Housing Lossage in a Nutshell [II]

In my last post in this series, I talked a bit about how the collapse in the housing market is infectious and causing serious losses throughout the financial system. I still have some more things to say on that subject, but first I wanted to explain a bit about why Bernanke, Paulson, and an awful lot of people in finance are so concerned about all this, and where it's going, and why the Executive is trying to persuade Congress to approve nationalizing an awful lot of private losses.

( Big Pictures behind the cut... )

My next post will be about how we got here, what's different between the Depression and now, and about some of the things that didn't contribute (or didn't contribute very much) to the current situation, and some of the really bad ideas that have been suggested for getting out of it, and why they look like really bad ideas.