rustymood,
i dont have a degree in economics and dont know much things at the core , but i want to correct u on some things i already know
the crisis is definitely coz of the risk prone approach of the investment bankers but also due to
the plummeting price of the real estate, which led to increase in bad mortgages and loans and it shows up in thier
balance sheet. Due to this the other banks are also skeptical to lend money to them ,and if they do only short term lending with very
high interest rates. Since that option failed they reach out to govt for bankruptcy. Since US economy is the leading economy in the world,
a recession here would have rippling effect and would lead to crash of other economies in EU and Asia too. So its not only about Wall Street ,but
the world economy.
So the bailout package now would be kind of relief package , buying the bad mortgage from teh banks and clearing off from thier balance sheets , so that
other banks would lend them money. Most ppl who are the champions of the bail out package want that Govt should have some stake in the Bank, and after some time
when the real estate price may go up and the money recovered, it can go back to the tax payers. And they also want to restrict the perks that goes to CEOs of the
failed institutions, not more than that the highest paid govt. employee and are opposing the "golden parachute" option to them.
I dont know the fate of the package, but lets hope it works as planned so that there would be some relief to tax payers and penson holders who will be the ultimate
losers if the program fails.
Someone with academic knowledge can provide more meaningful insights may be !!!!
