I have been watching the news on Wall-Street, stocks plunging ect. Mostly it is because we have a loan through CountryWide, but can anyone explain to me what is going on in the stockmarket in laymens terms? Is the country heading towards a recession?
2007-08-16 06:11:59 · 5 answers · asked by Angela F 5 in News & Events ➔ Current Events
when interest rates were low, some joker thought it to be a good idea to give home loans to people with bad credit and lousy jobs, now that interest rates are rising these people stop repaying their loans, which means that the banks who carry these loans take a bath, and tighten their loan portfolio's, which in turn means that people have to pay even higher interest, which in turn means that more people with lousy credit start to default on their loans.
right now this is all kind of starting to snow ball, with even some banks getting into trouble, which makes the people on wall street very nervous, and they start dumping their stocks.
hope this is not to complicated for you.
2007-08-16 15:42:54 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The plunge is mostly attributed to an economic correction or adjustment. The activity that brought the Dow Jones Average to over 14,000 was inflated valuing. The market is backing down to the realistic values. The trigger is because of the many home loans that are in default due to variable rate loans that are now changing to higher interest rates and people just aren't able to pay the new monthly mortgage price.
jj
2007-08-16 13:22:41 · answer #2 · answered by The man 7 · 0⤊ 1⤋
Don't worry banks never ever lose money! They will either be refunded by the federal reserve or they will sell all of their high risk loans to someone more greedy than themselves! Eventually it all gets spread out over a greater number of people like the taxpayers and everything settles down again and it all starts all over once more! After this war, the Democrats will be able to run for more than two terms and still win. Imagine having Hillary for four terms of office!
2007-08-16 14:36:20 · answer #3 · answered by Anonymous · 0⤊ 0⤋
It's because of the subprime mortgage industry in the States. Subprime mortgages are where companies lend money to people to buy property who are a credit risk. The problem now is many can't repay their debt. Some banks in the States are in financial trouble. Which ones may be hard to tell. The markets are getting jittery. As usual, if the States have a problem they bring everybody with them. Like every crash, just ride out the storm.
2007-08-16 13:19:00 · answer #4 · answered by soñador 7 · 0⤊ 1⤋
Best time to buy is when IDIOTS are running for the exits. This has been true on any panic selloff and correction in history. Some take longer than others to recover, but you will be better off Invested and buying more, than if you were to sell or stay out of the markets. Learn the game and prosper.
2007-08-16 13:27:13 · answer #5 · answered by Dick Richards 3 · 2⤊ 1⤋