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September 30th, 2008
08:00 AM ET

That's not your concern, don't overreact

Ali Velshi | Bio
CNN Senior Business Correspondent

How does this credit freeze affect you?

If you are invested right now, understand that the market can make up 777 points in a matter of days.

That's not your concern, don't overreact to this.

But let me explain to you the credit markets – because that is where the problem is.

You have major investors, and I mean major: countries, sovereign wealth funds, pension funds, hedge funds and then you have banks. They send money between each other.

The most direct relationship between you, this bailout and the credit markets is that banks loan you money: auto loans, student loans, home loans, and that's already a problem, that's frozen.

Now – you're trying to sell your house because maybe you're being foreclosed on? Well, those same banks loan other people money, including someone who might have bid on your house. You want to go to contract, but they can't get that loan, and that's the 2nd way this affects you.

The third way – these banks and these major investors loan money to corporations. It is very standard for corporations to borrow money on a short term basis to meet their operating expenses – including salary. Well that affects you right now: if a company can't meet those payments that means that you may not get your salary, or you may get laid off.

These are just three simple ways in which this credit freeze, this credit crisis affects you.


Filed under: 360° Radar • Ali Velshi • Bailout Turmoil • Economy
soundoff (5 Responses)
  1. Merelene

    see this one $12.00 a month $902.17 for rent con ed always jacking up the bills no one to complain to Cable bill car fare for work 5 in the house hold. tell me what

    April 7, 2009 at 1:40 pm |
  2. Teresa Stamback

    I just wanted to give you one other perspective on how this financial crisis is affecting the main street person. In 2006 I went through a horrific divorce having to refinance my home, I was only a part time worker and homemaker. I talked with a broker who assured me several times I was signing on a fixed rate 30 year note, she kept mentioning that I could refinance in 3 years to a better rate, current was 8.75%. Of course my loan was sold several times,most recently to Carrington Mtg. I have been with Carrington for 1.5 years now and had spoken often with them about refinancing down the road. Now I have just found out that my rate is going to 11.75 that I signed on a 40 year note and the BIG surprise, Carrington is not authorized or licensed in the state of Virginia to refinance my loan now or Never regardless of what happens with the bailout program. I have currently lost my job and am now wondering what in the world can I do, No one else is will refinance me at this time........ Any Suggestion

    October 3, 2008 at 12:05 am |
  3. Christine

    I have no problem with not buying a house and not buying a car if I don't have the money for it and that's how it should be in the first place. People with good credit are still able to get credits anyone else SHOULD NOT HAVE any credit anyway! Are whining now that we can't buy a house with 0% down anymore? That's what brought us in this mess! Will this slow down the economy? Of course but a big potion of us caused it and now the mistakes need to be corrected but NOT by the government!

    October 1, 2008 at 2:35 pm |
  4. LOREN

    im 33 married and 3 kids , horrible creadit due to medical bills ( no affordable wirthwhile health ins. ) and $500 a month winter gas and electric bills .
    ive given up THAT DREAM on owning a house . i useuly dream of getting by !!!!!!!!!!!!
    YOU GOTTA BE SMART TO SURVIVE LIVING POOR (MIDDLE CLASS)
    i bring home $700 a week ,my wife stays home because the added expence isnt worth the trouble (extra money) . i refuse to get a loan for a car!!( in N.Y. a new car typ. rotts out in 10 years ) we have a 207,000 mile 88 chevy truck with a 5.0 liter v-8 that i must brag gets 20 city and 25 t-way , we spend $150 a week in gas , $400 A MONTH FOR A CRAP APT , $150 A WEEK ON FOOD , AVRAGE $250 A MONTH IN CAR PARTS $130 A MONTH FOR BASIC CAR INS. , $150 A MONTH FOR CABLE , INTERNET AND PHONE , ELECTRICITY IS CHEAP BUT NAT. GAS IS THROUGH THE ROOF . WITH WHATS LEFT ( DO THE MATH ) THATS OUR BUYING POWER !!!!!!!!
    EVEN BY WALLMART STANDARDS IVE NO MONEY TO BUY STUFF , LET ALONE SAVE IN A 401K PLAN , OR PAY FOR A "BAIL-OUT".
    AND THE GOVT CONSIDERS THE 43 -45 THOUSAND DOLLARS I MAKE A YEAR MIDDLE CLASS !!!
    WHAT A SLAP IN THE FACE TO THE "POOR" BECAUSE MY EMPLOYER IS FORCED TO CHARGE ME $150 A WEEK FOR CRAP HEALTH INS , THAT I CANT AFFORD !!!
    I GOTTA DRIVE 100 MILES A DAY JUST TO GET TO A DEACIENT JOB AND I CANT AFFORD TO SAVE THE MONEY TO MOVE CLOSER TO SAVE ON GAS , EVERYTHING IS BULL $HIT , AND THE MIRRICLE IS THAT SOME HOW EVERY DAY MY WIFE AND I SHOW AND TELL EACH OTHER "I LOVE YOU" AND HARDLY ARGUE !!!!!!!!!!

    October 1, 2008 at 12:42 pm |
  5. LOREN

    ALI ,
    THIS BAIL OUT IS WRONG -we got separition of church and state we need separition of state and wall street !!!!!!
    WE SEPARATE GOD AND GOOD VALUES FROM GOVT BUT NOT MONEY ,GREED , ANDFRAUD
    NO WONDER WHY THE MARKET CRASHED – GOD IS MAD !!! REALLY MAD !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    the stock market was started a long long time ago as a "PRIVATE CLUB"
    YOU GOTTA BE SMART TO SURVIVE LIVING POOR (MIDDLE CLASS) – WHY IS WALL STREET SO STUPID

    October 1, 2008 at 12:40 pm |

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