What you post is exquisitely important and germane as it could be.
The Congress et al is focused on the “housing bailout” and “housing prices” and “home foreclosures”.
The fact of the matter is that if the problem was simply the face value of all those stenchy mortgages out there, the problem would have a start and an end that could be loosely quantified. But that is not the case, and that is why this problem has morphed and oozed into so many other sectors of the economy and indeed the world.
The problem is not the face value of the securitization(s) that have fictionalized the world’s financial system; it is the value of the insurance that has been written on the default of all that fictionality. Commonly called CDS = Credit Default Swaps. And I shouldn’t have to give you a more cogent example than AIG, a profitable and well run insurance company that has been turned into a black hole of unfathomable debt from the operations and activities of a 200-employee division in London. The bailout of AIG was almost entirely for the sole purpose of bailing out Goldman Sachs, the insured party on most of these default swaps. Well, at least the part that didn’t go for spa treatments (I know, that’s a satirical cheap shot)
The insurance was insuring nothing more than air, there never was anything physical or tangible, nor was there any sort of contract such as loan documents, underlying these "securities". It was a mathematically-obscured Ponzi scheme.
The total amount of mortgages in default is under $300B, so the $700B bailout should have more than covered it. That it didn't is proof that CDS is the real problem.
Wrong.
Like power and water, finance should function as a utility serving the real economy. Instead, finance has grown so large that it is sucking the energy out of the real economy, destroying it.