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

Can the bailout work?

Category:

Education

Tags:

• bailout
• 700
• billion
• paulson
• bernanke
• fed

[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.

[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!!

[steverock85]

@PRINCECOUNTYBEATS When was this video uploaded?

[jdbohdan]

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

[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!

[soozedog]

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

[tIs4gatorbait]

"irregardless".

[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...