What happened? Why is there a financial collapse?
The bottom fell out of the US real estate market, thereby undermining the value of the massive home loan market, which in turn are assets behind the trillions of share derivatives that have infected the financial markets like a Trojan virus; and as they were being bought up, pushing up their values unrealistically....the real estate market underlying their value was dropping. Finally, no one wanted to buy these bad loan derivatives. Their real value has plummeted but the banks don't want to book the real losses. So they are stuck, no liquidity. This has caused the financial markets to collapse.
It makes no sense to throw our good money (credit) at the reeling 50-70 trillion dollar world financial markets.
It is stupid to try to prop up the financial markets, they are too big to prop. To throw money at them and then hope that this will trickle down and benefit all Americans, is hogwash.
Let's use our American Credit to support our American real estate values...
We should provide $700 billion specifically for refinancing the US real estate market... directly for loans and refinancing for home owners....Not to support big financial corporations, with little control of how they use it. No way. Let the derivative market collapse. It should. It is inflated far beyond its real value. It may involve up to 10 trillion dollars in US junk financial products.....floating thru a 70 trillion, fungible, US/World financial market. Let it all collapse. Let the free market correct itself.
But we MUST save the US real estate market...by providing credit guarantees and refinancing for home loans. This way we are providing a real net underneath our economy.
This is the only Bail Out that we Americans should consider. It is an investment in our future...not throwing money at losing financial institutions. Every other type of bail out concept....is just throwing away mind boggling sums of money that we, each American, must borrow...into markets that we can not control... into international markets that will suck up those funds in a second and will still collapse, providing no real long term help to America.
Secretary of Treasury Hank Paulson admitted that the entire financial market collapse is caused by the US residential real estate market collapse. So....let's use our credit as a Nation and put it to use focusing directly to the problem and do our best to help the US real estate residential market.....not the world financial markets...not the big financial institutions.... where funds are fungible and easily manipulated....where paper trails don't exist. Do not throw the money into these proven quagmires of deceit and greed.
Yes, we also have to allow the US real estate market to correct itself. Some loans are not worth protecting, where home values have already gone down well below the value of the loans. But... markets tend to "over correct". We can keep the real estate market from over correcting downward... by providing some upward push with new loans, and move the US real estate market into stability.
ANY MONEY THROWN INTO THE FINANCIAL MARKETS...IS GONE, BYE BYE, SAYONARA!
Keep this in mind: When we throw money into financial markets.....the markets are intertwined, domestic and foreign...there is no line. Our American money will be used to bail out foreign financial institutions. Money is fungible, real estate is not.
INVEST IN AMERICA
When we back up US real estate....we support our underlying (literally) US assets. When we buy up bad debt from US financial institutions....the money knows no national boundaries....flows into the International markets and we are propping up foreign banks and countries with our borrowed money... we are throwing our money away into a collapsing world financial market. I say: NO WAY.