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There are 14.7 trillion dollar's worth of mortgages out there, of which, conservatively, 10% are in trouble (so far). That's 1.5 trillion dollar's worth of bad paper.
So far, the government plans to pony-up to the tune of 200 billion.
That's 13% of what's needed just to break even with the mistake. So far.
We have the interest on 40+ trillion in annual debt service.
We have 180 trillion in derivatives exposure, economy-wide, and we already know that part of that 180 trillion has been caused by derivatives instruments used to hedge 1.5 trillion in bad paper.
We have been able to inflate the value of our currency to this level of idiocy because the US dollar has been the currency of record used to buy and sell oil. Remove that requirement and, suddenly, every dollar on the market is like a bad check that our debt-holders keep trying to cash.
At our best, our GDP is worth 8 trillion. We lose a grip on the oil market and we're looking at a debt exposure of, potentially, 180+40 = 220 trillion dollars.
The good news is that no one will ever run out of toilet paper as long as the Fed keeps printing dollars.
The bad news is that the only thing left to give value to our money is our willingness to travel to foreign lands and kick the snot out of people with a near-40:1 kill ratio. Those who try to use a different currency to buy oil and those who disagree with the value we place on our currency are "next" after Iraq. Could be any one of several countries.
Do Putin and Medvedev's behavior in Georgia start to make some sense? How about Chavez and Ecuador? Our countermoves in Bolivia?
What about China?
Japan holds more of our toilet paper than any other country in the world. If Japan ever bails on us, we're a booger next to a footnote.
I think Japan gets most of its oil from Iran.
