As I understand it, a bunch of banks loaned money to people that had no hope of paying back the loans. The banks then sold the loans, some how turning them into securities. (I'm pretty sure you have to be at least a 15th Level Thief/Magic User to cast this spell.) They then sold these securities to other banks, which then used them as assets to borrow more money. In doing so they managed to contaminate the entire banking/finance sector that, now the people who bought the houses are going back to live on friend's couches and under bridges, the entire damn financial system is threatened with collapsing to such an extent that even businesses that had nothing to do with this mess could go belly up because there will be no money anywhere.
The solution is that the Feds are going to offer to buy the securities, meaning that all the banks won't go under so there will be money in the ATMs. The Feds then will own all of these mortgages, most of which will turn out to be total losses.
Is my understanding any where near reality?
Is this a good idea, or a bad idea?
Deutschland Uber Nobody?
54 minutes ago