Clamor and criticism continues to reach policymakers and Wall Street as Congress haggles over a possible $700 billion bailout.
Now chatter surrounding the bailout has reached beyond traditional media and landed on Main Street. New media-type forums, like the blogosphere, are housing strong reactions from people attempting to understand the bailout and its potential impact on taxpayer’s wallets. Everyone has a reaction.
Our own poll indicates that almost half, 45%, of concerned MainStreet readers do not think Congress should approve the current bailout, while 35% approve of it and some 20% need more information.
"I think congress should help out every home owner in foreclosure instead of all the fat cats in Washington," writes one reader. "Let the money trickle up instead of down." Another dissenter, has her own message for the U.S. Government, "the greedy idiots and Wall Street":
"No way, Nada, Get Lost, Forget it. Find a way to live on less like those of us who are the ones who keep this country going, and with a shrinking paycheck."
Of course, both sides are heard on MainStreet. "I fear most of us 'Main Streeters' don't comprehend the impact on each of us if this plan is not approved," writes one supporter of the plan. "I say Pass It Now! ROME IS BURNING while the idiot politicians fiddle and posture for reelection."
Meanwhile, in a weekly Triangle Business Journal (http://www.bizjournals.com/triangle/stories/2008/09/29/daily34.html)poll, only 5% of the 716 polled believed folks on Main Street would receive any benefits from the bailout. A reader commented:
This is absolutely a bailout of derivative paper that is worthless. The $700 billion would be better spent buying homes in foreclosures at 60% of value than writing new mortgages with the foreclosed owners and selling those. It would reduce their costs and provide a real product to sell instead of getting saddled with paper that only ever had value in the heads of some greedy people.Given 4% of homes in foreclosure, the $700 billion would probably buy all of them (that's well over an average of $75K/home when many outside of California are only $20K) and begin the much needed reset in home values.
A recent Associated Press Knowledge Poll indicated that 30% of the respondents backed the President George W. Bush-led economic plan, 45% opposed the plan, and 25% did not know if they backed the plan. In the Politico comments section, tax payers sounded off about the poll and the package:
The Government should use the People's Tax Dollars to bail out the American taxpayer’s debt and prevent any American from losing his/her home. If the security and financial health of all Americans are solved, they can be real consumers and unite on better footing to get the economy going again. Bailing out the Corrupt CEOs and the big investors and lenders won't solve America's economic problem. A nation can only be healthy and prosperous if it doesn't have poor, frustrated and angry despaired citizens who have been displaced by their government and the corrupt rich.
The most difficult part here is truly understanding what the $700 billion gets us. It is not a one way expenditure, like the Iraq War or the Bridge to Nowhere, where we get little in return. We are using the U.S. government's balance sheet to acquire assets from the investment banks. Acquire assets at an incredible discount, say anywhere from 20-60 cents on the dollar. If you think this is a bailout you are wrong, the banks are taking a huge hit here. Think about it, if someone offered you only 50 cents on the dollar for your house or your 401(k), you would scream bloody murder.
The U.S. Gov't will then look to sell these assets back in time to other investors or wait to get paid off on the underlying loan. Some of these will default but the likelihood that 80% of them will default is highly unlikely. Even under the most basic scenarios, the taxpayers are likely to make money here. The trouble is it is being billed as a "bailout for rich Wall Street execs." Taking an 80% hit on your asset value is not exactly living the high life for the Street. The negative sound bites are a much easier sell and without thinking of a decent way to get that across to the masses, it will continue to get mischaracterized. To that end, the proposed plan seems reasonable as long as it carries the necessary strings to ensure it is being prudently handled, monitored and enforced.
Here on MainStreet, we want to hear your opinion! What do you think of the bailout?