Understanding What Happened To The Economy

Over the past year, the stock market has gone down about 30%, and is going lower as i write this. The pain is felt across the board, from John having to cut back on his soccer games, to Wachovia employees watching their IRA's drop 90 % being generous( probably closer to 95-99%), to Ed McMahon foreclosing on his Hollywood estate. We're told this vague and confusing bailout will help (save) the economy, but who really knows. Obama and McCain point fingers at each other, and the general sentiment is that those evil wall st. CEO's created this, and now congress must fix their mistakes. that seems nice until you actually look into it and start to see the truth. clearly the economy is the the number one issue, and we deserve to know what exactly happened, so here it is...

It all started back in 2003/2004, when home values were skyrocketing. How great was it when you could buy a home and watch it go up 10-15% a year endlessly?...it was really really great. so with this idea, congress decided to deregulate the mortgage industry by allow sub-prime mortgages to be given out like welfare checks. if you wanted a house and had a couple bucks and a job, BAM!! you got yourself a house. Great idea since the real estate market was skyrocketing. this bill was backed strongly by democrats Chris Dodd, and Barney Frank. the loans allowed consumers to pay a low low interest rate for the first 5 years..and then it would adjust to the current interest rate after 5 years, and go like this for 30 years. its called adjustable rate mortgage. Hey, whats 2003+5...2008. hey, that's when the people couldn't pay their loans, since know they had to pay way more money than before. back to 2003. anyway, with pressure from congress since they're essentially government owned, Fannie mae and Freddie Mac, as well as the very sneaky Indie Mac started throwing these mortgages out like crazy, but the Wall st. mortgage houses, WaMa, Wachovia, etc dint. why not?(think for a sec) It was becuase these people weren't going to be able to afford it 5 years down the road, and those loans were WAY to much risk. after watching Fannie Mae and such, they realized when Fannie Mae goes bankrupt in 2008, where gonna have a financial crisis and they'll get bailed out. therefore, if they partake in this risky business, best case, the people make their loans and worst case they get bailed out by the government since theyll be willing to bail these companies out becuase of the magnitude. i have to finish this later...more to come
-Bwa