The bailout schemes were supposed to help restore the “intrinsic” values of the securities.
Actually it was to insure proper capitalization ratios so that banks would not have to immediately liquidate assets that were under attack.
It would like a neighbor’s house going into foreclosure, and another neighbor selling his house because of unemployment. Pretty soon, you can’t refinance your house because you no longer have equity. Then you can’t send your daughter to college or buy a new car, etc…
Unless you are trying to use the house as an HELOC ATM, there would be no need to refi your own house. Part of the problem was that HELOC ATM was in overdrive and people shaped their lives around it. This is why many of the people who went through the Great Depression are not having a problem (they didn’t equity-out at every possible chance), while those that didn’t go through the Great Depression didn’t have any equity left. They lived off their house appreciation.
