- Banks gave loans to people they knew could not pay back the loans.
- Various banks and other investment firms traded these loans around, selling them as if they were actually worth something, and even using them as collateral for other investments.
- They weren't, people couldn't pay, the money evaporated.
- Chaos ensued.
Now the US government is buying a chunk of these "assets" to put actual money into the system, instead of the imaginary money. It's going to cost us $700 billion (more than we've spent so far on the Iraq War, for example), but it looks like it's necessary, so fine.
But now, with a straight face, Hank Paulson is saying on This Week, that we shouldn't count that whole $700 billion as the real cost of this, because we're buying assets, people, which we can then later sell! See, no problem. Sure, they're assets that are so worthless that they could, say, cause our entire economic system to very nearly collapse, but we, the American people, will now own them!!
Don't you feel better now?