Although that served to boost the real value of the dollar (it takes less of them to buy a house these days empowering millions of young people to buy a house years before they'd planned to do so), it damaged the value of existing family "nest eggs".
Given the way debt is packaged and purchased, this single event served to destabilize the entire financial system of the country.
The theory here is that if a new surety for that 20% drop in wealth that backs up the debt can be created (the $700,000,000,000 pledge of credit), the rest of the system should stabilize and all will be good.
It's probably a phoney-baloney theory of course.
Another way to handle it would be for Congress to use its power to prohibit usury to set a 4% limit on all mortgages and an 8% limit on credit cards and other consumer credit.
You will see such action on a cold day in Hell of course. Congress fears interest caps.
Ok - thanks for the further info.
My question, then, is if a “bailout” is not instituted - rather quickly - I keep hearing “economists” say = the financial meltdown will happen - and fast = and I see this as a repeat of forcing an unneeded depression which will in effect throw every sitting Repub out of Congress because like it or not people will blame President Bush if this happens and all Repubs with him - even though we KNOW that is not what is going on.
He is not responsible for this meltdown.
So, I am asking, what is the solution? Let the bailout fail and the economy fail along with it?
It’s pretty f***ing mornic that we’ve set up or allowed to be set up, a system where a 20% drop in home prices collapses the whole works. Why the heck is our economy rigged to require ever-increasing home prices?