I am so confused on what’s going on. Where does this 700 billion go? Does this money sit in some sort account and given out to the appropiate comapnies? Who is chage of giving out this money? Why not just let these people be able to re-finance their homes or adjust the payments to what it used to be so we can keep the 700 billion? What does this have to do with people’s savings, 401k’s ect?
Obviously I am not a finance major but there has to be a better “common sense” solution rather than throwing 700 billion at the problem? Also, people had better start going to jail over this debacle. Namely people like BARNEY FRANK FOR ONE!
I am so confused on what’s going on. Where does this 700 billion go?
The best analogy is a line of credit. The government is borrowing money to set up a LOC to buy at a very low price then re-sell the securities and derivatives that are not jammed up in the banks, brokers and hedgefunds. The banks, brokers and hedgefunds have them on the books as assets they can lend against but no body knows for sure what they are worth so the lending gets slowed down - dramatically. What the government is proposing is to use the $700B LOC to buy these when nobody else can or will and therefor get them cheap and sell them back in a more orderly market.
Learn about 401Ks. It is tax law not an investment vehicle. You actually cannot invest in or put money in a 401K. That is a nonsensical statement. A 401k is a legal construct that allows some of you money to go into investments that are not taxed until later.
I am so confused on what’s going on. Where does this 700 billion go?
The best analogy is a line of credit. The government is borrowing money to set up a LOC to buy at a very low price then re-sell the securities and derivatives that are not jammed up in the banks, brokers and hedgefunds. The banks, brokers and hedgefunds have them on the books as assets they can lend against but no body knows for sure what they are worth so the lending gets slowed down - dramatically. What the government is proposing is to use the $700B LOC to buy these when nobody else can or will and therefor get them cheap and sell them back in a more orderly market.
Learn about 401Ks. It is tax law not an investment vehicle. You actually cannot invest in a 401K. That is a nonsensical statement. A 401k is a legal construct that allows some of you money to go into investments that are not taxed until later.
“Why not just let these people be able to re-finance their homes or adjust the payments to what it used to be so we can keep the 700 billion?”
Many, many of these people would never qualify for a mortgage,UNDER ANY REASONABLE ASSESSMENT OF RISK, let alone for a re-fi. But reasonable assessments were tossed out the window by lenders who repackaged the loans & sold them. Fannie & Freddie “bought” billions of these mortgages. So F & F got “stuck” with a gazillion bad loans. Everyone who invested in F&F lost money. Which includes some global payers. And most likely, includes the companies/firms that manage & invest your 401K.
The 700 billion is a guesstimate as to what would have to be poured back into the market to “correct” the losses
suffered b/c of BAD INVESTMENT STRATEGY. So the question is: should the American taxpayer foot the bill for these players?
Don’t forget: by default, your a player, too. Even though you might not have known it.