I have an honest question about this (don't mean to be a wise-ass). How would this help people who've already moved out of their homes in the past 4 years and are now renting? The banks have taken a lot of those homes and re-sold them at a lower price to another buyer.
Short answer is it doesn't. In the long run having the Government involved in the credit crunch it may be better because interest rates will be more stable, and also the Government has the patience they may be able to offer some sort of program in the future for people who were forclosed on to try and own a home.
Primarily this is simply bailing out those who's incomes depend on stock options. Which is why you keep hearing the biggest catch-phrase regarding this whole situation "Good for Wall St. but don't forget MAIN St.". The General public isn't stupid, they can tell if something is fishy even if they don't know why. The General public seems to also realize that essentially there is nothing for them in this bail-out. What effects stocks? A company's equity, now if banks own mortgages for houses who's value is decreasing, their equity goes down. They will have more owed money than capital, especially with people forclosing on houses. They already paid the previous owner of the house the exorbident price, and now they just lost money. That goes up to the stock market because now their stocks lost their value due to capital going down. If the government comes in with it's nearly unlimited capital, the stocks will then stay the same and probably go up.
Now here's where it's ridiculous I feel. The government bail out, "bail-out" is the perfect title for it. It will raise the stocks in time for the traders who had the potential to lose a great deal to then go and sell their stocks and invest in something more stable. The only possible morsel that will trickle down to the middle-class on this bail out is that our 401K and retirement funds will be a bit more stable. But most people's funds aren't in danger anyway, 401K plans and retirement funds are usually in pretty stable companies to begin with.
People should be protesting this alot more than they are. You know it's going to be passed too, our congress is far too attached to their lobbyists right now. On the bright side I think the general public is intelligent enough to realize this and I can see Washington getting changed a bit in the next election. Unless congress doesn't listen at all, in which case I would say I can see government being changed quite a bit.
