PBS had our back all along, go figure.  How could socialist media be so much more effective than "free" market media?

Here is the essence of the 800 trillion dollar mortgage scam:  Mortgages were bundled into "mortgage backed securities", essentially bonds.  These bonds were sold to banks and other investors all over the world.

They were supposed to provide good safe returns based on homeowners paying their mortgages.  The bank or investor that bought the bond did not have to deal with each homeowner, the mortgage company did that for them.

But what if an economic downturn, caused by soaring oil prices, for instance, caused job losses that started to make it difficult for those mortgages to be payed?  

People who  bought the bonds needed  insurance against a catastrophe like that, which they bought from AIG and other "investment"  banks, these were called "credit default swaps".  But these insurance policies were backed by a small percentage of real assets, as Reagan revolution deregulation left industry to police itself.

To put it on a level of family economics:  if you bought a homeoners insurance policy, as many did on the Gulf Coast, and then a huge storm came along like Katrina, and insurance companies didn't have the assets to back the policies they wrote across the devestated region, then the insurance companies would simply go belly up, declare chapter 11.  And you would be left to fend for yourself.

That's what monopoly capitalists do under "free" market self regulation.

The whole 800 trillion e-dollar play money counterfeiting scheme was really just simple insurance fraud.

"Derivatives", nothing but options based on an index of the value of the bundled mortgage instruments were used to inflate the bubble, this was pure casino capitalism.  Remember the books and the movie about a professor and a team of college students playing blackjack based on mathematical theory?

Casino capitalism plays in the "free" markets based on economic mathematical theory through hedge funds.  The justification for this trading is that insurance companies could then "hedge" their risks posed by the fraudulent insurance, "credit default swaps".

With a regular casino you need to have actual cash or property to back up your bets.  With "free" market Reagan revolutionary deregulated casino capitalism the players need less than 5% of the assets to cover the bets they are placing.  And even that 5% can be bad paper, bundled no money down mortgages owed by unemployed familes for instance.

This was a simple scam, none of the parties involved in it, the brokers, traders, bankers, politicians, (de)regulators can credibly claim they don't understand it.  

Frontline makes it clear, this is all based on fraud, obvious fraud, everyone with conflict of interest problems could merely put their loot in hedge funds and claim they had no knowledge of the scam.  See no evil...(im)plausible deniability.

This is an ongoing criminal conspiracy, and as such it comes under RICO law.  Civil forfeiture should be used by government (as it is routinely used in drug cases) to confiscate all the wealth of the participants.  Then they should be put on trial under RICO statutes.

Regional and local banks and families about to get kicked out of homes due to the unemployment caused by this global Ponzi scheme need to be protected by government, then government must use asset forfeiture to reclaim as much of the losses incurred as possible.

Swiss and other banks that serve as tax and RICO havens should be encouraged to give up the assets.

Rick "blame the losers" Santelli knows what really happened too.  Does he have any possible excuse for his wing nut behaviour?  Nope.