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The reason the system will “Crash” is because of the runs on the money markets and the weaker banks (like Wachovia).

Why the money runs? Because people are concerned on their monies safety.

We can prevent this by simply raising the FDIC insured deposit amount to $1 million per account. Charge the banks a higher premium.

Most of the “runs” at least by individuals and small businesses is stopped.

Then we can sort this out without tossing $700 billion to Wall Street and foreign banks.

We can prevent this by simply raising the FDIC insured deposit amount to $1 million per account. Charge the banks a higher premium.

And those premium costs would be? I talked with someone today who has been in banking for 32 years, and she says increasing the premium costs of the FDIC insurance would likely cause several more banks teetering on the edge to fail. I don't we can afford that many more failures.

I am amazed at how little is actually known about this crisis. I have yet to see a firm definition of what exactly the $700 billion is supposed to buy. It appears that the $700 billion is supposed to buy paper rather than land but I haven't seen any clear explanation of this. The paper at issue appears to be financial instruments that are derived from mortgages rather than the mortgages themselves.

So one of the questions that needs to be answered is how much were the problematic financial instruments purchased for. Until we have some rough idea of that, it seems we are guessing as to how much money is needed.

The next question is what is the total amount of the mortgages upon which the bad paper is based? In other words are we talking financial instruments that were purchased for $5 trillion that are based on mortgages that total $1 trillion. Again, some rough idea of the disparity between the purchase amount of the bad paper and the mortgages upon which they are based needs to be known.

Next, what pecentage of the mortages are actually in default. Is it 10% or 20% or some higher figure. From what I've read, it appears that a large portion of the mortgages upon which the bad paper is based are not in default. If that is the case, then the problem is purely one involving the aftermarket in mortgages

Given the lack of basic information on these issues, I am beginning to suspect that something like a ponzi-scheme was occurring in the aftermarket on mortgages. In other words, what happened was that a mortgage for $10 was sliced and diced and then sold in individual parts for a total amount well north of $10.

I hope I am wrong but I suspect the reason answers are not forthcoming on these basic questions is that Goldman Sachs was a central player in the aftermarket on mortgages on Goldman Sachs is now in charge of the Treasury Department.