What does the term "bailout" mean to you?

I'm asking because I think the language of the financial intervention bill is worded wrong and feeding a misconception of what was suppose to do. A lot of people I spoke to think the gov't is just giving failing financials 700b dollars with this bill. They didn't understand that the gov't was going to buy the sub-prime loans for a fraction of the cost to provide liquidity to the strapped companies. It has also been said that the gov't has made money on previous deals like this. I have seen conflicting data on that and it depends on what is used as present value. This is a very simplistic explanation but I was wondering if this was the wide spread feeling.

Re: What does the term "bailout" mean to you?

Bailout in economics and finance is a term used to describe a situation where a bankrupt or nearly bankrupt entity, such as a corporation or a bank, is given a fresh injection of liquidity, in order to meet its short term obligations. Often bailouts are by governments, or by consortia of investors who demand control over the entity as the price for injecting funds.

Often a bailout is in response to a short term cash flow crunch, where an entity with illiquid, but sufficient, assets is given funds to "tide it over" until short term problems are resolved. However, often bailouts are merely delaying the inevitable, as a government or investment structure attempts to avoid putting a large quantity of illiquid assets on the market, which would force other similar entities to write down their assets.[



*wiki not me but I understand and agree with the definition*

It would have taken me a half hour without coffee to come up with this.

Message edited 9/30/2008 8:27:13 AM.

Re: What does the term "bailout" mean to you?

Posted by Emily

Bailout in economics and finance is a term used to describe a situation where a bankrupt or nearly bankrupt entity, such as a corporation or a bank, is given a fresh injection of liquidity, in order to meet its short term obligations. Often bailouts are by governments, or by consortia of investors who demand control over the entity as the price for injecting funds.

Often a bailout is in response to a short term cash flow crunch, where an entity with illiquid, but sufficient, assets is given funds to "tide it over" until short term problems are resolved. However, often bailouts are merely delaying the inevitable, as a government or investment structure attempts to avoid putting a large quantity of illiquid assets on the market, which would force other similar entities to write down their assets.[



*wiki not me but I understand and agree with the definition*

It would have taken me a half hour without coffee to come up with this.

Re: What does the term "bailout" mean to you?

Re: What does the term "bailout" mean to you?

Re: What does the term "bailout" mean to you?

I understand what it means, but I just don't like it. I don't have a better idea of a solution, but then again, it's not my job to have a better one. Oh well. I really have no say in the matter, so rather than worrying about it, I'm just following it and letting it go. What can I do really?

Re: What does the term "bailout" mean to you?

Re: What does the term "bailout" mean to you?

Now that I had coffee, I believe in this circumstance that "bailout" is the first step towards socialism. The taxpayers aka American citizens will be forced to own a piece of everything from the banks to peoples homes. By bailing out subprime mortgages we will collectively own a piece of everyone of those homes. By bailing out the banks we will theoretically each own a piece of the banks, too.

OT but where in the world does the US gov't plan on getting 7 Billion from and why that number?