But in reality the majority of the 'toxic bad debt' is due to the 'derivatives' or "bets" that were placed on these mortgage securities that were being traded. These 'bets' were on whether or not these loans would be paid. These "bets" were created out of thin air. and then the huge investment banks put them on their books as actual assets (to the tune of trillions of dollars!).
While all was going gangbusters, they paid themselves huge bonuses on these "bets" (fake assets). Paulson himself being one of them while he was at Goldman Sachs. In fact, in 2006, $53 billion was paid out to these firms in bonuses--that's right, $53 billion. Now that these "bets" are in the loss column and no longer show up on the books as assets, the money to pay for these losses created by the "fake assets" or "bets" is nowhere to be found. It is a huge Ponzi scheme and we're the guy at the end of the line.
This is like the Wizard of Oz---we're supposed to be looking at the projected image of the Wizard--while behind the curtain, Paulson, Investment banks and the 10% who own 85-90% of all the financial wealth in the US reap ever more benefits for themselves.
Bailing out Wall Street is the equivalent of the American taxpayer signing up to become a serf. Let's not do it.
