These are the people who first lose money.

And of those 20 that default, we have a 50 recovery.

But this I just want to show you some data here.

So the 300 million from equity, they're going to get 55 million assuming that there are no defaults or pre payments or anything shady happens with the securities.

You're still solvent.

They serviced the loans.

Some percentage of these borrowers are going to default on their mortgage.

We would create incentives for securitization.

Payable to the City of San Francisco.

Helps bring it down.

You have 189,000 as the value of this equity.

Now let's say it gets even worse.

What is your strategy in your household?

Well everyone knows that it's not going to be exactly 10 .

So that's bankruptcy.

You go get bankruptcy protection.

This guy, he does have interest.

It allows let's say this group of borrowers let's say this pool of borrowers right here actually didn't

It can do it through debt or equity.

I have 4 billion in residential CDOs, collateralized debt obligations.

Over the next few years big decisions will be made in Washington on jobs, the economy, taxes and deficits, energy, education, war and peace.

External debt something that I can tell you a long story about because I personally worked on one of the biggest debts on the continent has come down dramatically.

So we still have the same amount of debt.

So, each of these is an investor.

There's no law that says, you know what, if you insure a billion dollars of debt, you have to put a billion dollars aside.

Have a surplus? Take two tax cuts, roll back some regulations and call us in the morning.

It's exciting, but we went over our finances and...

That man borrows money from many lenders.

That man is a heavy debtor.

That man has many debts.

So it buys, it buys debt.

You can sell shares.

And so when the Federal Reserve or any Central Bank prints money, and it buys debt, it goes out into debt markets and it buys it, it usually buys the safest kind of debt, but that affects all of the debt markets, it goes out and buys in the debt market, they're essentially shifting the supply curve of money to the right, they shift the supply curve to the right.

And because it's a junkier rating, no one is going to want to buy it.

We would just know that there is a 20 chance.

I can no longer fulfill my obligations.

So I really do have a positive equity of 11,000.

They would actually owe this extra 1 million.

The bank was profitable.

My next presentation, I'm going to take it to a further

So that's what we're going to show you in the presentation on collateralized debt obligations.

What are my liabilities?

This is the retiree health care benefits.

So it's only 10 , indefinitely, if all of the borrowers pay all the money and never default or anything like that.

America's foreign debt shot past 500 billion.