San Diego Housing Bubble News and Analysis

They pulled it out of their collective ass. Truly.

This morning on CNBC, I watched a talking head pontificate on how if the Feds purchased toxic waste debt instruments "at market" it would have no net effect on the markets. They would have to pay "above market" to grease the machinery of finance. Yeah, at the same time they are pitching to the voters that the taxpayers "have a chance to make money" they are acknowledging that this whole bailout won't work unless the government pays TOO MUCH for these near worthless pieces of toxic sewage. What a scam. You wait. The taxpayers will NOT make any money off of this boondoggle. Au contraire.

Sidebar: What is so friggin' critical about getting the whole $700B at once? Why not authorize $100B (still a huge number) and plan to reauthorize 6 times if necessary? If it works, we will quickly see. If not, we'll be able to shift course.

Also of note: What's the last issue that YOU can think of that united conservative Repubs and liberal Dems in opposition? That alone should cause some thoughtful analysis.

You have everyone involved in finance insisting that something be done, and only rare voices of caution. Scary times indeed.

oooh i know i know. paulson is worth 700 million; he just multipled that by 1000 to get 700 billion. plus 7 is a lucky number.

What most people don't realize is that it's $700,000,000,000 per occurence.

This is from the Bill:

...the President transmits to the Congress a written report detailing the plan of the Secretary to exercise the authority under this paragraph, unless there is enacted, within 15 calendar days of such transmission, a joint resolution described in subsection (c), effective upon the expiration of such 15-day period, such authority shall be limited to $700,000,000,000 outstanding at any one time.

The real question, which is absurd to even have to ask, is how many times?

I'll tell you exactly how they came up with 700 billion. Here's a direct quote from the Treasury:

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”

The $700B is not used to buy homes, but to buy the bad securities that got sliced and diced. According to Warren Buffett, $700B might not be enough. He said: "If we don't get [this] solved next week, I may go back to delivering papers". Here's the whole article. Since he's an adviser to Obama, if/when he wins, I can see even bigger bailouts in store. How deep will this rabbit whole go?

I've tried to write my congressman, but the site crashed.... Makes you wonder. American's finally want to speak up about something important, but they don't want to hear it.

WTF....

Bernanke said 700B is 5% of the mortgage market in one of the hearings.

1 trillion would have sounded too large...so lower it a little...say $700 billion. When they come back in a few months, we will be able to handle the trillion dollar draw.

What happens if the bail out isn't approved? America is being hit with the perfect storm..

-We're no longer living on borrowed money (no more homes to cash out of)
- We have no industry here (no bottomline)
- Everyone lives on Credit Cards (so what happens when people lose their job and can't pay credit card companies).
- Are credit card companies the next to need a bail out?
- What about govt. Who bails them out? Look at the state of Ca, look at the city of San Diego, look at everything. It's all coming apart.
- what could turn the economy around, if anything? Is there anything? short term. and how ugly can it get?

LostCat,

None of what you have posted is true.

Not everyone lives off of home equity (I certainly don't).

American is the most productive nations on earth, with tremendous natural and human resources.

Not everyone lives on Credit Cards. I have great credit and when I need it, get a teaser 0% rate on a new card and then pay it off before the rate adjusts.

If we get out of Iraq and reverse Bush's tax cuts for the super-rich we would, easily, run a budget surplus.

Re: the economy. Nothing can turn around a sinking ship. What is going to happen is everyone is going to, one way or another, be forced to live within their means. I.e., things are going to reduce to where they should have been in the first place, before the credit bubble. For some this is ugly.

For me, it is beautiful. YMMV.