money goes suppose joe makes $200k/yr. joe bet this bull run would never end. despite the fact that every bull market before this one ended. anywho, joe has a mortgage on a $2m house. joe loses his job. joe has to sell his house. but nobody can buy his house at $2m. he has to sell it for $1m. joe goes bankrupt. joe liquidates the rest of his stuff for $300k. which goes to the joe's bank. fortunately, joe's bank insured joe's loan for just such an unhappy circumstance. they file a claim with their insurance company for $700k. the insurance company says OUCH! and punishes joe's bank for making risky loans by raising its insurance rates. the insurance company pays this policy by liquidating some of its real assets. by law, an insurance company is required to have a certain percentage of its exposure covered by such real assets. at least, that's how a healthy system is supposed to work. unfortunately, somewhere along the line we gave those insurance policies a new name: credit default swaps. and our lobbyists successfully persuaded the lawmakers that these things weren't insurance and didn't have to follow established rules for insurance. namely, the insuring company didn't have to have real assets to cover their risk. so they didn't. and now all of a sudden it's time to pay the piper. and there's no money. only paper. it's not all bad news. mary didn't lose her $100k/yr job. she's been saving a third of her income. and she just bought joe's $2m house for $1m.  ¶ 8:00 AM