Deseret News | Reader comments: Credit: How will the crisis affect Utah consumers?

Reader comments
Credit: How will the crisis affect Utah consumers?

store owner | 7:00 a.m. Oct. 2, 2008

The big news is China!

If the government doesn't pass this bill and reign in these bad mortgage loans.
China is refusing to loan us anymore money so we can fight our wars, pay our social security, and give some congressmen hundreds of thousands of campaign dollars.
I quit buying lead toys, but
I guess I need to order another box of Chinese chocolates for Halloween.

Zell | 7:51 a.m. Oct. 2, 2008

The US and most people have maxed out their credit. It's a big joke that we are going to avoid a financial breakdown in the future. With millions of baby boomers set to retire and the government broke along with its citizens do we really think we're all going to retire and live off of each other? Thanks to extreme stupidity and GREED we're doomed!!

Bob G | 7:54 a.m. Oct. 2, 2008

To the dismay of the financial industry we consumers are not happy with credit and its pitfalls. We get raked over the coals with fees and service charges that are rediculous and we are supposed to smile and take the shaft? Then any business that has to borrow money to meet a payroll is not a very sound business and should not be in business. Borrowing money for capital improvement is one thing but not earning enoubh to meet their payroll and having to borrow it is poor business management. Any bank lending money to meet a busineses payroll deserves to go under. The world of finance is so full of stupidity its no wonder we are in trouble. Does the finance market really think consumers are going to keep supporting a broken financial industry? And how long does Wall Street think workers are going to keep sending them money to invest when it gets squanered and put at high risk? The cash cow of the workers funding a broken system can come to an end, people need to put food on their tables. Just becaus Wall Street loves the bailout does not mean consumers are in love with it.

Comments continue below

I disagree | 8:02 a.m. Oct. 2, 2008

..that we're not directly impacted by Wall Street. Of course it affects us. If you have a retirement fund that you've been wise to invest in (because most companies no longer provide you with a pension fund and you can't count upon Social Security to support you when you're old) you know you've been affected.

This article gives the impression that because we're Utah we're not affected by a national economic crisis. That's not true. We might not feel the effects as quickly as the national financial centers, but certainly we will.

Another reality you didn't explain--banks don't keep enough money on hand so that everyone in the bank could go and get their money back at any specific moment in time. That would be impossible. Borrowing and lending is part of the banking business. The ability to borrow and lend certainly can affect people in Utah. By the way a few weeks ago because of lack of faith in the system a local bank had to go down to a town in Southern Utah to help avert a run on the branch of that bank in that Southern Utah town. Don't think we're above these troubles!

Barney Frank | 8:02 a.m. Oct. 2, 2008

the biggest joke in Washington..3 years ago he was saying those people that had conerns about Freddy Mac and Fannie May we idiots..Now he has the guts to chastize senators for not voting on this bill.. It was under his watch and his total lack of managemet this situation was allowed to happen.. He is a worthless loud mouth, that had his hands all over this mess.

Kevin | 8:15 a.m. Oct. 2, 2008

This is a well-written article. I'm still taking a libertarian view, however.

Yes, people are going to suffer if the credit markets don't recover. But we must also ask ourselves what are the financial and political risks of the bailout.

By financial risk, I mean the risk the infusion of (borrowed) cash fails to achieve its desired effects. Even the economists that support the bailout agree the outcome is not certain.

By political risk, I mean the risk of giving the executive branch of the federal government even more power.

Why don't we all start living within our means?... for once.

Hefty Smurf | 8:33 a.m. Oct. 2, 2008

Hasn't anyone heard of saving up to buy something. Earn it before you buy it. Judging by this article that is a novel idea.

To Bob G | 8:55 a.m. Oct. 2, 2008

It is ignorant comments like yours that show you have never ran a business. Borrowing to meet payroll is necessary, even solid businesses that have long term contracts. My employees get paid every two weeks, however I get paid at intervals along the way when certain criteria is met. Short term borrowing ensures that my clients get paid as I wait for my customers to pay me. It is someone like you that has only been on the receiving side criticizing those making the jobs for you. Go out, take some risk and see how far you can get without running out of money. It's not banks lending to businesses that cause the problem, its was banks lending to anyone. Now to compensate, they have stopped lending, thus hurting everyone. Study economics before you post your asinine comments.

RE:Kevin & Hefty smurf | 9:08 a.m. Oct. 2, 2008

Amen brother!

Anonymous | 9:44 a.m. Oct. 2, 2008

I want to see heads rolling, particularly those politicians(Obama, Dodd, Barney, and others) in Fannie Mae and Freddie Mac. They should be in prison! I think giving money to the government is a lousy plan. I think we're better off going through a depression than what they have to offer us. I think the government, particularly the democrats, are determined to put us in bondage and the media is on their side! Senators Bennett and Hatch are now on my "remove from office list." If we aren't in bondage by then! I think the House Republicans and those who voted, "NO" are the ones in government looking out for the people! The bail-out is an ill-conceived plan!

Giving money to what I believe is a corrupt government and country is wrong! Look at the men who've been elected to run for President! Both in my opinion are thieves! McCain's already proven to be a thief (The Keating five[The Cheating five]). Obama plans to steal from hard working Americans who make over $250,000. That's socialism! It's proven, socialism doesn't work! Socialist Countries are destitute and poverty stricken! Obama received money from Freddie/Fannie - which caused big problems! Our government is doomed!

re:Bob G | 9:53 a.m. Oct. 2, 2008

Sometimes businesses will have a payroll loan to cover them while they are waiting for payment on contract work. Let's say you have a large job, under contract that takes your company of 50 employees 3 months to do the first phase. A phase of many phases. After inspections of the work, paperwork of the client to get the draw to the lender, lender to inspect work, lender to cut draws, etc. You could be floating payroll up to 6 months. Hundreds of thousands of dollars in payroll, not to mention business expenses that are being floated for half a year. An existing company, a new company, or a company that is growing can't afford to to do these types of jobs without a line of credit.
You received a loan for a home based on your credit and the value of the property. A business receives a payroll loan based on the same things, the value of the contract, tangible assets, track record of the company, etc.
These are solid companies that receive these lines of credit. I hope this enlightens you on this subject.

Anonymous | 10:13 a.m. Oct. 2, 2008

Hefty is correct. If banks dont have liquidity it is precisely because there is no money in the banks. There are no incentives to save so we max out credit we cant afford to pay back. This wont change by throwing monopoly money at the situation either. In fact I believe the problem will just be dragged out further. Prices need to come back down to earth.

Anonymous | 10:17 a.m. Oct. 2, 2008

If your home is being foreclosed because you cant afford it than maybe consider renting. Not everyone is meant to be a home owner. I really get irritated when its described that home consumers didnt understand how their adjustable rate mortgage worked. Last time I bought a house there was an attourney present. If you cant understand what your buying into than you shouldnt buy it.

Anonymous | 10:19 a.m. Oct. 2, 2008

This has been one of the best articles I've read on the subject.

Although it's debatable which the various bailout options are better, it's true that doing nothing is one of the worst options.

No single entity is to blame for this mess. Republicans, Democrats, and the public were all involved. Even if you live in a house that's within your means, how many of us vocalized opposition a decade ago to easier credit?. In the past, buying a house required a larger down payment, but then we the people pushed for legislation to make it easier to get into a home.

The housing market was going up for so many years, and for some reason we believed it would go up for ever.

Anyway, this mess has been coming for a long time, so now that it's here, we can sit in it, point fingers, or we can clean it up.

Re-elect: NoOne | 10:22 a.m. Oct. 2, 2008

I think that it would perhaps give us another 70 years of prosperity if we learned the lessons of the depression again. Too bad our generataion didn't take heed and ignored them. Avoiding debt, and living within your means are fundamental truths to prosperity, and don't change with public preferance.

There are some third party candidates out there that have real answers and this may be the best time ever to vote them in! Darrell Castle has come up the a detailed, comprehensive plan that will get us out of this crisis without imposing a 700 billion dollar debt on us while devaluing our dollar.

In the words of a poster several days ago
"Re-elect: NoOne!"

Asset Grab | 10:53 a.m. Oct. 2, 2008

Instead of "bailout" call it what it really is: an asset grab. While prices are low, the government buys up trillions worth of assets, holds onto them and then sells when the market goes back up. We, the people, are suppossed to benefit from this. What is the problem with this? Take Social Security. When it had big balances, what did Congress and the Senate do? They borrowed the money and now it is in financial trouble. If any of us had invested the money and just left it alone, we would be much better off than letting the Federal Government touch a penny of our hard earned money. So while the "bailout" sounds good in theory, I am sure the Congress will figure out a way to spend that money in some stupid way and it won't help us at all on Main Street or Wall Street. We are only delaying the crash.....

Jacob Christensen | 10:57 a.m. Oct. 2, 2008

What makes the author of this article believe that a $700 billion "bailout" by the federal government is going to make the common consumer more comfortable to deposit money into banks? A huge "bailout" for banks may well have just the opposite effect. If the government wants to restore consumer confidence, throwing an artificial lifeline to troubled banks is not the way to do it. On the other hand, perhaps raising the minimum for FDIC insured deposits, etc. would actually be beneficial in this regard.

Kerry Killinger | 11:23 a.m. Oct. 2, 2008

Correction: It was JPMorgan that bought WaMu, and Citi bought Wachovia.

Credit Crunch? | 11:59 a.m. Oct. 2, 2008

The only credit crunch is to people who should not be barrowing money ... have a couple thousand $$$ for a down payment & you can finance a car, 10% to 20% for a house & you can finance the house.

Live within your means, pay cash for everything, get a second job if necessary & stop trying to impress people you don't like!

Sen. Bennett, Sen. Hatch & Rep. Cannon voted for this "HOG" filled bailout.

A Great Big "THANK YOU" to Rep. Bishop & Rep. Mattheson for voting against the bailout!

Red Flag! | 12:04 p.m. Oct. 2, 2008

"People who have good credit are going to have a harder time borrowing, Schaefer said. Small businesses may struggle ï¿½ some say they already are ï¿½ to secure short-term loans to pay their employees."

Here is a "Red Flag With Flashing Neon Lights & A Blasting Air Horn" ... if you are borrowing money to pay your employees, you better tell your employees so they can find a job because your business model/finance really sucks!

John | 12:31 p.m. Oct. 2, 2008

Really, Buying up the most risky and most likely to default financial assets to clear up balance sheets for investment banks is a good value for taxpayers? Americans should vote "No Confidence" in the US Senate and Congress incumbents. They failed to regulate and set law to limit this greed and corruption on Wall Street. The SEC and FED allowed lax oversight and relgulation to create this mess, and now demand the taxpayers to fix it for decades to come. And the President says it is our best "chance" to avert crisis. Well "chance" sounds like risk and this is a $800 billion dollar chance on a high default risk investment for the American people. 6 months from now (after the elections) they will again ask for $1 trillion or more to avert catastrophe yet again. The governments answer to get this bad investment passed is to add some pork earmarks on the package and tax breaks to ensure We the people will never get it paid off. Who elected these lawyers and career politicians to office? Smoke and mirrors and business lobbyists greasing senator and legislature palms and stuffing campaign re-election chests is the problem with our corrupt representives.

John | 12:42 p.m. Oct. 2, 2008

Business model lost over time:
1) Have a substantial cash reserve to pay for fluctuations in income.
2)Balance Risk
3)Only borrow money for capital improvements that will generate long term positive growth and value.
4)Do not expand or grow the business to quickly where you outpace demand and net cash flow.
5)Have both long-term investments and liquid assets available to balance changes in the economy and seasonal fluctuations in demand.
6) Most important: Don't let greed influence or factor into your business decisions.

Bailout Bob | 1:04 p.m. Oct. 2, 2008

I'm organizing a group to kick out Bailout Bob. If you're fed up with him, please join with us. The minimum requested effort for participants is 2 evenings and an entire Saturday of your time in the 2010 election year when Bailout Bob goes to request his next term from the people. If you live out of state, you are still welcome to join us but there will be less you can do.

Please send your contact information to misc at datamoon net, (yes, net not com) with BENNETT in the subject line. I will send an acknowledgment, subsequently you will most likely not be contacted before 2010 when the group goes active.

Credit is still available... | 4:33 p.m. Oct. 2, 2008

To those who have the down payments, and have decent credit.

What's all the panic about?

veedub | 9:48 p.m. Oct. 2, 2008

"Credit is important, because it's what allows us to buy things..."

Herein is the way of thinking that has led us to this mess. At one time it was money that allowed us to buy things! This shows the hold debt has upon even the casual comments of so-called experts. And notice how no one calls it debt anymore. Credit sounds so much nicer.

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