Primer repost for non-econ people on this big money hole Bush dug.

[Festivito]

Last night another DUer asked anyone to give a sense of the scale of the problem we are about to confront. So, I started typing. I'm not an econ person, I just read DU as much as I can.
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First the numbers to use: When looking at our nation, limit yourself to Billions with the B. When looking at what it means to you, see it as three to four dollars.

Again, think with me. There are 303-million Americans. Roughly. If each of us, every man, woman, and child puts in $3.30, that would be 1B$(one-billion dollars).

One billion dollars is $3.30. Say a McDonald's Quarter Pounder with cheese.

Family of four: $13.20. Say a trip to an ice cream shop and four cones, dad gets a double scoop.

That's what a billion dollars on our national scale should mean to you. A billion-dollar program to feed kids in the federal budget taxed to a family of four means one less trip to the ice cream shop each year. How's that sound? Okay I hope.

NOW FOR THE SAD NEWS BEFORE THE REALLY BAD NEWS:

Our national debt is $10.6T$. Oops Trillion. Multiply it by a thousand to get billions. 10,598-billions. Call it 10,600B$.

TO YOU: That is $35,000 per American. TO A FAMILY OF FOUR: That is $140,000. Imagine a family of four, mom and dad buy a house worth $350,000, put down $50,000, owe $300,000. They look good, until you realize that they have an asset of $350,000 and owe $440,000. Net worth: NEGATIVE $90,000.

That's sad enough. Good news is that the national debt already includes debt from bailing out the banking/insurance problem. Bad news is that they still want to borrow the other half of the $700B, another $350B.

NOW FOR THE REALLY SAD PART:

How bad is the banking problem? I don't think we know. Could it be fixed with 700B$? Some say there is 7,000B$ of trouble out there. Some say there is 70,000B$ of trouble out there. You may confuse these B$ numbers with the numbers that relate to your life. Uh uh.

An additional 7T$(7,000B$) is an additional $23,100 to you, and for the family of four: $92,400. For 70T$(70,000B$) use those same two figures and multiply by ten. $231,000 per American, $924,000 for a family of four. Nearly a million dollars of debt for that family. Let's just call that indentured servitude.

NEEDLESSLY DEEPER:
Banks can lend ten times what they have in the bank vault. No more, that's law.

SO, some bright banking/finance guys said, hey, those real estate loans are good as gold, how about we call them gold, almost literally, get the insurance company to insure it as good as gold and we'll call it MONEY IN THE VAULT! Then we can loan, say it with me, TEN TIMES THE AMOUNT IN THE VAULT!

Same as above with numbers: Bank has ten-million in the vault. Lends 100M$. Calls 100M$ as money in the vault. Lends $1,000M$(1B$).

But, the little secret: They only have one-hundredth of that in the vault. By law it's supposed to be one-tenth, no less.

Bright banker boys did not stop there. They said the new amount lent, the 1B$ was now, say it with me again, GOOD AS GOLD. And, then they had even more money to lend, but still had the same old 10M$ in the vault. They created an acronym salad of CDOs CDWs and on and on, but all they were doing was marketing the same overly-borrowed money(overly leveraged money).

They bundled the real-estate good-as-gold holdings and sold it to retirement accounts and hungry countries with whom we had a trade deficit desperately looking for some place to store the huge amounts of dollars they were collecting as we lived high and gave them IOUs. Maddeningly, this newly created money supply caused the price of housing to rise. NOT THE VALUE OF HOUSING, only the price.

ONE MORE STEP DEEPER:
The bankers collected their usual fee of one, two, three percent(I don't know the figure). Those LARGE amounts made them rich rich rich, and it made them believe what they were doing was and is real. It's not real. They need to give it back. But, that's just me.

BACK TO SOME REALITY:

When jobs dropped and prices fell, the house of cards fell. And, all that was in the vault? The same 10M$. Nowhere near the Billions now needed to sustain the PRICES.

Since you read this far, Hey, I think we should review each and every loan for appropriateness to each and every associated borrower and make the banks eat the difference. And for what the banks can't eat, we'll all have to take an adjustment, I'd suggest by age, as retirees can't re-earn their lost retirements.

Hope this helps a little and is not wildly errant.

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Originally posted question with that heartwarming Hawaiian style:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x50871#50877

If this helps anyone, please repost it at will. For some reason, I had a difficult time coming up with a title. Good day to all.

[Octafish]

1. There is no accountability in this bailout. Hence, it's prime for picking.

Bush and his cronies have looted the Treasury and fixed the policies so that Obama will have his hands tied. I hope that the new Attorney General has an excellent officer in charge of white collar crime. I'd say an Eliott Spitzer type, who can put these gangsters where they belong. Otherwise, we really will be the United Slaves of America.

Thank you for an excellent post, Festivito! You put things into familiar terms.

[Festivito]

2. I don't know if we can put them where they belong.

A truth commission would at least destroy the BFEE credibility, especially if we could drop that:
W lied us into war and gave us the banking scandal.
Poppy GHWB knew details of JFK's murder and gave us the S&L scandal.
Granddad attempted a coup against FDR and gave us Hmmm, what scandal of money. I bet there is one.

Thanks Octafish. I'm a fan.