What happens after...?

Dont worry bud... the second wave of ARM's will be resetting around that time too... so you think its bad now LOL... enjoy.

It seems that you were not following how this tragedy started or what is needed to fix it and return to normal.

here is a refresher:

1- Home prices reached unreasonably astronomical levels

2- Buying houses slowed down

3- By end of 2007 the economy started to slow down AND at the same time the teaser-rates of subprime mortgages expired and much higher rates kicked in

4- laid-off people and developers who couldnt sell stopped paying their subprime mortgage payments.

5- by aug 2008, banks holding those mortgages started to run-out of cash and stopped giving credit to anyone or to each other and were about to go bankrupt. they declared that to Gov in Sept 08 and that is when we heard about the $700B bailout.

6- Other businesses started to suffer from the credit squeeze and started to lay people off which accelerated the slow down.

7- Banks got scared and didnt trust anyone including each other and stopped giving credit and took the bailout money and kept it so their balance sheets doesnt go into the red. 

8- By dec 2008 everyone, businesses and people started to cut on their spending and investing due to unavailable credit and economy slow down and whole-sale lay off started and is continuing

as you can see there are THREE problems:

A- Toxic mortgages

B- Banks who lost other people's money

C- Good businesses and good people who were playing by the rules are not aple to work, invest, buy or pay

That is what Obama inherited on Jan 20. 

ALL economists are saying that the economy lost $2T activity and to reactivate it you need to fix the Three problems A,B,and C above

Obama is saying the following:

i- Start by providing good businesses and good people with work and money to buy and pay (that is the stimulus)

ii- Provide banks with the rest of the $700B with conditions that they resume giving credit and stop using the money for other purposes and stop the practices that got them in this mess in the first place

iii- Buy the toxic mortgages from banks (at current market value not original value) to relieve those banks from their effect on their balance sheets.

item (i) supposed to reactivate the economic activity by providing cash since the banks are not able to at the moment since they and also private investors are scared. (this is to counter # 8 above)

items (ii) and (iii) are supposed to provide cash for the banks so they start lending again and to restore confidence for banks and private investors ( this is to counter #5, #6 and #7above)

all Three steps are required to solve the tripple mess we are in now.

Stimulus to get bus. and people to start acting normal

the other two steps are to restore banks to solvency and provide investors with the sense of trust needed to restore normal activity.

the three steps together are supposed to restore the market to normal condition within 1-2 years

that is how they think it will work ....

Also, Gov is supposed to get our money back or at least most of it from selling those toxic assets and the shares we got from the banks once things are back to normal

To best answer this, think of what would happen if there was no stimulus - things would be bad for a couple of years, and then start to recover. So if the timing is got right, when the stimulus runs out, things will have recovered and so the market will be able to pick up where the government has left off.

How do you get 20%?! Also large levels of borrowing wouldn't be needed if the finances hadn't been ruined by the outgoing republican administration. Still, at least it's better than the alternative of doing nothing, or worse actually cutting back on spending (as some people here have suggested).

This package will produce multiple new layers of new government agencies.  When this money runs out, half of these new agencies will need to be funded again, because someone will believe they will be needed for the continueing future health of "XXXXXX".  You can fill in the blank yourself.

"The bureaucracy is expanding to meet the needs of the expanding bureaucracy" Oscar Wilde

I see no time in the future when any of our national debt will ever be paid down.  Now with a even larger portion of our future budgets going to pay intrust on all this new spending, we will never be in the black again.

The sad fact is that one side says lets cut taxes and the other side says lets expand the bureaucracy.  Then both sides are getting what they want from this President.  I just wish someone would actually truely balance the budget, and not give lip service that they have a plan that will balance it two years into someone elses term.

ThinkAloud said:

It seems you think I haven't lived long enough to know what is going on, or has gone on, not just now, but over several decades worth of time.

Sorry, you lose in that regard.  I know just what I asked and why, and I stand by the question I asked -- what happens when the artificial spending is taken away.

Something you seem to have missed is that over the last 8 years we've spent a bunch of money on military exercises.  Exercises that President Obama is quite interested in ending.  Once those exercises end, he and his compatriots in the Democrat party are going to be looking at gutting military spending and taking the money spent there to spend it on other pet projects.  But what happens if those spending plans are blown out of the water thanks to filibusters or dissension in the ranks?  Again there's going to be a hole where spending used to be, and the problem is going to be every bit as bad as when Bernanke and Greenspan before him popped bubbles rather than getting the soft landings they had hoped for.

After listening to a few talk shows today I have heard of at least two items that will not go away:

1.  Those receiving unemployment will also receive Medicare under this Bill.  Do you really think that those trying to get universal health care will let that go?  Heck, the resent child healthcare bill signed into law covers children upto the age of 30.    At this rate, seniors at the age of 35 years old will get it by the time BO leaves office.

2.  The education Department budget funding is being doubled.  This will make local and State education authorities beholden to Fed standards and control in order to receive a chunk of the cash.  Exspecially after county and State officials strip matching amounts from the school district to fund other projects.  Just say bye-bye to your school board's authority.  Lets also throw a few more lobbyist into Washington politics, after all the States and Countys will need to lobby in order to keep the cash coming.

Please do not get me wrong, I am all for funding education.  (I am a certified teacher)  But do you really think there will be no strings attached to Fed funding?

Those are only two items.  I am sure that is only the tip of this massive iceburg.

I am glad to lose this one ... your question did not convey your real point.

Not at all. I am well aware of that.

well, what happens if the sky falls down? or if we blow each other and the planet in the process?

One ugly way out is this: The NECESSARY war in Afghanistan may pick-up the slack ....

Another way out (assuming Afghanistan's spending is over) is to elect more democarts if you like small military and more spending OR elect more republicans if you like large military and no tax cuts Or keep it as is if you like small military and more tax cuts .....

This is all because no one teaches people how to handle money anymore. This stimulus is small in comparison to the one he will ask for in 4 years.....could it be in the trillions?????

Ah yes,...the clinton years when our military was gutted and we became the paper tiger for 8 years. Osama commits acts of terror and what do we do...we lob a couple of cruise missles at him. That should do it. Gimme a break! MORE DEMOCRATS!!! You have to be *@&#@&^# joking. There is already too many in Washington! If there ever was a time for an independent to slam the nation and become president it was this time around. More democrats (Guffaws)

I'm not sure how the Afghanistan war will ever manage to achieve some sort of success as long as Al-Qaeda and the Taliban are hiding in and striking from Pakistan's tribal regions. Maybe Obama will come through with his plan to attack Pakistan?

I have seen the results of the war in Iraq and it is definitely looking good and people there are optimistic. But from what I have heard Afghanistan is a lot more dangerous than Iraq and I wouldn't go there.

Leauk I wish your voice was louder. Though i not a big person on war ( ewwwww one of my evil Lib sides showing... good thing theres is not alot of it in me! ) People need to understand that the people in Iraq have it sooooo much better than they used to. Does this make things right? Maybe not , but I can tell you that knowing that those people can live someone decent and not be a repreased as they used to and enjoy some of the freedoms me and you take for granted, it makes it easier to be happy about it.

My god ACORN hates you! your holding down the poor people. EVERYONE should own a house! I mean living on welfare and in a house while me and you of the middle class ( I assume you make more than what... 15K? I am not sure what the poverty lvl is anymore ..though I make around 25 ish so ) work our butts off to cover for these people to live better? HOW SELFISH OF YOU!!!

Yeppy then you can pretty much flush education down the toilet now. Thats the last thing the education in this country needs is a federally funded educational system

Umm guys... I am starting to see the socailism coming here.. It seems like the feds are starting to take more and more out of the private sectors... and making it their own... if the feds do this with education it is yet another step... in the wrong direction. Lets take something broken and let the feds mess it up even more and cost even MORE money... brilliant!

yeah they are talking about another one and the first "stimulus" has not even passed yet. Dont worry we are on the way to becoming "US of China EAST"

I make about three times as much. But I can't afford a house because banks won't give me a mortgage easily. I am neither poor nor a (oppressed) minority.

Hyper-inflation.

O heck that wont even happen when it runs out... that will happen shortly after the bail out money starts making its way into the system

The money runs out.

Regular people won't have any money. Regular things will not get bought. People will continue to lose their jobs. (Endless cycle) until a large portion (larger than now) run out of Money. Example = California preparing to fire 10,000 STATE employees. Kansas withholding tax returns. Why? Because they are failing.

Multiply these states by 25 and you have all of the states in America. Alaska and Texas will remain likely to fail last because they are very self sufficient. (Oil, Food, Other Natural Resources and Population Mentality of 'Hardiness')

The FEDERAL government will continue to borrow money in an attempt to keep 'stimulating' the economies. Unfortunatley, the boat of America is sinking - holes like Medicare, Social Security, Foreign Loans, Wars, Wasteful Budgets, Huge Government) will all cause the water to come on board. Expanding the Government, that governs the Government, that will eventually try to tax itself, will fail. We are the fat person that is stuck in a burning building, and too fat to get out the door. What happens? We burn to death.

The Federal and State goverments fail. What then?

People will inherently look for a large 'reset' button. The Constitution. Who of us has read the Constitution? No one but one in 1,000,000 (million) of us have. The Constitution states that the states will govern themselves and that the Goverment will have only two roles, Self Defense and Foreign Relations with free trade with all.

This is the reset button.

Self revolution. States will 're-stand' themselves. Public programs will fail (who bails out the bailer?) and fundamentally, people who do not know how to take care of themselves, work with their community, be 'worth something' to society, will fail.

This will bring about something unfortunate. America's dread of a Revolution. Like every major country before us - Russia, China, France, England, countries in Africa. We will go to our 'original' format - the Constitution - or we will go by our 'new government's format = unknown.

Unfortunatley, there will be those who want to make their own governments. Those who do not agree with the new government, or the old (why agree with what failed America in the first place?) all reasons will be valid.

Revolution.

Cival War #2? Perhaps. There are enough weapons in America to start this revolution. Or defend from one. You will be fighting for or against, or passively watching one happen.

Food shortages. Who has their own garden? Who 'actually' grows their own chickens? Who knows how to hunt, quarter and preserve a deer? Not I. Not my neighbor. Not 95% of you. Those that have this ability to feed those that do not have the ability will eventually rule over them. Do what I say, or you will not get any more food. You will do what they say.

Post revolution. Unsure. Does a foreign Government invade and take over? Or will the foreign Governments be in a similar dire situation? Look at the continent of Africa. A revolution every 3 years. Look at Zimbabwe right now - Cholera, Famine, 2% EMPLOYEMENT, 98% UNemployed. What do they do? They die, fight, leave, revolutionize.

America is originally - constitutionally - The United States IN America. Not 'of'. The States govern themselves. Hence, when the Federal Government fails, States - that still exists - will stand up to govern themselves. No one works for free. 90% of America lives pay check to pay check. And you can not tax the untaxable if they have no money to tax.

Your boat sinks. You burn in your house. Only the skinny and fit survive. Only the states with strong budgets and positive revolutions survive.

Rebuild.

All Governemnt projects are scrapped. The constitution is re-established. Read the constitution. Learn how to survive for yourself. My question to you, is where do the homeless governments go? How do you pay the govenor if he has no money, and no one to tax, and no one will listen to him?

Throw in one of several scenarios: Natural Disaster - Global warming causes sea levels to rise. Sickness/Disease - BirdFlu, Influenza, etc. Terrorist - cause havoc. Financial Disaster - potentially already happening.

Once again, you can not tax the untaxable. People will not work for free. Electricity will fail. What do you do then? No food in the Grocery store. No money to buy it. Theft goes up because people are hungry. Crime rises to sell things to buy things -  food, toilet paper, clothes, toothpaste.

The Federal Government will do all in its power to prevent this from happening. Why? Because if it does happen, there will be no Federal Government because there will be revolution. Watch the other states fail - California/Kansas - and then expect it on a larger level.

Furthermore. The Government taxes homes, people that work, and businesses that make money. We can loan money to people, (Stimulus) but what happens when the Government still needs to tax more in order to pay for itself?

Look around you. Foreclosures. Firings. Pre-failing poorly run local governments.

So the Federal keeps taxing those that are successful to make up for it's losses. Then give the money to the unsuccessful? When does it stop? When will people refuse to get taxed? What will happen? The Government will then force taxes to pay for itself.

Democrats traditionally want more Government and to help everyone. Republicans want smaller Governments and to tax everyone. Independents want the go back to the Constitution.

So something BIGGER than the stimulus must happen, in order to prevent what has happend to continue happening. Re-regulating the financial systems, dropping 80% of all Federal government programs, little things like this? Will only get us back to 'normal', not to 'successful'. What is that bigger? I don't know, and no one else does either.

My personal background is in Trauma management and we have a very realistic understanding in the ER.  Not everyone that you work on will survive. You may be able to save most of everyone, but every once in a while someone is already too far gone to save, and they die.

This 'Stimulus' is our ER medicine and America is the patient. At the end of the day, entirely too much has gone wrong for everything to go right.

So to answer the question, What happens after the stimulus runs out? Then we either sink or swim. You will either have a job, or not. You will either have food, or not. You will have a home, or not. And America, like in the ER - will either be alive, or not.

Liberals don't want anyone to hear that...shhhh.

Yep, that's our major problem and it keeps looking worse and worse.  Nationalized banks...I'm sure that's going to be great!  Didn't they have nationalized banks in Nazi Germany?  Don't get me wrong, I'm not implying that Pres. O is a nazi.  I actually think our Pres. has good intentions.  I just think he is horrifically wrong.

Wow, quite an explaination WhiskeySausage.  I grew up in farm country.  My family can run a nice little compound   For those with no back-to-basics skills, I highly reccommend the book Self-Sufficient Living.