(Originally published at Greater Democracy.)

In my recent posts about the financial crisis our country faces, I’ve attempted to get people to understand a little more clearly how mortgages are traded and from that to look more closely at what the bailout really entails. Let us now look at possible outcomes.

The Treasury Department has proposed spending $700 billion to buy the mortgage securities that are most at risk, in an effort to avert a severe credit crunch. Where is this $700 billion going to come from? How much of it will come in the terms of new debt issued by the government? Are we just shifting around who is lending money to whom? It would seem so. In addition, we are shifting the lending of money to institutions that have made poor financial decisions.