When you say “Lets just bail out another big loser” in reference to Bear Stearns, you miss the mark by miles.

Bear Stearns was not “bailed out”. Bear Stearns ceased to exist. The Fed provided a loan to JP Morgan at 2.5% interest, to take over Bear Stearns.

Had they not backed the loan for JP Morgan to buy Bear Stearns, the collapse of Bear Stearns into bankruptcy could have triggered a chain reaction involving other banks which would have added to the deepening crisis of liquidity and cash, and would have affected each and every citizen detrimentally.

This was NOT a bail out.

You’re right of course. Allowing the system to collapse as punishment for its excesses ends up hurting everybody, so once again, we must rescue it.

As a rare example of the “old” American dream to work to pay La Hacienda off by age 50 on the way to a well-planned retirement, its hard not to resent our repetitive need to bail out fools in order to protect our own hard-won assets. It reminds me of the fable of the grasshopper and the ants. In the end, the thrifty ants end up feeding the foolish grasshopper who didn’t have enough sense to plan for the future. Of course, in the real world, the ants would wait for the grasshopper to die, and then carry its carcass down to the storehouses, but that’s another fable….

Soros is exactly right, had steps been taken to renegoiate the mortgages instead of eviction there would still be a cash flow and stability.

The government/taxpayer picks up the tab regardless of the method applied to stabilize the economy.

If the market forces are allowed to prevail, which is the foundation of American propaganda, then everyone in the states will be homeless and out of a job.

If the government interferes in market forces, an almost commie idea, then there may be a way to help the situation.

Any way you look at it this is a major major problem that could drag down the whole country for many many years.

50 years ago, this problem would be resolved by America firing up her industry.
Today there is nothing to fire up, the whole country couldn’t make popcorn unless they borrow a pot from somebody.

Add GWB to the equation and I need a stiff drink, cause thinking about the problem is hurting my head.

I’d rather see home prices collapse so an honest hardworking person (with good credit) just starting their career can actually afford to own a home. OR should they already have taken out a 800K mtg they cant afford and get bailed out. Guess they missed that boat.

Mr. Soros is right again, in the years that I’ve followed him there is never a year that he doesn’t win big in the most complex area of finance, hedge fund management and enable large change that reduces suffering and increases opportunity. He has been misunderstood due to false portrayals and he is human and opinionated, but he is a great man.

As an aside, the Bear Stearns deal was a guarantee of large amounts of risky debt transferred from private holders to the government, call it what you may, but someone got off the hook and it wasn’t us or BS shareholders.

Soros is correct. However I think that much of the ‘bailout’ should also involve the lenders taking a hit and reducing the balances. There seems to have been a lot of predatory lending and they should not be rewarded. Also, builders who speculated should take a hit – help them sell their inventories but – at best – at break-even

Mr Soros us right, His direction and thought is similar to the Economist Mr. Galbiathe. Unfetered capitalism is the rule of the jungle.

Mr. Soros’ bailout from the bottom up sounds wonderful. Let us “the taxpayer” protect the bottom up, and the top down.
The responsible individuals get beaten from both ends. This does not make sense. There are individuals, who cannot handle money. Why does the taxpayer pay for that hubris?
If Mr. Soros is so concerned, I suggest that he give his money to inviduals, who are in default to bail them out. Mr. Buffett should do the same rather than create jobs for the Gates family and relatives.

They should not give their money to the government. The funds will never get to those that need assistance.

Foreclosing on people was a huge mistake by lenders.

They should have kept these people in their houses by raising the interest rates slower and extending the loans. This would have resulted in a reduction of the writedowns banks made. They foreclosed on people and are stuck with properties that they are not making money off of. Making some money every month from a house is better than making no money on a house.

Fool me once, shame on you! Fool me twice, shame me!

Check point “Hammond” has merit; unfortunately, that’s what almost always happens after the corral gates were left open and the horses just disappeared!

If you can’t trust the “GATEKEEPER”, who can you trust?

“SECURITY”, traditionally, has always had embedded “CAVEATS”!

Since “Nixon, Ford, Carter, Reagan, Daddy Bush, Clinton, and, our Harvard cheer leader, GWB; foreign aid, free lunches in Italy, Japan, and who knows anything about all the other places where free lunches took place under the guise of “SELF HELP”, OOPS, I mean foreign aid!

Hilliary parlayed, I believe, a ten thousand dollar investment into a 100,000 in a very short period of time; 401k owners should be so lucky??

I remember when people ooo’d and awe’d when a candidate spent $100,000 or so for an office that only paid a tiny portion of the cost. Today, they spend a $100,000,000.00!! ooooops!

Don’t they get the picture? The office they win is as inflated as the currency that got them there!Politicians digressed from leaders to “Poor little lambs who have lost their way baaa baaa baaa!

The work-force today consists of men and women who are decendents of coal miners, steel workers, auto workers, assemblers, and last but not least–farmers. Let’s see how thrifty they are with rights their forefathers fought for and won for them!

The big picture we get is that our decendants just take their inheritence to “DISNEY WORLD” and have a “PARTY TIME”!!!

We literally have been having a party with our savings account; now that it is depleted, what shall we do?????

Bing-

I enjoy your column, but George Soros is a billionaire communist…he has reaped the rewards of the free-market system and is NOW prepared to give back because he is rich and has cash to burn. If he really wants to help out, maybe he should pay some more income tax.

I agree. In fact I think we should chain people into their houses so they can’t escape even if the house is getting sucked into a sinkhole.

What if someone decides that their million dollar McMansion won’t let them put clothes on their kids? TOUGH!

Keeping those people in that house no matter what kind of impact it has on their finances for the next 40 years is in the best interest of the community! In fact, It might just be best if we just socialize housing, because saving up a down payment is hard, and not everyone can do it. If this causes a shortage of housing we’ll just force builders to build houses for a set rate instead of the ripoff rates they are building for now to keep costs low.

Market forces are EVIL, just look what they did to the price of food! Those evil farmers aren’t growing rice, wheat, and corn for people to eat anymore because they can get more money out of selling corn for ethanol. It’s a lack of government regulation that’s caused this problem. The government should have regulated the farmers to tell them what to grow when they regulated the gas stations to force them to sell ethanol based fuel. Of course we may need to regulate the tractor manufacturers, seed , and fertilizer manufacturers so they will stop making so much evil profit from the farmers because the farmers won’t have as much money to spend on that stuff with the lower priced mandated crops, then we might need to regulate the supermarkets to keep their prices lower so they won’t gouge the poor farm suppliers that aren’t making as much money.

We just keep making the mistake of overlooking related areas where we can enhance productivity and wealth through subsidies and regulations. Some people just don’t make the kind of rational decisions with their money that they should, so to protect them we should just have the government make the decisions for everyone.

Foreclosing on people was a huge mistake by lenders.

They should have kept these people in their houses by raising the interest rates slower and extending the loans. This would have resulted in a reduction of the writedowns banks made. They foreclosed on people and are stuck with properties that they are not making money off of. Making some money every month from a house is better than making no money on a house.

Posted By Yadgyu, Harkeyville, TX

Absolutley correct: Half a loaf is better than no loaf.

Having said that: I am a believer in market forces ie:”you made your bed, you lie in it”.
Hard working thrifty people should not have to pick up the tab for stupid people.
The only problem with that, is the issue is so big, that we are all in the same boat and it is sinking.

I wonder how many bankers are sitting there wishing they had tenants sending in some portion of their payments.

This thing is just starting, another million houses come up for reset in 2009 and 30% of those are behind in their payments as we speak/write.

Currently there is a normal 5 year supply of houses on the market.

That means it could take more than 5 years to clean up what’s out there right now.

This thing is gonna last 10 to 20 years.
Cheer me up
Tell me you and I aren’t gonna be affected by it in some form or another.

I sure hope David of Amarillo’s post is tongue in cheek. Sadly, it sounds an awful lot like what gets spewed from the serious folks on the far left in our country – “The peasants are too stupid to take care of themselves, so we need the government to do it for them.”

I do find a rare point of agreement in Bob’s most recent rambling when he says that we’ve been having a party with our savings account. Now that it’s depleted, its time to pay the piper. Oh, but we can’t let that happen, so let’s print some more money to rescue our irresponsible foolish peasants at the expense of our wealth-builders whose savings we devalue by printing the money.

What a damned mess!

Iam with you all the way we can blow up cities all over the world and we find the money to build them new roads houses etc. let’s bring some of it here thanks ch

Trailing 12 stock reflects the GSEs as losers, but Fannie & Freddie are not to blame. Executives at both companies have relentlessly expressed concern & frustration (as WSJ article mentioned, “puppets of the government”) with regard to their role in the market. Memorial Weekend 2008 & gov. has yet to take one side of the road- housing crisis probability publicly stated long before talent at top of the companies have since pursued positions in which they can actually make executive decisions (The Street…) with risk/reward of an exec post.

Take a look at g&a (financial restatements likely called for a few consultants over the past couple years…) and consider multifamily as well. Last investor reports highlight $$ ROE in multifamily, while Wall Street has been priced out of the market. It’s a duopoly here between the gses. I wish it weren’t the case, but I don’t see this scenario ending soon. I am with the Gov. on this, (about to get run over in middle of the road) but could we get some legislation passed…figure out Fannie/Freddies position?? McMansions are/were disastrous, but as for these two, i think one would be hard pressed to find a comparable multifam portfolio…

huge single family defaults due to horrendous credit policy/lack thereof, but i don’t see a bailout here… i think its classic case of time in the market vs timing- as previously mentioned, tenants ARE sending in payments in their apts., or they get evicted.. while housing market rides it out, rental income is a point rarely tied to Fan ‘n Fred.

This is a great post specially for the people like me who are struggling for their repayments and management of debts in these hard times.
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Jacob
debt