To the tune of the intro to "The Rockford Files":

"Eh, yo, Danny Boy. This is your buddy, Fat Sally…Sal Minela. You still bustin’ knee caps? I gotta couple of stugotts been a little light recently and I need some persuasive collections. Names Skinny Fannie, Fast Freddy and their pal Mini Indy. It’s about $6 trillion with the vig. U interested? Call me."

OK, let's go over this again.

1. You can't lend money to people that can't pay it back.

2. You are not a government that can print money so you must either earn it, borrow it or have someone buy your equity.

3. Contrary to some folk's opinion, money is not just digital bit and bites created at the Treasury's or the FED' whim.

4. If you leverage your equity 30:1 (or even 220:1 ala Bear Sterns), just a weeeee little decline in the market wipes out your equity and, therefore, your capital structure.

"What we have here is a failure to communicate."

Let's remember just what our government is. It is nothing more than the collective capabilities of all of its citizens. That's it. We, as productive citizens, produce value in excess of what we consume, after tax (or at least that is what we are supposed to do). This is called savings.

Then there is the government. It is funded by our taxes. These taxes may be invested in things that last, such as bridges, roads, utilities, etc. We can spend it on social requirements such as the military. We can spend it on the necessary expenses of our country (though you and I might differ on the definition of "necessities"). Then, after all of this investing and spending, we still don't have enough, the country may use our collective ability to service new debt and we can borrow. To support that debt, we must pay interest, but that interest must be paid out of our taxes UNLESS you have a giant governmental negative-am economy.

That is it! We have a giant negative-am country!!!

We tax, we spend more than we tax, we borrow to spend and we borrow to pay the interest on the debt we borrowed. How do we get away with it? We have a giant printing press. The world uses our currency and they have wanted our dollars. Also, it helps that we have 13 or so aircraft carriers, a large number of "boomers" (submarines that break things, not you and me), an even larger number of warheads and the demonstrated ability and desire to use them to defend liberty and capitalism (OK, not really but it sounds good). This is the real meaning of "defending the dollar".

But, you and I do not have a trigger in our hands so our debts must be paid and serviced. We don't have a personal printing press.

Another truism: Most people think that assets are fixed in value and debt is variable. It is quite the opposite. Assets vary in value and debt is fixed.

As an example, you buy a house for $500,000 and borrow $475,000 (a very generous, by current standards, 5% down). If, just if, the value of your home declines by 25%, as they have in many parts of the country, your home is now worth $375,000 BUT you still owe $475,000. You must pay that off somehow and you must service the debt while you owe it.

If you don't pay this debt, the bank looses money. That loss reduces their equity and they can now lend less. Less lending, less growth capital, higher rates, etc.

This is right where we are now. Over valued assets everywhere supported by too much debt and too little income to service the debt. This is true for individuals and for the country.

And for Fannie and for Freddy and for Indy. And the "ands" just keep on coming!