: combjelly	Read Replies (1) \| Respond to of 1575740

"We can't have firms the size of AIG that we have to bail out because they're "too big to fail."" Excellent point, Z. The phrase "too big to fail" should not be in the vocabulary. If you look at the Panics that were common in the post-Civil War era, most of them had some large company that got caught with its pants down, collapsed and it took the economy with it. In more recent times, look at what happened to Japan. They went from being feared as replacing the US as the dominate economic power in the 21st century to a basket case for the same reasons. China is walking that path now. Bottom line, "too big to fail" is a dangerous concept.