Just in case you don't quite understand what "bail-out" means...here is part of Paulson's statement this morning justifying the massive one that's happening as we speak:
The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible. The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
FYI: "Remove" means "Buy"
So, here is what he said:
The banks are paralyzed--they are refusing to issue credit.
Since the world goes round due to the American average person's credit-backed consumption, the lack of credit is Really Bad.
The government experts think the solution is for us (as in, you and me) to purchase "illiquid assets" (mortgages) from the investment banks.
By doing so, we show that the taxpayer will always ultimately be willing to back the banks. We let those guys survive, so they can go back to giving us credit.
I believe this is the concept. and, Paulson says, it'll be less painful for us than the alternative...