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September 29, 2008
Villaraigosa Speaks Out on House Bailout Vote
The House rejected the bailout plan earlier today sending stocks down and worrying people across the nation. Mayor Antonio Villaraigosa, who is not happy with the idea of bailing out the "failed lenders and investors," is not satisfied with congress doing nothing. He tells Congress to get back to work in a statement released this afternoon. While it's obvious Congress still has a lot of work to do, Villaraigosa's statement emphasizes how all of this affects local services.
By now, you no doubt know that the House of Representatives failed to pass financial rescue legislation today as planned, and the markets have been hit hard as a result. As mayor of one of the cities hardest hit by our nation’s foreclosure crisis, I implore our Congress to put politics aside and get back to work for the American people. This is not the time for partisan bickering. Too much is at stake. Too many families and employers are at risk.Now, let me be clear: no one, and I mean no one, should be happy about
the federal government having to devote hundreds of billions of dollars
to bail out failed lenders and investors. This economic crisis was
inflicted upon the American people by corrupt power brokers and a
reckless lack of federal oversight.
But the consequences of doing nothing to fix it would be simply intolerable. The credit market could collapse. Small businesses would struggle or fail to meet payroll. Families would be shut out of the housing market, and would have no ability to get a car loan or student loan for college. On the City side, tax revenues would plummet and construction projects would be delayed or canceled. Bonds would become more expensive and pension contributions would go through the roof.This crisis is no longer about Wall Street or Washington politics.
It’s about families and small businesses in small towns and big cities
across the nation.It’s time for Congress to get back to work.
AP Photo/Damian Dovarganes
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Rock on Tony, Rock on!
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Sorry Mayor. None of this "consequences" you list effect me today.
1. "Small businesses would struggle or fail to meet payroll": Doesn't Entrepreneurship come with Risks? It would not be the first time, nor the last time a small business' in Los Angeles have to let employees go. (everyone needs to have at least 6 months of emergency funds)
2. "Families would be shut out of the housing market," Not sure which families the Mayor is talking about. If they can already afford a 400k+ 2 bedroom southern-california house, I think they will be able to rent for the next few years. I have been shut out of the market for 10+ years now. The failed bailout could lower the price of houses!
3. "and would have no ability to get a car loan or student loan for college". I recently had to sell my car. I could not afford it just because of gas and insurance. The Dept. of Education has not stopped granting loans, and if someone has to go to LACC instead of USC or UCLA, I think they might actually learn more about value and the real economy.
4. "On the City side, tax revenues would plummet and construction projects would be delayed or canceled. Bonds would become more expensive and pension contributions would go through the roof." Tax revenues are already going to plummet due to the economic downturn regardless of this failed bailout. Propping up insane housing values to gain tax revenue is delaying the inevitable and unethical (are you really trying to open the housing market to low-income families?). Not sure about bonds, does the city even issue bonds for sale? Sounds more like a State debt issue...
Every city is going to have to deal with this. Los Angeles is no different other than it has the privelege of having the biggest Entertainment driven economy possibly in the US.
The Mayor, instead of blaming Washington, needs to work with the Gov. to figure this out.
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Funny to hear Villaraigosa lambast anyone as being "corrupt".
Pot, meet kettle.
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Well said, scotyosh!
I, too, am not convinced. First, housing prices will continue to go down and that, to me, is a good thing. This will allow more middle-class Americans to buy houses. Heck, two of my friends just recently bought houses because the prices had finally gotten down to a point where they could afford them without going ridiculously into debt. Why is this a bad thing?
Heck, housing sales were up 9% last month and 14% the previous month.
If you keep housing prices inflated, you'll need loans from the government so that people can afford to buy houses. So first our tax dollars go to keeping housing prices high and then more of our tax dollars go to helping people buy houses that are artificially high. Does this sound ludicrous to anyone else?
As for the loan issue, I think, short-term, you will see the credit markets dry up as people put their money somewhere "safe." But, eventually, people are going to want to make more than, say, 1.5% interest. The money will come back.
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HI RedMercury.
Glad your friends were able to buy a house! Congrats.
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I agree that home prices needed to come down.
I also think America as a whole needs to go on a credit diet. I know so many people who max out their credit cards so they can buy something "right now". The credit card companies are more than happy to let them do just that so they can up the interest they charge, and collect interest on purchases up to three or four times what the items originally cost.
When the average family is carrying $12,000 in debt and is only able to make the interest payments on their credit card accounts it becomes totally unsustainable.
Burn your credit cards America. Live with in your means. Stop being enslaved by instant gratification and those who want to enslave you with it.
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Definitely burn those credit cards America! Stop purchasing useless consumer goods. Rah Rah Rah! ...And then our economy which has been historically vibrant (specifically because people purchase all those consumer goods) will slow down. But no worries, that only means 10% of you or so will be laid off when those small businesses (and large businesses) that aren't making any money anymore can't pay for you. But, you know unemployment doesn't look so bad. In that case though, I would suggest not burning those credit cards, you may need to buy stuff during that whole time you're looking for a new job. Grocery stores don't take IOUs.
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"Stop purchasing useless consumer goods. Rah Rah Rah! ...And then our economy which has been historically vibrant (specifically because people purchase all those consumer goods) will slow down."
Where did I say stop buying consumer goods? All I said was stop relying so much on credit to make those purchases. Instead of giving 25% or more more per year to spend your own money, bank your money 'til you can buy, pay cash, save that interest you would normally pay the credit card company, and suddenly your purchasing power for consumer goods goes up 25%.
That should be good for the economy, right?
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Well said JRB. That is a remedy for many people, but to get from here to there is a tough step, especially if you are already in credit card debt. Credit cards are not the culprits here, in fact they are providing the liquidity many people need to get from paycheck to paycheck. The real culprit is financial illiteracy, which i think you address. People don't know what to do with their money and how to spend wisely and also save for economic times like these, and their high school didn't teach them these important life skills about how credit cards work and how easily you can abuse them if you don't watch out.
Purchasing a more modest home instead of paying rent on less modest apartments is one step (Though difficult now because you can't get a home loan until they pass this "bailout"). Keep in mind, the rates on home loans are always much much less than the interest on a credit card.
Using credit on essentials (groceries, electric bill, etc) - paying your credit card off EVERY month, and not spending on those extras accessories is a near term quick solution.
I agree with you JRB, a healthier economy is one where the purchasing power is in the hands of consumers, not the credit card company -- personal choices are the only way this will happen. The wake up call is not just on the use of credit cards, it's basically a wake up call on how you spend your money and make every financial decision in your life.
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Keep an eye out for a rebroadcast of this particular Bill Moyer's Journal...
http://www.pbs.org/moyers/journal/08082008/transcript3.html
It tells how much credit card companies rip you off, and what's actually hidden in all that fine print no one ever bothers to read.
I quit using credit cards 30 years ago after getting publically embarassed by having a credit card company instruct the vendor cut the card up in front of me, god, and everybody.
I swore off credit cards and I've never looked back.
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Gotcha. So you're the one at the front of the line at Ralphs paying in all cash and slowing everyone else down...
Also, just to be clear - Credit card companies don't cut up cards because they think it's fun. They do it when you don't pay for the things you bought.
Of course, we'll just have to agree to disagree on this one. I'm glad paying all cash and writing checks has worked out for you over the years. Probably doesn't work for most people, and that doesn't even mention all those small business owners who rely on credit to get their businesses up and running.
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" So you're the one at the front of the line at Ralphs paying in all cash and slowing everyone else down..."
Not exactly. A debit card works just as well as a credit card, except I'm only spending money I have.
"They do it when you don't pay for the things you bought."
Oh I fully admit I was out of control. It's funny though. As soon as I was caught back up several companies sent me a new credit card and act like we should be best of buddies again. Now why would they do that to someone who clearly can't handle a credit card?
I cut them up and mailed them back.