Related to the previous post, this graph from Paul Kasriel of Northern Trust helps explains why the banks need the bailout. It's not pretty.
In real simple terms, mortgage related assets now account for over 60% of total bank earnings - a post-war record high. If commercial banks can't make money on their mortgage assets, because homeowners can't repay the loans, the entire industry is in trouble.
And we all know what happens when the banks get into trouble.
Big Question Time: So, which is preferable ... Regulation, or corporate bailouts?