Economics help!! US BAIL-OUT? fannie mae and freddy

[Kira D]

mac...? basically, I have a piece of economics homework all about the bailout of the two mortgage companies in America.THe question isLHow does the US governments intervention in fannie mae and freddie mac help the UK economy?I don't understand how it could help the UK economy? Are economies aren't linked are they? Isn't this just helping America?Please help! I am soooo confused!

[robrobiii]

UK banks have invested in Fannie and Freddie bonds. The government bailout makes those investments more secure (less likely to be defaulted on).If the banks debts are more secure, then the UK banks that own them are more secure. Good for UK banks and other investors.