The US House of Representatives has voted in favour of a $700bn bail out plan aimed at rescuing the US financial system. Ok. That’s good news … right? … Please tell me its good news… It has to be good news… We can’t have all bad news all the time!
Now if you are wondering how you can qualify to get your cut of this $700bn JUST FORGET IT!!!
The money is for Banks (whom I know you all love Of course!)
These banks are in are in deep trouble. These banks are peopled by highly intelligent people. Since these people are so intelligent they are in a mess!
At some point in the past these banks invested heavily in the US mortgage market (They seriously did … I am not making this up!)
Later the big event happened!
The housing bubble went PHUT!
What this means is that the more optimistic bankers can hope to recover a few cents. The rest can contemplate suicide.
Most banks do not know how much they will recover on these bad loans.
In walks Santa Clause (read: US House of Representatives). He is going to buy the bad debts off the books of the banks. So the Bad banks … er… I mean bad debts will become reformed … and there will be more credit in the market (with which banks will immediately go and invest in the US mortgage market!)
US Treasury Secretary Hank Paulson wants to use the money to buy up many of the dubious mortgage investments. He is VERY clear as to why he wants to do this… its just that he has not been able to explain to anyone else his reasons for doing so !
In return, US taxpayers will gain a non-voting stake in the banks they rescue. So if the banks recover, taxpayers may make a profit. Taxpayers always get a fair deal!
The Government will try to buy the mortgage securities in such a way as to be able to protect those people who are facing foreclosure. So you can come out from under your bed or wherever you are hiding in fear of the foreclosure people. Uncle Sam will make good!
All very simple … the only thing i can not understand is how do these banks do it? If i go bankrupt i will be on the roads… but when these banks almost go bankrupt the Government gives it $700bn.
Some people have all the luck in the world!