Student: Professor, could you explain this bailout? Teacher: Of course. The first thing to bear in mind is that the problem is very complex, and cannot be easily described in a few words. But in a nutshell, it boils down to this: American companies — and individuals — are heavily in debt. This makes expansion and modernization difficult, or impossible; and debts difficult to pay. Plants may have to lay off workers. These workers are thus unable to spend at their usual rate, causing further business depression, more layoffs, still less spending. There is a multiplier effect at work, a … Continue reading Bailouts 101