Virus and Cannibals

The commercial banks and mortgage hustlers collaborated to infect the financial system with a virus, and then the investment banks and hedge funds gambled on the success of the virus to extract interest from the initial prey ( the homeowners who were unqualified credit risks ) for a period of time before the hosts keeled over. The inevitable happened to the subprime market and eventually spread to better grade mortgages, dragging down the government backstops of Fannie and Freddie with them. ( Obviously, everyone involved knew that this would be a con game with a predictable life span- the appetite for credit default swaps proves that. )

Then, when the fraud was exposed,  it all boomeranged back against the share prices of the top tier banks ( the 'too big to fails' ). The cannibalistic system turned against itself, and the shorts swarmed all over the financial sector stocks, causing them to sink fast, and forcing huge banks to be merged into even bigger banks.These bigger banks panicked because now the waste paper was on their books, so they ran to the government for 'profit protection' insurance, in the form of an emergency bailout. This bailout ( handout ) was sold to the people as 'market stabilization', but it actually did nothing to rescue the foreclosed or to free up lending- instead, shares in the crooked banks were purchased, to keep the shareholders from suffering.

This whole bailout has been an exercise in insulating the super-wealthy owners of the banks and the wealthy speculators on banking stocks from exposure to the losses generated by what was essentially widespread securities fraud.