What Bernie Sanders said
If a company is so large that its failure would cause systemic harm to our economy, if it is too big to fail, then it is too big to exist. If it is too big to fail, it is too big to exist. We need, as a Congress, to assess which companies fall in this category. Bank of America is certainly one of them. Those companies need to be broken apart. We cannot have companies so huge that if they go under they take the world economy with them.
Sanders also introduces a new acroym, CDS --- Credit Derivative Swap.
I can't untangle all that now -- Readers? -- but, falling into rank speculation mode for a moment, it sounds like:
1. The usual suspects, enabled by a complete lack of regulation, managed to backscratch each other into owing themselves more money than there is in the world.
2. As usual, the game of musical chairs is fun until the music stops.
3. When Paulson bailed out AIG, he triggered -- knowingly or unknowingly -- a lot of CDSs, and stopped the music. It's like a margin call on the world economy, and since the swaps involve more money than there is in the world, that's a problem.
4. I'm guessing -- I'm not completely clear on the timeline -- the music stopping was the source of Wednesday's famous "tick tock" in the WSJ (see comments here).
5. If this is true, the $800 billion is the merest stopgap. There's a lot more money in the world than that.