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Toxic assets are simply bad loans--at least there was a time when that is what they were called. The English language gives us this kind of slight-of-hand, to avoid the more accurate term: propaganda.

Before we do some numbers, let's see how we arrived here and where we stand.

  • Relative to inflation, housing prices rose twice as fast over the last decade or so.
  • Freed from New-Deal controls, banks competed all-out for the market. Part of their strategy was to buy and sell mortgages. Some even emulated a Ponzi scheme. Others dared unfamiliar territory out of sheer exuberance.
  • When the law of supply and demand asserted itself, the whole phony edifice came crashing down.

He may have had little choice, but the Obama bailout plan adds to the national debt owned by the American public. Five percent of the bailout will be put up by private sources.

If the toxic assets revive to their former value, their piece of the national debt is paid off.

Sounds good doesn't it?

THINK: What is being revived?

The unsustainable and unrealistic distortion of the financial markets, especially the housing mortgage markets. That's what.

Do we really want to recreate the conditions that got us into trouble in the first place.

Intentional or not, is this not just another way to fleece the little guys to further enrich the plutocrats of both parties?