Bad Economics

Let's see how screwed up the economy is and how simple it would be to solve it. Bear Sterns, once worth $171.00 a share now worth about $5, a reduction of ...oh you work it out.. Let me suggest something. Firstly, whose fault is it that BS messed up with their own BS about economics? They do not deserve to be bailed out. IF they loaned, somewhere down the line the amount of money to buy the average house in the US, $250K let's say. They loaned to no-hopers at an introductory rate of say 5%, to get them hooked. They would be getting a total interest repayment after 25 years of $145K...after two years they hike these losers up to 12%, then their profit on the loan of the 25 years is a whopping $540K. BUT these losers soon realised that they actually had nothing to lose so defaulted. This drops the value of the home ( most of these losers live together) so BS no longer get a cent and still have a hard to sell home on their books. NOW, let's say the loser - for we are talking about Bear Sterns, and not the smart guys who realised dumping their home they could buy it back for half the price in a year or so.

Bear Sterns decided to help the homeowner out and CUT their mortgage rate to half the introductory rate..$77K earned over 25 years, as opposed to $540 in the money grubbing days. This is a 1/7th projected earnings. But there is no housing crash and the homeowner can work toward increasing his mortgae over time as his personal economy picks up. That 1/7th could really end up being half over the period. Which means that BS would be worth half their peak - about $90 a share.

It is a sorry state for the economy when financier would rather go bust then give something back to the people they are bleeding dry. Because their investors would rather it be that way.

I don't mean to be derogatory when i refer to the people at the bottom of the economic ladder as losers. They are not. The irony is the bankers refer to them as that, because of the risk, and yet they lend and MUST suffer the consequences and not be bailed out by the government. An economic crash would be painful, but not for those that have nothing to lose.