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When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn't whine about being put on the street. But when banks bet billions on a firm like AIG that was heavily invested in mortgages, they were making the same bet that Joe Homeowner made, leaving themselves hugely exposed to a sudden drop in home prices. But instead of being asked to "suck it in and cope" when that bet failed, the banks instead went straight to Washington for a bailout -- and got it.

The point of all of this is, if you add up all of the MBS-related liability out there, the banks as it stands are facing an Armageddon of claims from all sides. It can't possibly be less than a trillion dollars, and it's probably much, much more. But the Obama administration's current plan is to let them all walk after paying a few shekels apiece into a $20 billion kitty.

Welcome to the brave new world of post-bailout capitalism. The Commerce Department announced Tuesday that corporate profits are at their highest level in U.S. history, and the Fed released minutes of an early November meeting in which officials predicted a stagnant economy and continued high unemployment.

WASHINGTON - The new Republican-led House is showing no appetite for making federal taxpayers help state and local governments cope with widespread budget problems. Even some Democrats are wary, underscoring the impact of Washington's crushing budget deficits.

America is not broke. Contrary to what those in power would like you to believe so that you'll give up your pension, cut your wages, and settle for the life your great-grandparents had, America is not broke. Not by a long shot. The country is awash in wealth and cash. It's just that it's not in your hands. It has been transferred, in the greatest heist in history, from the workers and consumers to the banks and the portfolios of the uber-rich. Today just 400 Americans have more wealth than half of all Americans combined. Let me say that again. 400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer "bailout" of 2008, now have more loot, stock and property than the assets of 155 million Americans combined. If you can't bring yourself to call that a financial coup d'état, then you are simply not being honest about what you know in your heart to be true.

Elizabeth Warren discusses how the dreams of the middle class american family are being depleted by the dramatic increase in bankruptcies and foreclosures. Warren discusses the role that credit card companies and ballooning interests rates have played in rapidly increasing mortgage rates as well as the how the over consumption myth is clouding our understanding of the average middle class family, who is in fact experiencing a lower standard of living than their parents and still finding themselves one payment away from losing their home. Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard Law School and chaired the Congressional Oversight Panel created to investigate the U.S. banking bailout . This program originally aired in April 2004. it is being re-aired because Professor Warren's predictions of economic disasters and the reasons for them have proven correct, and she is a candidate to head a commission to guard against recurrence. The Massachusetts School of Law also presents information on important current affairs to the general public in television and radio broadcasts, an intellectual journal, conferences, author appearances, blogs and books. For more information visit http://www.mslaw.edu

Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?