Can someone explain to me in very simple terms, what is causing the stock market to drop?

Does it have anything to do with the real estate or anthing. also, what is this bailout that they are talking about doing that will pull the economy out of our slump?

The measures you see in the stock market are the value of certain general stocks. They are losing value because people are selling them. They sell them because the people who own do not have confidence that they will increase and/or fear they will decrease in value. Many of these stocks are financial institutions which have extended loans for years to people who had a questionable ability to repay those loans. In many cases they thought the loans were secured by property but as people lose income or fear they will, they try to sell property to have money in many cases to repay the debts they shouldn't have had in the first place. So with many properties (mostly homes) on the market, the value of them lowers. See the paper clip example above as he is correct. The more of something that is available the less valuable it is. Since these homes were the guarantee of many of those loans and the homes have become less valuable then the assets the banks thought they had suddenly decreased. The banks foreclosed on many homes to recoup what they could but that put more homes on the market and decreased them even more. Now think of a spiral or a toilet flush. The more they foreclosed the more people are in financial difficulty the more homes were on the market the less they received on loan payments the less their property is worth and rinse, repeat so on.
So back to investment. Would you take your life savings and by stock in a bank today? Probably not and most others think the same so the stock value decreases. But also all the industries that contribute to housing are affected also. Construction, wood, furniture, appliances, gardening, and 50,000 other industries that only make money from people who own homes. Now these make less and also can't pay their loans. They lay people off who try to sell their house since they can no longer afford it.
Rinse, repeat.

Will 700 billion help. Maybe for a very short while but the real problem is that we owe more then we are worth. So our solution of borrowing more isn't the brightest but I admit like the rest that other then just suffering this out and letting it run its uncomfortable course, I can't think of anything better either. And during that uncomfortable course most of us won't be happy with the people in office so borrowing more makes sense to them. Lets them maybe keep their jobs another 4 years.

the big financial empire was built as a house of cards. Pull one and they all topple. They were doing a very big Ponzi Scheme. Borrow or use new investors money to pay back interest on old debts. It's like having ten credit cards where you pull money on one to pay down the debt off on another one. Round and round but your still in debt with no way out unless you infuse new and real capital into the mix. They liked to cook their books for questionable audits so everything looked rosy and the public plus institutional investors thought they were solvent. Now they need Government Welfare.

These are a few reasons:

1. Political instability
2. Investors Confidence
3. Supply and Demand
4. Natural Calamity

Stock market are based on confidence to a particular stock. Example XXX softwares, suppose that there is a rumor that XXX SOFTWARES is proliferating spyware, to make consumer buy their anti-spyware at that it is getting all information and selling to would be your competitor. The senate will investigate. At that moment I guarantee though it is a rumor, the stock of that company will hit rock bottom.

It depends on what commodity is being traded. But there are 3 major stocks that spins the entire economy of the world.

1. Oil
2. Currencies especially US $, EURO, Pounds, Aus $, Yen, CHF
3. Gold

All stock players are in the business of making money through buy and sell futures. And you make money based on the Supply and Demand. Some traders earn through the spreads (The points that raise and fall of a particular stock).

Futures means that you are buying an X number of stock though there isn't a physical stock realized let say Gold. So if there are so many people wants gold, everybody wants to earn money so they sell at the market driven price. Making existing gold mined more valuable. Imagine if gold were to be found on every handful of soil, gold will loose its value like salt did. And people were paid with salt and spices in ancient times.

The bail out will lower the value of the dollar compared to other currencies, because it is increasing the supply of it (supply up, value down - think paper clips. There are way too many paperclips in most offices for them to be considered valuable. Nobody working there would pay money for them, because they are there in abundance). If the bail out works by printing more money to give to the banks, it will increase the supply of the dollar. This will cause its value to drop. It will do more harm than good for the US economy. Other markets will benefit from the drop in the dollar and therewith coupled loss of power for the USA...

To answer the first question: Banks were always thinking that houses would rise in value over time. If the lend money out to people with very low interest rates and almost no down payment, the bank would have the security of the ever increasing value of the house to make money on, even if the owner couldn't pay them back (they would sell his house and end up with a win). Since the housing market went down the drain, houses lost value, banks lost money.

On a side note: the money that you have in your wallet is constantly being "taxed". Inflation is reducing its value by the day. Inflation is caused by printing more money. The Fed is the body that, without any oversight, prints money in the USA.

Money is valuable because it's scarce. There isn't very much of it, so it can be traded (like gold, because gold supplies are limited, too). The fed, however, can control the supply and increase the supply. Increasing the supply will simply lower the value of the money (reduce its buying power).

Ron Paul believes that the Fed is unconstitutional and therefore illegal. I, personally, agree.

The word is INvestors! They get greedy, and God only knows how they can up the price of oil when it hasn't been taken out of the ground yet! I can never understand that! Anyway, it's what they call a snowball affect! Price of oil goes up, and our wages go down! People bought expensive houses, then couldn't keep the payments up because THEY lost money in the Market, or their jobs! Banks throwing credit cards in your face left and right, and of course! it's like Christmas for a lot of people, and they go buying stuff like there is no tomorrow! Come time to pay the Piper! They don't have the money, so the banks go bust, I just read this very morning WAMU just failed! That's one of MY banks!! Lovely!! Someone has really messed up big time with this country!! Now they talk about bailing out these banks! THEY don't need bailing out, WE DO!

stock market is dropping becuase a few years ago stock market was very good so banks borrowed money to basically anyone who asked for it then people could not pay back what they borrowed and banks last alot of money and now some of them are even going under becuase of it

1st yes -

2nd- NO this bail out isnt going to save the already falling economy ! Because the bail out 700 billion will go out of tax payers pocket....

very simply question 1 - yes, question 2 - no