You are spot on about the oil. Just look at the 70’s and the oil embargo. Inflation went thru the roof. Oil is used in almost everything, plastics, fertilizer, engines, and rising fuel costs increase cost of everything. Why? Every product must be shipped by gas powered machines.

If you made vehicles that ran on cheaper fuels inflation would plummet. The cost of all goods would go down. That makes a dollar go further and therefore people spend more on different products and services from different businesses which gives more taxable income.

It would be a simple increase of revenue and a decrease in expenses.

The only move being made which makes any sense is the lowering of interest rates by the Fed. This will moderate the effect of the housing problem, and even make some marginal sub-prime housing situations tenable again (at least temporarily)…while not turning off the pain which is necessary to prevent bad behavior in the future.

Not that the Fed is doing “good”…it’s way too willing to jump in and “do something” without waiting for the natural market correction.

We’d ultimately be far better off if we gave both Congress and the Fed a 6-month “time out” during which they were not allowed to do anything at all.

you forgot to mention that by raising interest rates it also decreased demand for housing thus causing home vaules to fall. Making it even harder for those with ARM loans to refi because they now owed more than the house was worth. Causing lenders to decline their loan applications. To top it all off the FED did this to decrease inflation but since all the inflation was do to oil price (controlled by OPEC) and food prices (controlled by worldwide growth and governmental programs to increase ethonel) The Fed’s action had no effect to curb inflation.

Now people complain when the government tries to fix their own mistake. Unreal.

Why would you take pride in being uninformed about your country’s economy? About how financial reality works? Why outsourcing is occurring, why the dollar is falling, why the markets are down? Why the Fed does what it does? Why unemployment is rising? How best to invest in your future? The list goes on and on. Why would anyone be proud of that? That’s like saying I think pride in not knowing what the canidates support before voting for them.

Does no one understand what is at stake? This is not about the people that made mistakes, that were greedy, that were stupid. Those actions have been done. That argument should have occurred 2 years ago. It wasn’t. That horse has left the barn. We are dealing with the ramifications of those actions.

The stimulus package, the fed cuts, the refi of the subprime is NOT to save them it is to save US. Did not last Tues make you see. We opened the market down 500pts. If not for the FED cut of .75bps we could very easily have been down 1200-1800pts (10-15%) by the end of the day. The FED and federal government saved us from a 1929 crash and the corresponding depression that would have resulted.

I don’t know about you all but I enjoy my 401k, my IRA, my job, my house. I do not relish having to stand in soup lines or live in hoovervilles because of some bad mistakes by some bankers and some subprime borrows. Why should the entire country/world have to suffer through a depression because of some greedy, uninformed people? Our government is there to protect us from not only external threats but internal threats also.

We are not out of the woods yet. But we are alot better off this week then we were last week because our government took the proper steps to stave off the worse financial crisis this country has faced since 1929. Do you really think the FEd chairman vists the House leader for no reason? Do you think that the DEms and REps come to agreement in record time for no reason? Without fighting? I am really tired of people that do not understand economics, the credit markets, how capital moves and how credit is given complaining about the “bailout”. I repeat this bailout is not for the rich bankers or the clueless subprime borrows (of course they will also be helped by these actions) This bailout is for the ENTIRE COUNTRY. Our GDP dropped from 4.9% in the third quarter to .6% in the 4th qrt, consumer confidence is at decade lows, unemployment is rising, credit is becoming harder to get, consumer spending is at year lows. In 1929 people thought thinks were great too. They didn’t call it the roaring 20’s for nothing.

For those who say let the free market handle it. We tried that in 1929 with Hoover. That didn’t work out very well. The market is nothing but the collective EMOTION of the country. Fear was controlling the markets last Tues. Should our entire life savings be wiped out because people were afraid? would you rather the FED and Federal government sat back and watched out entire stock market crash and credit markets freeze up? Watched as the fear spread around the globe and infected every country on the globe? While all the time saying “let them eat cake” The last time we did that we had the biggest move towards socialism in our country’s history (FDR,FDIC

What I got approved for was WAY out of means at the time (over 5 times my yearly income), and the real estate agent was trying to encourage me to buy a house for what I had been approved…and I kept on telling her “I really can not afford that!”

I guess being stubborn and ‘thickheaded’ can pay off at times. But is a naive person is pushed like that, they end up with something they can not afford.

Nice, MM! :-)

want to stimulate the economy put a freeze for 4-6 months on income tax with holding from pay checks .

Temporarily cutting the gasoline tax was another interesting idea for putting money into people’s pockets quickly.

The hope by government is to give people money they’ll spend. If they save it then the stimulus doesn’t work since 70% of our economy is consumer driven.

I had a rather large mortgage and real estate company in the Orlando area until I got out in late 2005. 97% of the loans we originated were subprime loans from First Franklin, Greenpoint, Indymac, Chase, MLN, Freemont, etc. All those lenders are out of business now except First Franklin which is barely holding on.

All those loans were fixed interest payments for the first 2 or three years. They then adjusted according to treasury bills, Libor, or prime rate depending on the program.

The problem arose when the Fed in its infinite wisdom increased interest rates so fast trying to slow down the economy to keep inflation from going up. The problem is when these loans got into the adjustment period the fed’s rate was so much higher than when the loan was originated. The Libor (London inter bank offered rate) and others all tracked closely to the Fed’s rate.

Since all the subprime loans were tied to the Feds rate directly or indirectly the payments adjusted way faster than anyone ever anticipated upward.

These loans were great products that enabled us to make the dream of home ownership a reality for thousands; especially those that had very little money to put down.

Now those lenders are all gone, all the people that worked for them are out of a job, and hundreds of thousands of buyers will be unable to buy houses for years to come. Not to mention the damage it has done to our economy.

The good news is with the Fed lowering the rate 1.25% the past week, it will help those people with adjustable rate loans now have payments that actually reduce. This will lower defaults and foreclosures and help the real estate industry and the economy.

That’s all I have to say about that.

Kudos to you.

Living within one’s means is possible, and it is possible to thrive while doing it. My husband and I bought our house with a 30 year mortgage and paid it off early. We did not buy what we could “afford” according to the realtors who had advised us in the past. This frees us up tremendously.
I’m grateful to my husband’s and my parents for instilling in us the money-sense that sees the salesmen’s lines for what they are- bait on a very dangerous hook.

How else will they learn about poor fiscal decisions?

It turns out that if you give people free money, they will take it without really worrying too much about giving it back. Because after all, it was free,” Jim Grant says.

What liberals do not understand – in a nutshell

Some people should just be “sucking it up”.

Whether people suck it up or not isn’t and shouldn’t be Bush’s primary concern. Hank Paulson and Ben Bernanke are primarily concerned with systemic issues that affect U.S. and global markets. There is always a concern about bailing out dumb investors and thereby creating a moral hazard, but the Bush administration has done a fairly good job of supplying liquidity to the markets while they work through some serious problems.

There are going to be millions of investors and homeowners who lose money because of the credit crisis. There will be no shortage of pain. Paulson, by coordinating the banks to minimize foreclosures, is avoiding the use of government money and also minimizing disruption in the economy. Greenspan and Rubin played a similar role in the 1998 LTCM derivative crisis.

Herbert Hoover believed in a rugged individualism. I do too. But he got destroyed in 1932 by FDR, who then went on a rampage of government expansion. Hillary or Obama could do the same. I give Bush & Paulson credit for trying to be on top of this. If they do nothing the Democrats pound the issue into November victories.

Stop the madness.

Eventually, probably sooner rather than later, the
government will go broke, and fail. When a new system
is born, perhaps personal responsibility will re-emerge.

Eventually man will relearn what works, and what doesn’t.

Say my neighborhood sold a significant number of houses to illegals like Tanc was talking about on Cavuto. When these houses are foreclosed on, the property value of the whole area is affected. So the policy affects more than the buyer/lender. I don’t just want to say, hey that’s the way it is. I would like a hard look at both sides of the equation and the government that encouraged it.

I don’t really see how this issue is that much different then our health care facilities going bankrupt by abuse consequent of illegal behavior either.

What the problem is now is that we live in an instant generation where they have to have everything now! The want what we worked for, for years, and don’t want to have to put any work into it. Instant gratification without a worry about the consequences. Of course the mortgage companies aren’t blameless either, getting people into houses they knew they couldn’t afford.

Boy, you hit the nail on the head!