Let's talk about the Subprime housing market again. Economists, feel free to weigh in here and correct any mistakes.

Here is my understanding of this issue:

In short, ignorant people bought bad loans with adjustable interest rates from shady people who promised them that the value of their property would go up (I'm assuming people bought houses that they thought that, by selling, they would eventually be able to afford them). The mortgage companies sold the bad loans to banks and got a commission. The banks did not want the bad loans and turned them over to Wall Street (or took government bail outs). Wall Street packaged the bad loans into investments, gave them fancy names, and sold them to investors (both foreign and domestic) for milions/billions of dollars).

I'm sure the rationale and what happened in terms of housing costs and the complex subprime loans was more complicated than this, but I can only simplify it--the houses were not worth as much they promised, they lost value, and people defaulted on their loans because their interest rates adjusted up too high. So there's the issue that housing prices are falling, and this is affecting most homeowners. But that's only half of it.

So now there is no money to pay the investors who bought these fancy new investments, and this is causing financial crisis for the companies and individuals (both domestic and foreign) who invested in them. They have to make up for those losses somehow--whether it be government or internal cost cutting (which usually means laying off employees).

All of this adversely affects the stock market, so the fed lowers interest rates to encourage investment, which devalues the dollar. All of this rate cutting has not made much of a difference because it only puts a temporary band-aid on the problem and we end up back at square one with a currency that is now at almost half its value.

So basically, and many experts agree, we're up shit creek without a paddle. There's less money coming in, and huge debts that need to be taken care of by someone.

Anyone care to chime in as to how each candidate measures up in relation to this problem? And please do not moralize. These debts *need* to be taken care of by someone. just saying, "this should never have happened!" is not a solution.