Now, tell me again why my tax money should go to bail out big banks and big business?
The way I've seen it explained is.
Because the real problem isnt the markets. Its that credit has dried up. Banks have stopped lending money to each other.
Which means companies that take out short term loans that they use to pay for inventory,supplies and payroll.
For example a contracting company gets a job. untill it gets paid for that job which can typically take anywhere from 30-90 days after the job is complete. But, it still needs money for supplies and to pay its employees.
So what it does is take out a short term loan to meet these needs until it receives payment. At which point the short term loan is paid. And the process starts all over again.
If the credit market dries up. Companies can no longer secure these loans. Which means they cant buy supplies. Or pay their employees.
As a result. Companies start lay offs
Which means the employees cant pay their mortgages and other debt. Which means more homes go into foreclosure debts go into default which furthers the problem. not to mention that people can no longer afford to buy anything. less money is pushed around in the economy. Which drives the markets down even further.
And round and round the merry-go-round we go.
Which is why so many who say that even though they are fundamentally against a bailout. They have to do something
