Can someone explain the bailout in layman terms

I am from the government and here to help you... open your wallet.. give me all your money! thank you have a nice day!

I am more concerned about the return of my money than the return on my money. --Mark Twain

and your offspring taxpayers bend over grab your ankles and no KY provided

To pay off all of his rich friends and we get stuck wih the bill.

~Mikael / Peace, love, Light and unity ~

I'm not an economist, but here we go:

Insurance companies like AIG (and all banks really) have to have real assets to lend against. If you buy an insurance policy from a company, you're saying you trust them to pay you to fix your car, or pay your widow after your death, or whatever it's insuring, because they have many many other people doing the same thing, and making monthly payments. You're trusting that they have taken that money over the years and invested it well, in good real estate, good gold and oil reserves, and also that they have lots of "liquid" assets - money they can shell out at any time for disasters and insurance claims.

However, if AIG and Lehman brothers and others didn't have enough liquid assets or good investments. They had a lot of pieces of paper from other banks and lenders saying "yes, if you need capital, we'll give it to you." Most of these pieces of paper were real estate, which is going down in value because we built too many houses. They were bad investors. Very very bad investors. They sucked.

The market needs to correct itself. AIG needs to go under. They need to "liquidate" these bad assets by selling them for pennies on the dollar.

Instead though, Paulson is offering them a 700 billion dollar loan. But they don't get to keep it, they have to pay it back. Another way to look at it is that Paulson and Bernanke will now OWN that company. It will not recover from this, and will never be a good insurer again. It has nothing.

That's the first big problem.

The second big problem is that the Federal Reserve who is loaning them this money doesn't have 700 billion dollars to loan. It's in debt too. But, because they can print money, they can loan as much as they want. "pumping liquidity into the market" is another word for printing money.

So, since 700 billion dollars is 5% of what our entire economy produces in an entire year, there's no way that the Federal Reserve will EVER get 700 billion dollars out of our hands. They'd have to tax us 2300.00 dollars each to pay for it, including every baby, woman, and man. That won't happen.

So what happens when AIG uses this loan for ANYTHING? What happens when they spend this money, buying new computers, paying off individuals whose car insurance was in their company, and paying executive guys severance pay? The new money printed "taxes" each one of us 2300.00 each in inflation. Your groceries will cost more because AIG f**ked up, and is spending the Fed's loan.

I'm sure there are much better ways to explain it than this, but that's the way I understand it.

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That's the short way to explain it, without getting in the constitutional end, which says the Fed is an illegal institution, the government has no right to meddle in the economy, etc etc. blah blah.
But keep reading Daily Paul to figure all that out.

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:::::I'm on board with Chuck Baldwin. Let's do this!::::::