Travel2 mins ago
Mo' money
2 Answers
All this stuff with all the financial problems in the world, what's it all about? I hear there's problems every day, but I missed the day when they said how it all started. And what's going to happen?
Can anyone sum it up nice and simple for me?
Thanks
Can anyone sum it up nice and simple for me?
Thanks
Answers
Best Answer
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For more on marking an answer as the "Best Answer", please visit our FAQ.Started when US banks realised they had lent lots of mortgage money to US citizens to buy houses they couldn't pay for. Borrowers defaulted (stopping paying), banks evicted them to sell the property but couldn't get the outstanding loan back as prices starting falling.
Banks in general then started getting nervous about lending to each other, in case the borrowing bank defaulted. Some have and collapsed.
Various Governments step in and provide cash to banks in their own country so they have some to allow borrowers (esp mortgage borrowers) to starting buying stuff again. In exchange for their charity, they are taking a 'share' of ownership of the banks. Pundits are angry and argue the banks are being nationalised.
Governments should get their money back again when banks start making profits again - when they can pay dividends to shareholders - who now include Government.
If not, Government loses it's money and will have to find the lost money from either putting up taxes or reducing public spending somewhere else.
Banks in general then started getting nervous about lending to each other, in case the borrowing bank defaulted. Some have and collapsed.
Various Governments step in and provide cash to banks in their own country so they have some to allow borrowers (esp mortgage borrowers) to starting buying stuff again. In exchange for their charity, they are taking a 'share' of ownership of the banks. Pundits are angry and argue the banks are being nationalised.
Governments should get their money back again when banks start making profits again - when they can pay dividends to shareholders - who now include Government.
If not, Government loses it's money and will have to find the lost money from either putting up taxes or reducing public spending somewhere else.