The basic thing to keep in mind is that huge pools of bonds were created, backed by mortgages on inflated real estate, with the expectation that the housing market would rise forever. There’s more, but many of those financial assets, bonds, are wiped out in value.
When real estate recovers, things will settle out. Not before. The problem now is that this thing has the possiblity of spreading.
McCain really needs to get someone who is up to speed on what Wall Street does (or used to do). We need sensible regulation.
Before someone flames me again for using the R word, I believe the free market needs to operate, but the government needs to set the rules of the financial game. Right now, its the wild, wild west.
Speed limits on the highways are regulations — I wouldn’t want to drive without rules of the road.....
Great post.
One caveat about regulation: Wall st bankers want regulation in return for bailout promises by the Feds ie the taxpayers. The dems are willing to go there...that would be catastrophic.