WALL STREET BLUES

The economy today is in the worst state that it has ever been in. Businesses are losing money, like the Lehman brothers who lost so much money because of bad loans that it had to close. That day was a bad day for the U.S. stock market because it dropped 504 points and investors started to pull out their money. This got so out of hand that the U.S. Treasury Secretary Henry Paulson had to steo in and ask for a $700 billion bailout for banks and other struggling financial institutions.

What happened?
The trouble started out minor. When people started wanting to buy home that were too expensive for them. Banks gave these people subprime mortages at first the loan payments were low monthly payments. By as time went by the payments grew larger and larger until the homeowners could not make payments at all. Banks started taking homes. When they tried reselling the homes were worth less than the loans themselves! The banks lost a lot of money.

The dominoes fall
In early September two of the nations leading mortgage leaders almost failed because of all the bad loans they were carrying. The country couldn’t risk letting them fail so the government poured $200 billion into fixing them. Then it lent AIG $85 billion dollars to it from failing too. But all that money had no effect on bouncing back the economy.

The big bailout
The U.S. secretary asked for $700 billion dollars to by up bad loans and work with barrowers to get repaid. With bad loans out of the way the banks can lend money more freely.

What now?
The national dept is $10 trillion before bailout. Its higher now, and tax payers will have to pay it off.