Mark to Market to Buy a Fat Pig -- What Do You Want To Know?

[flwyd]

I've been absorbing a lot of news and blogs about the current financial crisis and about financial systems over the past few weeks. I feel like blogging what I've learned to help my adoring readers understand the situation. Yet I know that I tend to think about undertaking such explanations and then getting overwhelmed by the amount I want to say and not writing anything.

So I won't attempt to explain the entire financial crisis here. Instead, I'd love to answer questions about it. By focusing on one point at a time, like "What is a mortgage-backed security" or "Why are U.S. taxpayers 'bailing out' big banks by buying 'toxic' assets" I can share some of what I've learned in a context that will hopefully keep me succinct.

Are there terms you've heard in the news that you don't know? (Basic tip: "Security" in financial news doesn't mean what it means in "Homeland Security.") Are you confused about what's happening in "global credit markets" and how it impacts your daily life? Anything is fair game, but be warned that I'm not an economist or a financial adviser. I'm pretty good at picking up the core concepts of a domain, but there's a lot of background I don't have. So I'll try to be clear about what I know, what I suspect, and what I opine.

So, what do you want to know?

Comments

[dr-tectonic.livejournal.com]

If I were informed about the situation at more than a casual level, are there actions I could take that would have a substantial impact on my current or future well-being? (I have some retirement funds, they're all TIAA/CREF and not easily accessible to do anything with them, and I'm not really planning on trying to do anything with them for another three decades.)

My current assumption is that the answer is "no", and that this is a situation, much like 9/11, where more information has at best a marginal benefit, and could do significant (emotional) harm by making me all upset about something I really can't affect, and so, like the dangers posed by nearby supernovae, asteroid impacts, random spree killers, rampaging sewer alligators, and the like, it's really best to just ignore it for the most part.

[slyviolet.livejournal.com]

This is a kind of lame question, but...

For those of us with relatively insignificant (in comparison... obviously not insignificant to ME) bank holdings, no credit debt to speak of, no large loans outstanding and no stocks/bonds/other things of that nature, what will the practical personal fallout of the bailout be, if any?

[mackys.livejournal.com]

What is a reasonable estimate for the ACTUAL value of the mortgage-backed "junk" securities that $810 billion of my tax dollars bought?