Can you explain the purpose and effects of the $700 billion bail-out?
The purpose of the bail-out is to stabilize the economy, in which it will not do because the housing market is not stable and won’t be,unless they step in and put the regulations back on the banking industry,get jobs back in america to where the employment comes back up to where the people can afford to pay for what they have over spent and tried to out live their means.
Many banks in America own financial products whose value is tied to mortgages that encumber homes. The value of real estate in America has been falling substantially since a wave of foreclosures of sub-prime mortgages began in 2006. Beginning around 2000 real estate brokers and mortgage originators manipulated the sub-prime mortgage market by using inflated real estate appraisals and unqualified buyers to generate mortgages that were then sold to Wall Street institutions. Wall Street institutions then cut up these mortgages into asset backed securities that they sold to other institutional investors worldwide. They also held onto many of these high-yielding mortgages for their own portfolios. They had no problem getting rating agencies to rate their products as Triple A, which meant that there was the widest possible market for risk-free high yielding investments. The only catch was that these asset backed securities were very risky. Not only were many real estate buyers unqualified to
