For those of you who watch Fox News or Fox Business, you have seen me on both of those stations for the past few weeks talking about the bailout. For those of you who don’t watch those stations and haven’t seen me, let me catch you up.
1. This is a bailout. Period. This is NOT a rescue plan. If it looks like crap and smells like crap, I don’t have to taste it to know it’s crap. And this load of crap is a bailout. Don’t be fooled by the cutesy names that make it more palatable. It is not a rescue or a stimulus package. This is a bailout of Wall Street. We are bailing them out because of greed and stupidity.
2. I am against it. I know the ramifications and I know what they SAY will happen if we don’t. I don’t buy it. Lots of economists don’t buy it either. When you reward bad behavior you set a bad example and in this case, you set a precedent where any time an industry gets in trouble, they will consider it their right to go to the government (that’s you and me) to bail them out. I am also against it because any behavior, when rewarded will be repeated. I am also against it because any lesson, not learned will be repeated. This lesson is not being learned because the consequences are not being imposed. You take your licks now or you take them later. I would rather see us take them now. Add to that the fact that we don’t know if it will work or not. For $700 Billion we should know whether it is going to work or not. We don’t have a CLUE.
3. I am aware people are suffering. I hear from folks every day who are making their payments, working two jobs and doing their best and are still in trouble. They are not the idiots I talk about all the time. They are good folks, working hard and still not able to get ahead. These people will not be helped by this bailout. Don’t buy it, this is for Wall Street, not Main Street.
4. When the government says that something will cost a dollar, it will cost three. One for the program. One for government waste to implement the program. One for someone to make money off the program. Also, any government program takes twice as long to implement as promised and does half as much good as promised.
5. Fear. Bush came on TV and told people that their kids weren’t going to be able to go to college and that your company wouldn’t make payroll and that you wouldn’t be able to buy a new car. That is fear mongering and I don’t like it. On top of all that, when George Bush comes on television and says “trust me, we need to do this” I am skeptical. You should be too. He has lied to us before and that lie cost us thousands of lives and about ten billion dollars per month. Add to this fear the stupid economists who are saying that you will go to your ATM and won’t be able to get money out – total BS. FEAR FEAR FEAR. Trying to create a panic among all of us regular folks so we will support it. So far, the people aren’t buying it and are communicating that to their elected officials. GOOD. I hope WE win.
6. Credit is going to be hard to get. Is that a bad thing? Credit was too easy to get for way too long. That is a major part of this whole mess. AND, I don’t think people are worried so much about future credit as much as they are about having cash to pay the credit they already have. Who cares if your 401K takes a hit if you lose your house?
7. I find this whole thing offensive. SUDDENLY the government is aware we have a crisis. On July 18, Bush said the “fundamentals of our economy are sound.” On August 20, McCain said “the fundamentals of our economy are STRONG.” And NOW we are in crisis and the administration want us to immediately come to their rescue! I have been working for a couple of years with regular folks who have known for a good long while that the economy is NOT sound and that Americans are in a financial crisis. You knew the economy sucked. I knew it sucked. Why didn’t the government? In July, Bush said that he had HEARD of $4 a gallon gasoline but wasn’t aware of it. He wasn’t aware of it but you and I were paying it. That is another reason I wasn’t in any rush to support a blank check from a guy who said he had the solution to a problem only weeks before didn’t believe we had.
Don’t make long term decisions based on short term fears. In other words, don’t panic. Good decisions are rarely made when people are emotional or in panic mode.
Understand that investments carry a risk. If you didn’t know that, then you never should have been investing in the first place.
Investments are long term. Hang on. What goes up MUST go down. What goes down, eventually goes back up again.
Cut back on your lifestyle. If you can survive without it right now, then don’t spend money on it.
Stay away from debt. And if you are in debt, get out as quickly as you can.
Sell off the crap you don’t need. Pay off the crap you shouldn’t have bought.
Cash is KING. Accumulate as much as you can. Put it someplace where you can get your hands on it quickly.
If you have money, now is a good time to invest. Things are cheap right now and they will go back up. Some stocks are a good buy. Real estate is a good buy. But ONLY invest if you understand the risk involved and if you can afford it.
Folks, this is a tough time for our country. People are having a hard time making ends meet. It isn’t going to get any easier for a while – maybe a good long while. Be smart!
If the government gets $700 billion this time, how much will they ask for next time? There will be a next time, and a time after that. Why wouldn’t there be?
Our politicians want to drive fear into us by saying that companies cannot meet their payroll without a line of credit. Not true. But even if it is, they can learn cash management like the rest of us.
It is outrageous that good people have gone without while Wall Street has their greedy hands out.
Enough already! Let’s take our lumps now and pass on this so-called deal.
I am a mortgage underwriter and I am in 100% agreement on tightening up the credit requirement. For so long, applicants were lying about their income (stated income stated assets) to purchase homes that they clearly couldn’t afford. Programs from Neg ARM to Interest only. When the interest rate is adjusted, they were all screwed. I know alot of borrowers end up blaming the lenders for misleading them in the first place. I’m not denying that is true. Lots of salespeople lie no matter what field they are in. But people, read the documents line by line before signing them! Don’t be deceited by what you were told. Take responsiblity for being greedy and not knowing your finances well. There’s a price to pay for lying.
I truely hope by now everyone is fully aware George Bush is a idiot. He completely ruined our economy and our reputation around the world. If you are going to vote for McCain this year, you haven’t seen the end of this mess yet. It will continue to get worse. People it’s time for us to stop spending money overseas creating wars, making weapons, and keep borrowing money from China.
Just let the markets take care of themselves. Enough meddling! There will be a solution and a leader will come out of this to lead the way. It is a good thing the bailout failed.
This is my understanding of the real debacle our leaders are afraid to tell us. While the bankers loaned money to people who could ill afford to pay it back I have seen where this is only 400-500 Billion of the problem. The real problem is the ones who put together these packages then sold credit swap derivatives which allowed speculators to place bets against these going up or going down. These were leveraged sometime 90-1. If you bet long then you have lost your shirt as the price of the underlying asset now has a market value of $0. If you bet short, then you have the golden egg. The long side of this was taken by investment bankers, credit unions, pensions, etc. who bought into the illusion the price of real estate could NOT go down. The speculators took these fools to the cleaners.
Now somebody has to settle the bet. If one thinks this handout to the owners of this junk will be used to help the people in the actual house, let me sell you a nice lake front cabin in Maricopa county AZ.
This money will go to the speculators not the banks, pensions, or others who took the long side.
While this should be played out and the speculators allowed to take the assets and THEN do something with them, our so called Leaders have decided we the fools of the field will now have the privleage to keep the speculators from taking the shearing they deserve.
I am trying to be positive, but I am not keeping cash in ANY bank and fortunatly several years ago became debit free. However, I do feel my IRA and 401(k) are gone. The government will see these as free money as I dont need it right now.
I feel for the American taxpayers footing the bill for the “man with the golden parachute”. When it all comes out the rear of the fan, the Wall Street merchants will be laughing. Just my opinion north of your boarder.
Larry, you’re spot on. I think the whole world is being duped by some very clever people who know how to take advantage of any crisis, just look at how the stock markets are bouncing around. I just can’t figure out whether the politicians are stupid or very clever. I think this article puts the whole sorry situation into perspective:
Hey Larry great assessment here will share with family. Also great to see you in NY last week I came back to see if you wanted to have a drink and you were gone next time brother JG
PS please set those fair and balance folks at FOX straight about their slanted coverage of the campaigns later
Like a trembling and nervous 6th man on what used to be an all-star basketball team watching from the sidelines, a game that quite frankly we hope deep down we will never be called in to play, we know that eventually the whistle will blow, a tired or more likely fouled out player will be whisked off the court and on we will go. By “we” I am referring to us in Canada who’s economy of course is intimately tied to and deeply affected by what takes place in the U.S.
My eyes and ears are starved for the latest information from the ” playing court”. Are their any referees? Did the bail-out pass? Fail? Who’s belly-up now? Have they re-written history yet again South of our border? Man what a roller coaster ride.
I agree wholeheartedly with Larry on this one. $700 Billion is a small band-aid being placed on a severed arm to try to stop the bleeding. Essentially your government is telling the morbidly obiese fatter than fat cats on Wall Street “Hey, don’t worry, you orchistrated and implimented one of the worst economic disasters in history, but we fat cats will look after each other. We’ll be just fine cause the hundreds of millions of good tax paying citzens will pay for it. You continue to scratch my back/fill my pockets Mr. CEO and I’ll scratch yours. Let’s fly away somewhere in my personal jet and watch the puppets dance from afar…bbbbwwwuuuhha ha ha.” Unbelievable.
Case in point. Although not tied directly to the $700 billion bail out, how does the CEO of Washingtoin Mutual Bank, the largest single bank failure in U.S. history, walk away with $19 million after 16 days of work while $307 billion in assets are seized? Do you really believe that in just two days since voting on a three page bail-out plan they were able to craft a well thought-out thick as a phone-book over 400 page plan that covers all of the bases? How can each member even know for sure what they are voting on? Guaranteed the same CEO’s and upper Management (and I use that term lightly) of these crumbling companies will take their cut of the $700 Billion while the rest of America suffers.
I guess fact really is better than fiction in this case, you couldn’t dream this stuff up in Hollywood.
Watching from the sidelines, this Obama character sounds like the new “head coach” the U.S. needs. Regardless, change is a com’in. Say no to the band-aid, demand a new arm.
That’s my two cents.
I don’t think either Candidate knows what the hell they are talking about. We the people should get together and literally take all the congressman and representatives out of office. They don’t know what the hell they are doing and how it effect us they are only interested in getting their share.
Larry as you know I am a real estate auctioneer and I now spend a great deal of my day talking to people who are desperate to sell their homes but they owe far more than they will market for thanks to the BS financing that’s taken place over the years. I’m hurting like many Americans, not for lack of business as we have far more people who want to sell real estate than we can help but many of our investor type buyers are staying away from real estate because they feel we are nowhere near the bottom. A sale has to take place for me to earn commissions and I live 100% on commission income. About 4 years ago or so when I had lost my mind and operated a general residential real estate brokerage along with the auction business I knew we were headed to where we are today when the 100% financing which was actually 110% to 115% financing happened. I get really PO’d when I see article stating “how did this happen” hell it’s obvioius as can be how it happened, stupid financing. Wall Street should have to suffer through this like most Americans are, they did it let them live with it. If we could take all these foreclosures and put them on the block selling them to the highest bidder this real estate market would get back to normal much faster than with any other method. Sell them for what they bring and let Wall Street eat the losses.
I nearly always agree with you and this time I am totally in agreement with your thoughts on the bailout.
And…I’m really looking forward to cooler weather so I can wear my Larry Winget designed Rockmount shirt I bought at your seminar in Mesa. I was in Nashville studying with some songwriters last week but it was t-shirt weather for sure.
Keep on keepin on with the good work.
Jim Owen
And now what? The senate approved it and it’ll probably.. NO, it’ll most likely pass in the house… So what should we do now? What can we expect?
Your right on about the Bailout! Your even spot on even with your concern about Bush and the truth equation; It does not equate! However we would be a fool to lay the root of the problem at the feet of George Bush. He is an easy target; but he did no open the Credit markets to people who could not afford credit. This has been consistantly pushed by the left in the White House and the Congress. Barack Supports this Bailout 100% as stated this morning. George Bush is Wrong and Barack Obama is Wrong. I look forward to Barack becoming President so I can give some more of my hard earned wealth to fund more Government programs like the one that got us in this mess..
Bush ran for both elections saying everyone deserved to own a house. Not everyone does.
The bailout passed on Wednesday is not for 700 billion anymore, it is 850 billion. The other 150 is for stupid pork. 150 million for rum producers in Puerto Rico, another 180 million for race car tracks across America. What does this have to do with the credit crisis? They said if we didn’t pass the original plan immediately the economy would collapse. It has been over a week and no collapse yet. Just the market going up and down depending on whether the government says they are getting their money or not.
Maybe if the saintly Joe Sixpack and Mrs. Hockey Mom didn’t take on big mortgages they couldn’t afford to buy big houses they couldn’t afford because they just had to spew out those 6 kids they couldn’t afford, the rest of us wouldn’t be in this mess. Sorry, but I’m angry. Everything I’ve been slaving to sock away is gone, and I did NOTHING to deserve it. I’m not in debt, and I didn’t overextend myself to grab a bigger piece of pie than I could eat. Yet I’m paying for everyone else’s irresponsibility. Nice going on your “American Dream,” folks.
And as for the ignorant partisanship being displayed by some, it’s easy to rewrite history (like Sarah Palin did last night, insisting that “massive oversight” is what Republicans have been pushing for) when your followers are uninformed. Easy to say it was the Democrats who were in favor of deregulation and Maverick McCain and the Republicans fought them on it… when you are secure in the knowledge that the choir you’re preaching to haven’t paid a blind bit of attention until now. You can say anything you want when your audience doesn’t know any better, and they’ll eat it up and spread it around and it’ll become “true.” But for the record, it’s the Republicans who have always been in favor of deregulation and letting corporations do whatever they want with no oversight, and have always fought the Democrats, who kept warning that MASSIVE OVERSIGHT was needed. “We don’t want to live in a nanny state,” cried Republicans the land over, “let the market take care of itself and we’ll all prosper!”
Yeah, now you see what happens when you let everyone do whatever the bleep they feel like doing. Don’t try to backtrack and rewrite history like you always do, as easy as it is when you have blind, selfish, lemming-like followers who never check facts, and never care about anything until disaster strikes and it affects THEM. “Everything’s great! God Bless America! Just put on your flag lapel pin and wave that flag!” Takes more than that to run a country, you imbeciles. And if you honestly think that higher taxes will not be necessary to pay for all this, think again. It’s not that Democrats “like” taxes. It’s just that we’re realistic about money NOT coming out of thin air.
I’m angry. And as someone who didn’t contribute to this mess but is paying for it (while those who DID contribute to it–from banks to borrowers–are getting bailed out with MY money), I have that right.
Laurie, you could not be more right. Everyone should be angry. I just hope everyone gets angry enough to do something about it. That means voting. And please no one tell me that voting doesn’t matter – I am tired of that argument. I don’t want to hear it. I don’t want to hear how we don’t live in a Democracy. I listened to that drivel a few months ago on another of my blogs.
And while I have not openly said who I am voting for – I know that 8 years ago we had a surplus and a balanced budget. And I know who was in charge when we got in this mess.
Vote your conscience. Vote your bank account. But vote.
Again, Laurie – great response. Thanks to all of you who are speaking up on this.
Larry
Amen Larry.
Businesses, just like individuals, need to take responsibility for their own mistakes. The problem is that we now live in a society that rewards just showing up and no one is allowed to fail.
The bottom line is that the Democrats and Republicans are not the ones to blame. Sure they screwed it up but it was We the People who voted for them and didn’t hold them accountable.
This one is on all of us.
$2 Million dollars for wooden arrows for children??? Are you serious?? Treating mental illness in health care the same as a regular everyday medical illness? What? Believe it or not these are part of this new bill. It’s gone waaaayyy beyond Wall Street and any semblance of a bail out. Why was it passed with absolutely no ammendments? I’m no expert but certainly these two little tid-bits could have been axed. I would leave the Rum money in cause you’ll need it to cope!!
In my opinion I think the government should have let Wall Street take care of itself. Let the sharks buy up the weak companies. It will be a while before things get back to some level of normal and hopefully someone would learn some lessons. When my husband (he got 2 degrees in 5 years)and I finally got out of college and got jobs we did not have a credit card. We lived on what we made. He was a banker starting out at the bottom and I had a degree in accounting and believe me there was not much in a small town for a women 30 years ago with a degree. We also started farming and ranching and some years it worked and some years it did not. But we had our jobs to back it up. When I did get a credit card it was probably a JC Penney card and I was so careful to pay it off. Now I charge everything to my card to get points but I charge what we would normally buy in the daily course of business or personal charges and pay it off every month. We have since in the last 30 years been able to pay cash for our new house and cash for approx 500 acres of land. We have a small loan on our original land purchase only because it has such a low interest rate for farmers. This original place we bought had a house on it I would describe as a nice shack. We lived in it 13 years until we could pay for our new house. Thank goodness we have been able to contribute to our IRAs, Roth and bought stock in the bank my husband works in. Thank goodness the bank is a local bank owned by local shareholders and is very conservative and strong. Not all banks are bad. They do not all make loans such as the toxic loans we have been hearing about. They require down payments and reliable appraisals. I also thank goodness I did not have a credit card way back then and I knew very well how to cook and sew. We lived out in the country and we took our lunch to work everyday but Friday. We tried to live on my salary while using my husbands for the farm. Our retirement is in mutual funds and they have taken a hit but I feel they will recover and will just sit tight and wait it out. We have a good bit of cash in the bank in a CD and I am thanking the Lord we have been so blessed that we are in the shape we are in. I have gone through the buying phase and now all I want is to get rid of stuff. I prefer to go and just look and if I buy something it can be pretty but it has to be something I will use if not I don’t need it. Maybe this has come with age. I see so many big houses and all I think is Man! I am so glad I an not having to clean and maintain something that big. I bought a new vehicle but it had to be functional first and look good second. It is also the first vehicle we have bought that we didn’t pay cash for. When I bought it the dealer had a special going on of no interest if I paid it off in 3 years or get cash back. Larry, I read your books and wished I had done so 30 years ago but I have learned a great deal from my mistakes. I have given one book to my nephew and my daughter and her boyfriend are reading the other ones. They are so common sense and I am afraid so many people are so ignorant today about so much. No one knows how to sew or cook from scratch. I think if we all knew more about the basics of life we would be better off. I think the need to put home economics and life skills back in the school and cut back on the computer classes. Again I am truly blessed to have not have had a credit card when I was younger!! Keep up the good work Larry.