Explain to me: Federal Bank Bailout

[asterroc]

Oh wise LJ-friends, explain to me this Feds bailing out / buying out the banks thing. Preferably in 3 sentences or less (so as to boil it down to what's most important).

I really do appreciate y'all's ability to boil down these topics I find remarkably complex and filled with too many details for me to grasp, into simple "here's what's important about the thing, and here's what you can ignore" sort of summaries. And I've a tag for them too.

So. Fannie May, Freddie Mac (what's with the names anyway?), and AIG. Three sentences. Go!

Comments

[caprising.livejournal.com]

Hmm the first major thing that I think is likely is that dollar could lose value, maybe a lot. If the government has to spend umpteen-billion dollars there are only really three places to get it:
(1)raise taxes
(2)print more currency
(3)sell stuff

(As far as I know the government hasn't *actually* paid any real money, they have only committed to spending money if other people fall through.)
Right now, people in other countries use/accept American dollars because they trust that it will retain its value. If the dollar gets devalued significantly it could lead to more foreigners buying U.S. companies, and more foreigners not using U.S. currency.
Ok I guess I am a little over my 4 sentence limit, hope that helps.
:)
MJ