Sunday, September 21, 2008
Billions and Billions
Billions and billions...
Carl Sagan said it about the cosmos.
McDonalds says it about burgers sold.
But our great-grandchildren will be paying it out of their pockets...
We are not financial experts... but we have been cogitating on this multi-billion-dollar bailout of Wall Street by the taxpayers.
This all seemed to start with adjustable rate mortgages. Many home buyers were suckered into going for a low-low rate that had the potential to change. Others re-mortgaged their home to “save money” on payments with these low rates.
My buddy got an ARM... and I asked, “Yeah, but what if the rates go up and not down?” He figured the worst scenario... it would just return to the pre-refinance rate.
We all know what happened next. The banks upped interest rates and people suddenly could not afford their homes. The resultant foreclosures created the debacle we are currently seeing.
So, we are wondering why the solution would be to bail out the banks. Wouldn’t it make more sense for the banks to drop the high interest rates so the foreclosures could be reversed, rather than be bailed out by the taxpayers?
But, of course, we are not financial experts...