News Federal Bailout and the Stock Market

I'm hoping it was on the people's behalf that they didn't do it, otherwise I have no clue.

Here's the deal, this bailout is not a "fix" for the economy. It's needed right now to put out the fire, then there will need to be more reform in the banking industry after we get this fire put out. This bailout package is the water to put out the fire, you need to understand that. It's not going to rebuild the house, it's just going to put out the fire before the whole house burns down. Get it?

Oneproblem is that credit is frozen right now. There is no money for businesses to borrow, which is how a lot of companies operate. They borrow money to keep the business going while they await their invoices to get paid back to them. So if businesses aren't able to borrow money, they might not be able to operate and they might not be able to make payroll. The longer credit is frozen, the longer businesses have to come up with money on their own to pay their bills. If banks can't provide credit, they can't collect interest. If they can't collect interest, they can't operate and they will start failing. If something doesn't happen to get the credit market going again, businesses are going to start closing down all across the country. Unemployment will go up and that's not good. People without jobs can't pay for their houses and can't be the consumers that the economy needs them to be.

So the economy needs this money because the banks need to start lending money again. Our economy runs on being able to borrow money, that's just how it works. So once we get banks lending again (which the bailout is needed for), we can go back and start to reform some of the things that caused this problem in the first place (too aggressive lending).

Another problem with this is that many people are basing their own opinions on what other "experts" are saying. For every expert out there that is against the bill, there is an equal number FOR the bill.

My whole issue with the public being pissed off about this bill is the fact that the public, in general, is very dumb and probably doesn't realize how necessary it is for banks and financial institutions to be healthy in order for our capitalistic society to work.

If these companies go down, we all go down.

If the companies go down, and the people get bailed out - that won't matter, because we'll all be out of jobs and the money that we save by not passing the plan won't mean jack shit.

Im glad that the bill didnt pass the 1st time.....it was too quick. It needs to be done right, and I bet that it will pass in the future.

By saying that you are against the Bill, you are essentially saying that you have no problem with all of these financial institutions flat out FAILING, GOING UNDER, etc. By saying that you are against the bill overall, you arent keeping a level head about the issue. A better stance would be "Im against the CURRENT BILL, but can compromise". One of the main requirements of this bil, among other things, l should be that the mortgage companies will be helped, and not the securities/derivatives.
The public is going to get hit either way....it all comes down to deciding/speculating which route will hurt the least.

But you dont seem to realize what will happen to your future if the the fed govt DOESNT get involved.

If the bailout happened, yes the Fed would be buying these mortgage backed securities from companies (not just banks) and hold the mortgage backed securities on the Fed balance sheet. This would give the companies more money (liquidity) and shift a lot of the risk from companies to the Fed. The idea is to get creditors to start lending money again and pump liquidity back into the market.

The Fed would by these securities from companies in auctions. They would pool up securities which are backed by similar assets and auction them. I don't really know much more details about the auctions than that. This would be the best way to determine the "fairest" value for the securities companies keep having to write down.

Potentially the securities the Fed buys up could gain value later in time. The Fed could sell these off and actually make money.

You agree with who? And if you have stocks in the market, you should be used to your stocks dropping. You wrote that at 3pm, which is after Wall Street was reporting the 3rd largest surge in HISTORY. If youre so against the bailout plan....then dont surprised when your stocks are worthless if the Bill isnt passed.


And this is no longer (and shouldnt have been deemed as such in the first place) a "BAILOUT"....its a RESCUE PLAN. Americans hear the term BAILOUT and automatically assume the worst. Its actually a Rescue plan for the economy, and yes, in the long run it WILL help.