>>>>>From budget surplus to this.
>>>>>
>>>>>http://news.yahoo.com/s/ap/20080920/ap_on_bi_ge/financial_meltdown;_ylt=AruohAemBFQQDzN8TfuIC2as0NUE
>>>>
>>>>What I don't understand is how did this sort of reverse socialism get sold to the masses. I mean, the people who couldn't pay will still lose their houses (which won't be homes, as they'll be empty and some of them just torn down). The banks who still own these houses - i.e. there are substantial assets to back this - are now somehow in dire need of money, and need to be bailed out at everyone's expense? Well, not everyone's, most of the large corporations manage to evade lots of taxes.
>>>>
>>>>So those who were irresponsible with their money (the owners of mortgage homes) lose everything, but those who were irresponsible with money of others (banks, loan sellers et al) get to be bailed out at the expense of others. Hmmm.
>>>
>>>Also, don't forget that many of the individuals who took out the homeloans had equity in their homes (based on value) to protect their investment. If they couldn't pay, they could sell and payoff the loan. Now, with the housing debacle and the values seriously lowered, the home cannot sell for enough to pay off their loan. They have negative equity and so do the banks. They no longer have the assets to backup the loan on either end. Still, I find it interesting that the govt is willing to carry the loans for the mortgage company to ensure that loans continue to happen (money continues to move) rather than carry the loan for the homeowner.
>>
>>To be honest, government is willing to buy bad loans from mortgage companies at discount. One may only speculate the size of the discount, but by historical norms it could easily exceed 50%. Would you suggest government to buy directly people homes at 50% discount? Whatever price drop already happened, these homes still could be sold on open market at better price.
>>Please, do not make a mistake; I don't like this bailout, but one should keep realistic perspective. By rescuing mortgagees government tries to restart housing market, i.e. restore home equity to better levels and help homeowners this way.
>
>It seems to me it isn't really about bailing anyone out, it's about trying to bring stability to the market. Right now the market is chaotic because nobody knows what some of this stuff is worth. Stocks are always a gamble but I doubt we have ever seen this degree of uncertainty.

It is about bringing stability to financial markets, specifically collaterized debt securities, i.e. it is about market, but not exactly about stock market.