[karasuma]

Originally Posted by Reckoner

It kind of bothers me that I am not really able to understand the second video. Unless someone is knowledgeable in both finances and economics, it is hard to know if certain plans are reliable or not. I can't understand very much from the solution video and neither can average American folks I would bet as well. As far as the average American knows, the banks gave out loans they shouldn't of to people who were not capable of paying them off. Now the financial institutions got bit in the ass and the whole public suffers for their greed.


Yeah, it is not diffcult to understand the very basics of the situation, but even then the problem is a lot more complicated and can be traced down to may different roots. However, the big problem is that a majority of people do not have the knowledge to know how to fix it. People are going to go into a 2008 election not knowing anything about our economy really and then are going to end up voting for the person they trust more on the economy (Which more often than not depends on how much a person bull shits the public about our situation with statements like "I'll get the money back into the taxpayers hands with this plan I just pulled out of my ass!"

It bothers me how naive and ignorant the masses in America are with our current situation. The government kept us so much in the dark, even spouting out how the banks were sound weeks before this crises, to the point that a lot of people did not see this coming (My family knew it was coming since a year and a half ago). Now the public is still in the dark regarding what is actually the best solution for this and how bad our situation really is.

Just one of the flaws with our half-assed democracy in this country, there is not equal access to information that is very important to us. Same reason we got in the Iraq war, the same reason this crap is happening under many people's noses.

Hrm... Let me try my best to explain this.

Short answer
you have $10 only and there are 10 friends like you. I, for some reason, am able to borrow $10 from you each and promise to give you interest.

After a while, I say I spent all the money and can't give you neither the interest or principle. Aka, I declare bankrupt.

Since you don't get your money back, you and your friends also go bankrupt. If you and your friends also borrow your $10 bucks to start with, your lender also go bankrupt. This is sorta how credit crunch work.

So, government comes in and say to me. You bad boy, I am going to take all your money ( which I don't have ) and honor my debt so that you and 10 others will get your money back and stop the chain reaction.

This is a mini explanation of bailout.

However, government's money comes from taxation. Taking on extra loan require money to come from somewhere. Hence, government will raise tax or increase their deficit. Your brother, meanwhile, didn't do a thing wrong and his tax suddenly is going up. Hence, he is not happy.

Me, you and 10 other friends are wallstreet.
Your brother is mainstreet.

Reality is more complicated but that is basically what happens right now. If you are with me so far, I can explain more..