...THE BAILOUT, SIMPLIFIED

Simplistic explanation of how the sub-prime deal worked, courtesy of my old friend, Marty, in Chicago. Also explains the bail-out of Wall Street...


How the Wall Street Bailout works in layman's terms:

Young Chuck moved to Texas and bought a Donkey from a farmer for $100. The farmer agreed to deliver the Donkey the next day.

Instead, the next day he drove up and said, "Sorry son, but I have some bad news, your donkey died." Chuck replied, "Well, then just give me my money back." The farmer responded, "Can't do that. I went and spent it already." Chuck replied, "Ok, then, just bring me the dead donkey." The farmer asked, "What ya gonna do with him?" Chuck said, "I'm going to raffle him off." The farmer said, "You can't raffle off a dead donkey!" Chuck said, "Sure I can. Watch me. I just won't tell anybody he's dead."

A month later, the farmer met up with Chuck and asked, "What happened with that dead donkey?" Chuck said, "I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $998." The farmer asked, "Didn't anyone complain?" Chuck answered, "Just the guy who won. So I gave him his two dollars back."

...Chuck now works on Wall Street for AIG.