This bond mess; yeah I know it’s confusing, or so my wife tells me, she says she doesn’t understand it but it’s really not very complicated; so, for her and anybody else who doesn’t get it, here it is in simpler terms: Remember when Bill Clinton left G.W. Bush a large surplus, $127 Billion to be exact? Well, let’s take another Bill, Gates, everyone knows who he is; the richest man in the world, right? Okay, so Bill Gates will be us, (the tax-payer, the U.S. government, Uncle Sam,) O.K. and so he has a crazy nephew named Joe Wall Street and Joe says to his uncle: “Hey Unc’ how much you getting on all those billions of dollars worth of Treasuries you’re holding, two or three percent right?”
     “Yeah, something like that Joe, why,” Bill Gates says.
     “Well, ‘cause I can get you an eight or ten percent return.”
     “Yeah but that high yield stuff is B or C-rated; they’re junk bonds.”    

“Uncle,” Joe says, “this is all triple-A stuff, I oughta know I rated ‘em myself and we even got insurance on ‘em; you got nothing to worry about, believe me, just trust me?”    

Now, Bill Gates remembered in the 1980’s there was a junk-bond mess that Michael Milken had gotten into that closed down Drexel/Burnham and the Ivan Boesky statement: “greed is good,” but this was his nephew and he was “guaranteeing” a large profit and no possible losses and besides the profits sounded just too good and so Uncle Bill forgot about Milken and the 80’s and told his nephew to go ahead and so his nephew Joe Wall Street does and brings him back 10% on his $100 Billion investment and Uncle sees $10 Billion in profit where he was getting $2 or $3 Billion. So he gives his nephew a big bonus and a blank check to invest in more high-yield bonds and so Joe buys up all the “junk-bond” high yield derivatives he can; he gets bundles of MBS, futures, car loans, student loans, and even credit-card loans, anything with high interest yields and he brings back Uncle Bill (Sam) 20% on his $500-Billion dollar investment and so Uncle Bill (Sam), ecstatic as any free-trader Capitalist would be at this windfall, hands his nephew power of attorney and gives him complete control over all his money. And what does Joe Wall Street do but go out and buy more and more “junk-bonds” for their high yields and everybody is happy for a whole decade, until, like a big earthquake the real estate boom goes bust and foreclosures, short sales and bank failures, with an occasional Bernie Madoff Ponzi scheme, dominates the headlines.

And so Joe Wall Street went to his uncle Bill (Sam) and asked for a bailout and his Uncle bailed him out, again and again and again, until, finally his money was all gone. But, this is Bill Gates (U.S. Gov’t.) we’re talking about here and all the business people knew and trusted Uncle and so they let him print up some more (counterfeit) money, which they accepted. They looked at this money as a personal Bill Gates (U.S. Gov’t.) I.O.U. and figured his company Microsoft (U.S. Treasury) was too big to fail and so he managed to write I.O.U.’s for 3 trillion dollars and is still printing the counterfeit money to buy up his I.O.U.’s with, the toxic MBS, CDO’s and CDS’s and other worthless derivatives and he is even talking China into buying some of this worthless junk; well, maybe worthless is too strong a word, after all, everything is worth something and if China will bite and buy some, well, maybe things aren’t that bad, after all, I mean we all know how good China is at making junk; even from junk. Oh, and Joe Wall Street is really sick over what he did to his Uncle Bill (Sam) and he even changed his name; he’s now Joe Six-Pack.