What is Bailout and how does it work?

£200,000,000,000 Bailout, will it work?

• The first bailout didn't work, will this one?

• Answer:

  A lot of these "Oh noes recession!!!" questions floating about at the moment and rather a lot of bashing the supposed solutions. Economics are terribly boring and confusing, but a simple explanation is along these lines: If you nip a problem in the bud, you wont be further down the pan later on. If the banks know the money they lend wont be secure, they wont lend, people will stop spending and we dig a deeper hole. This most recent little fund is just a buffer to get banks lending again and people buying - this is obviously not "Going to fix it" the idea is in the long run this slows our decent into recession and lessens the incoming blow. Same applies to the construction projects labour has got going - keep people in work and spending, instead of just sticking this dosh in a pot and waiting for the "Oh ****" times and handing it out. It's a global thing of course and not just restricted to us, the east has a considerably higher demand for resource and a higher export profit and we all suffer. Slow recovery simply because the economy is built like crap. If anything, in the past all this has happened before, why didn't the banks have a pot stashed away for these obviously-would-be times..