The real exposure is less than that because there are assets and partial income streams behind those mortgages. The problem of course is not mortgages, it would take 100 or 200B at most to fix that. The problem is worthless securities that are NOT mortgage backed, not backed by anything. One example is credit default insurance resold or booked as an asset. It is nothing but a piece of paper. There are many trillions of that.
>> One example is credit default insurance resold or booked as an asset. It is nothing but a piece of paper. There are many trillions of that.
Who owns that paper? For what purpose did they buy it?
And (not to be callous, but to understand better): why do we taxpayers care if the owners of that paper lose money on it? In a macroeconomic sense.