San Diego Housing Market News and Analysis

While watching the hearing this morning and listening to Paulson's terms, I couldn't help but think the Paulson will be back in the private sector next year...probably with an entity that will be buying all these "illiquid" assets from the government.

Since we, the taxpayers, get to pay the banks' wishing prices, the govt will probably "discover" after-the-fact that they really weren't worth that much after all, and will have to turn them around and sell them at "market price" which Bernanke is currently calling a "fire sale" price.

So...the banks get rid of their bad paper at their wishing price, the govt (that's us) overpays for them, then they will be resold back into the private market at their true market price (much less than what we paid for them). The private financial sector wins on both ends, and the taxpayers lose in the middle.

If this passes, it will be the single-most obvious display of where our representatives' loyalties lie...and it ain't with us, folks.

I think I'm going to rob a bank so they can claim the loss on insurance.

Won't that help the taxpayers too?

What else could we do to "help" the taxpayers?

Isn't the Carlyle Group the one that Bush Sr is involved in? Smells like something foul and underhanded

I wouldn't blame anyone for thinking this, but watching Paulson last night, I got the impression some Senators where asking the right questions, about how to establish the correct price in the so-called reverse auction.

Paulson doesn't inspire confidence, but that may be just a personal prejudice, and Bernanke seems to play his cards close to his chest. The question that we are all dying to hear the answer to is; what is the consequence of no bail-out? Presumably, the reason we are being denied this, is because of the "run" it will have on those institutions as they are named. What is just as troubling is the push to rush this through, when really something like this needs to be very thoroughly debated.

The tax payer does of course have one recourse, and that is don't pay your tax. Or maybe we should just dump all these toxic loans into Boston Harbor.

No expert here but it seems to me making more credit available is not going to solve the problem,

People need to make more money to pay their debts I would think is the solution.

But that’s just me….

I heard this analogy today, can anyone comment as to its correctness?

The financial companies which stand to benefit from the bailout, and the domestic automakers as well are all like people that have overindulged in payday loans. They are basically running back and forth between different payday loan companies, getting a new loan to pay off the old loan. Thats the only way they can stay in business.

If this is correct, then it sickens me that these are the organizations we are going to support. They need to be taken off of life support.

The problem is the people holding the existing mortgage paper that are going to lose big-time. This doesn't address that.

So, now that we have heard another couple of days of Congressional hearings with Bernanke and Paulson. What is everyone's opinion/read on what the new bailout will look like?

Are we going to bail out individuals mortgages through foreclosure forbearance, (through "bankruptcy cramdown" by judges), student and car loans, and all the other debt as I have been hearing about?

Are housing prices destined to be supported by our own tax dollars, disallowing those of us waiting to buy from affording a home?

The Carlye group is a huge equity company like Blackstone, etc.

They buy up companies, they outsource the jobs they can to India, consolidate subsidiaries, and sell off what's left, after about 3 years leaving the company footing the bill for the sale.

Theys guys are vultures circling carcasses.

While I don't know what the alternative is, this process doesn't set well with me.

Hedge funds are next on the bankruptometer!!
700 billion? No, more like 2 trillion before all is said and done.

They want the government involved because they want some degree of stabilization before they make a bid.

John

The question that we are all dying to hear the answer to is; what is the consequence of no bail-out?
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Absolutely spot-on!

Will interest rates rise? Yes.

Will housing and stock prices crash? Yes!

Will jobs be lost? Yes.

Will retirement funds experience extreme stress/insolvency? Yes.

Will we all be better for it well into the future (as opposed to what would happen if we continued to solve credit bubble problems with more credit bubbles)? Yes!

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All that being said, we do need to protect the money that really is there in FDIC-insured accounts and we should protect money market funds to some extent. As much as I hate to say it, we did need to protect the Fannie and Freddie bond holders because they are so entrenched in our financial system.

I also advocate a work program and deficit spending for R&D in energy, transportation and health care technologies.

Ultimately, we need a bailout, but Wall Street should not receive a single penny of our money.