For those who aren’t aware of how the whole housing crisis came to be, here’s a basic primer on what happened.

There’s a house at 123 Main St. It has a value. For the sake of our conversation, that value is $250,000.

You want to buy that house. But of course, you don’t have $250,000 cash on hand, so you take out a mortgage. Bank X agrees to loan you the money.

But Bank X wants some sort of assurance that they are going to get paid, so they make you take out mortgage insurance. Insurance company, InsCo A, agrees to provide mortgage insurance in the event that you can’t make payments.

Unbeknownst to you, there is an investment firm, InvesCo B, that is selling things on the stock market. They know that if you pay all the way through on your mortgage, you will likely pay twice the original value of the mortgage. What better kind of investment is there than one that pays 100% interest over 30 years—or better, over 15 years? Not many. Granted, most Americans will only hold their mortgage for 5-10 years before refinancing or purchasing a new home. Instead of $500,000, InvsCo B thinks they can get about $100,000 from you in interest payments and still be left with an asset that is valued at more than $250,000 … say $325,000 (conservative estimate). Therefore, the initial $250,000 mortgage, over the course of 5 years, represents a net gain of around $425,000 (interest payments plus the appreciated value of the asset). InvesCo B decides to buy your mortgage from Bank X and package it up with a bunch of other mortgages. That becomes an asset-backed investment vehicle. Your house—along with those of other people—is the asset behind the vehicle. We’ll call this vehicle a Pinto.

Now InsCo A doesn’t want to just stand there waiting for you to miss a payment or go unemployed. It’s bad risk management to not provide for this eventuality. InsCo A decides that they want to have something backing the mortgage insurance policy, so they go looking for investments that they can use to offset the cost of your house should you default. InsCo A looks around and notices that InvesCo B has a Pinto investment with a high rate of return. InsCo A then buys a bunch of these Pintos and uses the investments to back the mortgage insurance policy on your house.

One day, you get fired from your job—or laid off, or outsourced, or downsized, or something. Either way, you’re out of work. And you can’t pay your mortgage. Eventually, your property is foreclosed. The mortgage company, Bank X, goes to the insurance company, InsCo A, to call in the mortgage insurance policy. InsCo A goes to InvesCo B to cash out the investment they made in the Pinto investment. InvesCo B goes to the mortgage holder of the assets behind the Pinto, which is you^[1] And thus we start the wonderful circle jerk that is the housing crisis.

Now consider that the packaging of loans—or debt—occurs several times over. Ten different Pinto investments get rolled into a single Edsel investment. Then 10 to 15 Edsel investments get broken up into multiple pieces each and rolled into different Crown-Vic and Buick investments. Just to keep things interesting, the credit card companies have also rolled your debts—your credit card balances—into Pacer and Hummer investment vehicles, because what investment is better than you paying 30% on your credit card balances that just pay out in perpetuity. So you roll in a bunch of Pacers into the Edsel, Crown-Vic, and Buick investments, and then continue breaking them up, repackaging them, and selling them onwards.

And just to make the clusterfuck really interesting, Bank X actually represents about a thousand different banks, each doing their own version of Edsels, Pintos, Hummers, Crown-Vics, Buicks, and Pacers. And this is occurring not just with your house, but with millions of properties. And this is occurring not just with your credit card balance, but with millions of people’s credit card balances.

And then Wall Street jackoffs make billions (literally) in bonuses for this genius plan.

And then the whole house of cards comes crashing down, and no one can figure out the whole self/circular-referential mess because … well, no one really knows, because everybody had a fist in someone else’s ass.

Case in point:

And then Wall Street jackoffs make billions (literally) in bonuses (again) for this genius plan.

And then Rick Santelli goes on CNBC and says you’re a loser because you might be having a hard time paying your mortgage.

Hey Santelli. Fuck you.

^[1] Actually, Bank X never really sold your mortgage, they just sold the rights to the mortgage. Bank X was just a flow through (taking a little cut for themselves on the way) for the money to reach InvesCo B.