Someone tell me in short what is this financial crisis ?

what is going on i don't really understand it all someone tell me in short whats actually happening? Someone tell me in short what is this financial crisis ?That's right, the squeeze on credit. Banks don't lend money to other banks, businesses or individuals. If they do it is at a high interest rate. Businesses can't buy supplies or pay their employees. They lay off some employees who in turn can't buy goods. This puts more pressure on businesses who have less customers. And the ripples get wider and bigger. Someone tell me in short what is this financial crisis ?No bank trusts another bank, so they won't lend to each other. Banks are just like us, when they need money they either have it or they have to borrow it!



The bottom line is it will affect almost everyone, even if you have no mortgage or any shares. The companies you buy goods from will have assets exposed to the 'financial crisis' so they will be cautious who they are trading with as well. Someone tell me in short what is this financial crisis ?Go back in time for a minute:

1. Banks have a set percent of their assets that they can invest in risky loans. This is set by the fed. All is fine.

2. real estate prices go up.

3. Congress passes a bill to loosen the percentage rates on risky loans, to give "more people a slice of the American dream."

4. Loosens it again.

5. Loosens it again.

6. Loosens it again. Lobbyists push for many in Congress to "look the other way" in reform. Besides...real estate prices are rising rapidly. The whole thing will wash itself out.

7. Real estate markets collapse.

8. Many debtors whose loan value is more than the property they bought simply walk away.

9. Over the years Fannie %26amp; Freddie (knowing full well what they were buying) bought many of the bad loans. Congress tells everyone that Freddie %26amp; Fannie are in good health. Company's invest their pensions in Freddie %26amp; Fannie.

Now you see the reason for the bailout? Pensions affected, short-term money, and most of Wall Street's employee pensions.