Bailout 13: Does the bailout have a chance of working?

[chocoboblue99]

Yup, the bailout was a bad idea. Now, after years of sitting around we finally are protesting the bailout.

[PRINCECOUNTYBEATS]

George Bush and his boys? its obama who got the bailout thru, THANKS DEMS!

[jdbohdan]

@PRINCECOUNTYBEATS You're wrong it was Bush,..Obama just continued the stupidity.

[steverock85]

@PRINCECOUNTYBEATS When was this video uploaded?

[tIs4gatorbait]

"irregardless".

[soozedog]

@tIs4gatorbait i think Salman Khan is the only person who can say that and i still respect them afterward :D.

[jaroslav44]

''...if you have a dead skunk in your house, you won't notice that the milk is going bad...'' genius :D

[degauze]

I really like your videos, but the tone of this one was a little off.

[darkdavegmail]

Whos going to bail you out when u go to jail for touching my daughter?

[parklinkin52]

Thank you Sal, you are just amazing...

[boeing747200lr]

Sal, you totally rocked in this presentation.!! Great work.

[arndawgmp]

give them hell Sal...

[causeimthesquid]

Quite premature to say anything worked nikanj.

[tothemax01]

@causeimthesquid Is now premature?

[tothemax01]

@nikanj Lol, if by worked you mean 'loads of the publics money disappeared into the ether and we are still in an economic swamp' then hell yes it worked.

[nikanj]

@tothemax01

You're right. I spoke too soon and was young and foolish :P

[tothemax01]

@nikanj Lol lets just hope it all goes away soon, and we get some people in charge who know what they are doing :)

[blygrace]

This is excellent!  Thanks.

[kotpet]

let those f----g banks default, what's the big deal?

[thegoonist]

@kotpet jobs, employment, confidence in the economy, political trust and stability? so many things could go wrong.

[sonyse2t5]

Great lectures

Fuck the FEDS...

[LeonVerhulst]

Excellent. Thanks!

[cds162]

So this vid was posted last october.. this is 06/30/2009......... no collapse - yet

where are the banks today?

[Melville10]

Other shoes are just beginning to fall---commercial real estate, credit cards, and Alt-A mortgages (prime mortgages). Despite what the talking heads say on the big name news networks, we're not out of the woods. Capital One last reported charge offs are now 10%. Commercial real estate is highly leveraged---little or no money down and borrow the rest.

[Avidcomp]

@cds162

Greece

[dogsgoarfarf]

Hello Khanacademy,

I was under the notion that the reverse auctions are done in secret and the information regarding the selling of assets by banks in the reverse auction are kept private in order to not stir up the blacklisting of banks by other banks?

I am a college student studying Business and the macroeconomics book im currently using states this.

by the way love your videos

[bmay1000]

you have finally explained to me in a clear way why TARP is such a mistake. thanks

you should be a teacher

[hashcr]

Proposal (btw i dont know anything about economics so im probably wrong i just want to know why):

Why the U.S just simply bails out the homeowners instead of the banks??? So they pay their mortgages and the banks get their money back.

With the condition that the homeowners will pay an affordable monthly rent so the government will become like a massive LANDLORD and gets its money back.

In regard to the "gamblers" like AIG and such, let them die, they are not a piece usefull for economy.

[tmsouth1]

great explanation, clear and easy to understand. Why isn't anyone else trying to explain all of this to us?? they don't want us to know the truth--it all stinks!!

[Serge808]

lie - abilities

[killerkat74]

Thanks for the ACC 101 lesson! However, you're missing that banks usually have a provision for uncollectible accounts built in to their balance sheets (contra asset). These accounts grew and that's pretty much what the G is trying to cover. Banks have plenty of good assets- be it private equity, commercial and even subprime loans that they are and will be collecting. People like you should be in the business of writing fiction novels and not further contributing to the halt in this economy!

[ifc6969]

It's no surprise that after the bill was passed there was a total reversal. The toxic assets weren't purchased and they just pumped the banks full of "capital". I find it frightening that the federal reserve bank of Minneapolis published a working paper stating that the reasons for the bailout were false. I also find it frightening that the LIBOR value used to determine how much banks are lending only looks at 6 banks out of the thousands.

[hoonar]

Great work, Sal! Thanks a lot for these videos. The only thing I cannot understand is, if everything-- right from the housing price bubble to the systemic risk chain reaction-- is this simple to explain (for which a lot of credit goes to you), why didnt the 'smart guys' out there, the Ivy League MBAs making a fortune in the I-Banks, see it coming much sooner!? How could such prestigious institutions, the pillars of american capitalism for more than a century, just be so stupid?Blinded by greed??

[khanacademy]

Good question. I think a lot of these people understand less than they let on. Also, the compensation structure in finance encourages people to maximize their bonus in the short term (usually by taking on more risk when times are good). Very few people at these banks really cared about the long-term viability of what they were doing.

[mw92101]

Isn't the real problem with the "trend"? Can it be broken? To assume that everyone's home value is going to zero and the economy is going into a depression is somewhat of a self fulfilling prophecy? When renting is more profitable, then buyers buy the distressed homes. That will not be zero. Iliquidity is due to PERCEPTION and FEAR. That is what one of your earlier videos started with, but it appears you didn't come full circle. Could it be your own perception is "stinky."

[khanacademy]

Home values will not go to zero. They will adjust to some price where an investor will can a decent return on the asset based on potential rent (or rent saved). This is how all assets should be valued (vs. speculation on asset appreciation). Unfortunately, in most of the country (especially Californa), prices haven't adjusted to the point where one can make a good risk-adjusted return.

[manoman0]

"...when you have a dead stinky skunk in your home....." nice lol

[as702ecs]

brilliant vid (i like it when you say stinky).

what really concerns me is that supposing even if the government are sincere about their motives with regard to the revised bail-out package, then WHY ON EARTH are they putting the fear of god into wall street that only serves to further seize up the very liquidity they're trying to inject into the system!!!

plus, this doesn't even take into account the rapid hyper-inflation this proposal will generate (and will continue to generate).

bye bye USD

[andrewlively]

if they raised the minimum wage, people would have money to pay their loans back, therefore making the loans less risky and instilling more confidence in the financial sector. i think corporations will get away with paying people as little as they can while giving their share holders and upper management as much as they can.

[ChadCreevy]

With all that you have outlayed (and it's truly great stuff) for this plan not to work, why are asset managers like Bill Gross chomping at the bit and willing to work for free to get at some of these assets?

[doncollins197]

you should watch the rest of the videos pesented by khan -

[ufoengines]

A trillion bucks for Wall Street and no bucks for a National Health Care Plan! What a bunch of Crooks! Who Benefits?

[wmacorlando]

the crooks are Franklin Raines and his friends who caused this problem.

[podman51]

Thank you, these videos contain some of the best information on the internet. Anyway, the stinky stuff belongs to the taxpayer now. By the way, the nationalisation of banks is also distorting the markets by favouring those banks with government protection. So that now, some of the banks that were greedy and stupid are doing very well for themselves.

[yogiudo]

great vid. I'd love to see one on hyper inflation, or the potential fall out of using the cash (the only thing that isn't stinky...(or at least the least stinky) to secure this whole structure.

[chopperhead2011]

You, sir, are one hell of a genius.

[azntbooi]

smar man..

ron paul all the way!!

[asg102]

Great video!!! More people need to see this.

[ConHumLib]

Great explanation. Clear as crystal. Economics only gets muddy when too many mechanisms and metaphors are in use. It's profit and loss, equity and risk. Simple stuff that is being hidden in all the rhetoric of this so-called crisis. The bailout is one of the worst ideas possible as it will only pacify the markets for a short period and further inflate the currency.

Kudos!

[darkteknical]

The goverment has screwed us.

[mspear1986]

the better situation is to return the $3500 (based on 200mil tax payers)to the tax paying public..that money goes to raising consumer spending and puts the money back into the spending cycle

[mspear1986]

khan you are a genius as always..i will be a math grouppiie from now on..thnks for the lessons too

[gambuzo]

The answer is: Most likely, No

[joshuag5732]

So then what is the answer?

[pongman]

The answer I think is for the Government to give out the loans to the individual and small businesses; and not have the banks or these financial businesses to have their hands on it. Don't bail out these financial institutions and let the open market decide. George Bush and his family are behind this. Google "who is Lone Star? And why are they buying toxic paper?"

[disillusions]

Let the system run its course. These sorts of things have a way of working themselves out (even if the situation has to become the ugliest of uglies).