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costargh:
yeh but what does injected mean? It obviously isn't literal so in what sense is it injected.

marbs:
I thought the US was a bailout where half were negotiated to buying bad debts, but there were also injections, like the NAB thought they were going to receive money because they had bought sub prime.

The injections meaning, putting money into the economy in the sense that it will increase the supply of money, making it easier for people to get credit and giving more money.



Hell, this could all be wrong, I got to do some reading

costargh:
Buying bad debts and buying mortgage related assets are the same thing I think. I think of it this way. With so many houses being repossessed in America due to the sub-prime mortgage crisis, the banks have been trying to sell these houses or premises (plural?). This has resulted in an oversupply of housing in America which has brought the equilibrium price down meaning that some of the loan that the banks gave out cannot simply be reclaimed through selling the premises because they a) can't sell them cause no one wants them, b) don't want to sell because they will be making massive loses on their loans they gave out.

I think the government plans to buy these "bad debts" (houses) off the banks so they don't lose money.  Um that could be totally wrong and I knwo it gets more complicated than that for businesses etc but for the general American who got a loan for their house would that be correct?


Yeh I know that. But how do they put money into the economy? Do they throw it onto the streets? Do the drop it from a plane? etc lol

AppleXY:
Yeah, the government will have access and control to the "toxic assets" from the corporations. But it also includes sweetners as I mentioned earlier.

He injected $4bn into the non-bank mortgage sector by purchasing AAA mortgages, thus giving a such for the smaller instutions to gain an advantage in competition (due to lower interest rates for them, govt is the owner --> paid 4bn, injected into the economy), thus becoming much more competitive in the mortgage market.


Btw, costa, generally to "put" money into the economy is from Open Market Operations (OMO). If the RBA purchases a large number of second hand securities, this will inject money into the economy as the bank is paying for the securities in the open free market. However, if the RBA sells second hand securities then this reduce the amount of cash avaliable in the economy as the free market has bought the securities for cash.

costargh:
thannk-you. i remmeber seeing that on the news. AAA- i thought batteries when i saw it

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