Government moves again to unclog credit lines »
Posted By STONERS 1 year, 1 month ago in Business & FinancePresident Bush on Tuesday announced a $250 billion plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it."
Read Full Story at news.yahoo.com »
283 Views Share Story 5 Comments Report
Submitted By:
STONERS
Welcome to my profile...I've started a ""STONERS Daily News Group"" Please stop by and have a look and join if you like it ...
Who Also Submitted:
RSS Join the Discussion
+ Add CommentComments So Far: 6 (view all)
-
-
-
mackiemesserComment removed: Retracted by user
-
Neutral
nostalgia1 year, 1 month ago
This comment is below the standard viewing threshold View It »
Less than a month ago Paulson insisted over and over to the Senate and House that injecting capital into financial institutions was not the right approach.
Reply
Paulson told the Senate Banking Committee: “There were some that said we should just go and stick capital in the banks, put preferred stocks, stick capital in the banks. And that’s what you do when you have failures. You know, that’s what happened in Japan. That’s what happened in other spots. And we have dealt with some failures. And we’ve dealt with them where there’s capital. But we said, the right way to do this is not going around and using guarantees or injecting capital, and there’s been various proposals to do that, but to use market mechanisms.”
Two days later, he told the House Financial Services Committee: “There are a number of plans which say, ‘Let’s go to the root of the problem. Let’s just put capital in those institutions which we think are troubled.’ And that is one about dealing with failure, OK? And when you put capital in, that’s the Japanese solution. They were in a very long recession for many years, but what they did is they came in — you know, you put capital in the banks and then the government is essentially, in many ways, running them. So you’re sticking preferred stock in. What we are trying to do, we’re trying to take a different approach, which is, this is a different situation than anything you can find historically.”
http://blogs.wsj.com/economics/2008/10/14/the-evol...
Why did Paulson change his mind and infuse cash into the banks?
As I recall, Japan was in a recession for a decade after trying this
Paulson was right a month ago.
Now we are using the same approach Japan did but expect different results? -
-
Neutral
nostalgia1 year, 1 month ago
This comment is below the standard viewing threshold View It »
"The big question: Will it work?"
Reply
In a single word NO
Keep in mind that the problem now is the subprime loans for middle and lower income people. Even if the mortgages are "re-negotiated" many of these people still won't be able to afford the mortgage
Real estate prices have always been cyclic. They are trying to put a floor under home prices. Let's say they can accomplish that. Home prices will stay where they are now. Who is left that can afford to buy?? That's why the subprime mortgages were started to begin with - home prices were too high and most people couldn't afford them
The housing bubble needs to be deflated not propped up
Next year the first Jumbo loans are due for the interest rates to be reset. Are we going to bailout those people too?
Japan tried this same scheme of infusing money into banks and ended up in a recession that lasted for a decade
All this "stabilization" is going to do is create a recession that is deeper and longer lasting than what would have happened without government intervention
-
More News
Daily Finance
How the Grinch Stole Google News
The Great Pumpkin Crisis of 2009: Bad for Libby's, good for organic growers
Be thankful potatoes are mashed, not paper towels: They're eerily similar
Gift cards: How the new plastic economy is becoming a tool for hidden charity
Massucci's Take: Apple teams with AT&T in ad battle with Verizon
Add a Comment
Sign In With Your Propeller Account
Please keep your comments relevant to this story.
To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.