Got a clog? Call a professional, please.
I am not a financial guru. I am not in investment banking, money lending, or, really, anything that has to do with your money. I personally don’t have any.
However, when I see a headline, on CNN, which is not noted for being an Op-Ed platform, that says: “What Would You Do with $700 Billion?” it really annoys me. YOU (I am sorry) do not know what to do with $700 billion. I do not want you to decide what to do with $700 in taxpayer money, much less $700 billion. And I don’t want ME to decide, either. I want people who actually know how the “financial sector” (which *ahem* is sort of EVERYTHING) works to make those decisions. Like, say, the Secretary of Treasury. Or the Federal Reserve Chairman. ‘Cause, see, it’s those guys jobs to make these decisions, and they have spent a lifetime studying economics to do so.
The ideas floated in the CNN article are ludicrous. How about this one: “Instead of bailing out the companies (which doesn’t help the consumer), bail out the consumers that have lost their jobs, taken pay cuts or are being threatened with foreclosure”? Sounds awesome, right? How about we all get a little slice of the pie?
Unfortunately, the average American household carries about $8,000 in credit card debt alone.
$700 billion, split 111 million ways (the number of households in America) is still only $6,306. So, the be short: we’re short. And that’s just credit card debt.
The problem here, or, at least, one problem, the pressing problem, is that there is no liquidity in the market. Banks have money. They just can’t lend it to you, because they’re all clogged up. That part is complicated.
However, the houses people couldn’t afford to buy and then stopped paying for are still worth money. They are real houses. Please take a moment to think about that. Behind the mortgage-backed securities, which no one can sell and are clogging up the joint, there are mortgages. Behind the mortgages, there are real houses.
Personally, I have no problem with the Feds buying these mortgage-back securities. These mortgages—houses. (This is a simplification, but you get my point.)
I do have a problem with people who have no idea what they are talking about floating ridiculous ideas about how *they* would “fix” the economy, and distracting people from the fact that we are facing a Very Real Crisis, which can hopefully be averted by an, admittedly dramatic, move by the Feds, if they move quickly enough.
The rest is fine print, as far as I’m concerned.
Tags: cnn, debt, mortgagebackedsecurities