2007-08-10 13:59:04 · 12 answers · asked by Chi Guy 5 in Politics & Government ➔ Politics
The subprime mortgage problem has gotten bad...I've heard it may take 18 to 24 months to get through this
2007-08-10 14:03:43 · answer #1 · answered by Anonymous · 3⤊ 0⤋
There was no 'hand-out' today. What happened was that the Fed undertook some rather dramatic open market opperations in which it bought back treasury bills from major financial institutions, who could then lend the money to other banks.
This kept the Fed funds rate below it's target (currently 5.25 percent).
Normally, the Fed announces it's target, and banks start lending to eachother at that rate, since they know they could also get it from the fed. When banks become reluctant to lend to eachother at the target rate, the rate climbs, and the Fed will do something to push it back down.
Since the Fed was buying securities, that put more cash in the banking system and thus increased reserves. Thus the 'injection of cash' language.
2007-08-10 21:15:08 · answer #2 · answered by B.Kevorkian 7 · 2⤊ 0⤋
People are so far in debt that any rise in interest rates will send quite a few into becoming bankrupt. when this happens the banks lose alot of revenue and the only way they can recover their losses is to increase interest rates thus increasing the problem. When the banks are bailed out it stops them pushing up rates and thus should slow the rate of defaults.
The fact is the economy is only booming because people are getting further into debt.
If people only spent what they could afford we would be in the worst recession ever!
2007-08-10 21:06:16 · answer #3 · answered by Anonymous · 4⤊ 1⤋
Isn't the Federal reserve a private company? I is an insurance company. No hand outs here.
Bushes booming economy? where did that come from.
And i think the Debt is mostly on paper anyway.Maybe we ought to call in debts owned to us since ww11.Then we can pay our debts.
2007-08-10 21:15:11 · answer #4 · answered by ♥ Mel 7 · 1⤊ 0⤋
Traditional Banks didn't.
I would however suggest that this is a shining example of Government mandates in Business. The Community Reinvestment Act (CRA) says that if Banks want to loan money in more affluent areas, they must also lend money in "Rebuilding" areas, whether or not they would actually "Qualify" for a loan.
So several years ago, you got one of your "Feel Good" bills passed the "CRA". And now it came back to bite them in the A**.
Ah, but what do I know. I was just in Banking over 20 years...
2007-08-10 21:16:26 · answer #5 · answered by Ken C 6 · 0⤊ 0⤋
The Bush economy has FAR outdistanced anything Bill Clinton did- AND the Clintonista's called Billy's economy "the Best". That makes Bush' economy the 'GREATEST Economy In The History Of Time!" 4 MORE Years!
2007-08-10 21:05:41 · answer #6 · answered by Anonymous · 4⤊ 2⤋
Very good question. At the same time if any hard working American tax payer needs an extra dime when they are down and out, like catastrophic illness, food stamps or a couple of bucks for heating oil..........OH NO ! The government can't afford that.And as for national health care? Oh my God, your going to break the bank !
No wonder the rest of the civilized world laughs at American workers.
2007-08-10 21:05:00 · answer #7 · answered by Mezmarelda 6 · 2⤊ 3⤋
You need to do a little more studying of both history and financial history and also finance in general.
2007-08-13 13:22:00 · answer #8 · answered by pcreamer2000 5 · 0⤊ 0⤋
It didn't start with Bush Chi, not the elder or junior. It really started when Jimmy Carter bailed out Chrysler. After that, all corporations felt they had a God-given right to ask for bailouts every time they got their @sses in a crack!
2007-08-10 21:04:56 · answer #9 · answered by texasjewboy12 6 · 3⤊ 3⤋
Developers overdeveloping.
Out of control housing prices in most places in the country.
Plus fed prime rate overadjustment in both directions.
I know you think its BS and ya know what.... I agree.
2007-08-10 21:07:27 · answer #10 · answered by sociald 7 · 0⤊ 2⤋