If I were the easily entertained type I'd attempt to wade through the dozens of seemingly insipid ET threads about the Treasury's bailout plan. Unfortunately I have little tolerance for stupidity, ignorance, illogic and gross levels of misinformation. Finding anything beyond the former is becoming increasingly rare on this site. For starters the âbailoutâ is not to help Hank Paulson's friends at GS or to save the necks of âgreedyâ Wall Street bankers or even an attempt to lift the U.S. Stock markets. Anyone holding BSC or LEH will tell you that there was zero attempt to make the âfat catsâ in those firms anywhere near whole. This bailout plan has one single goal. It's an attempt to save your Federally Insured Bank Account. You guys want to talk about leveraged bets? Here's some numbers: There is $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. Total cash on hand at banks is $273.7 Billion FDIC reserves are around 50 billion. Anyone with a double digit IQ can do the math. The FDIC is levered at about 85-1. Even Lehman's Dick Fuld would blush at the exposure. Hence the Treasury/Fed hopes that the guarantee of 700b towards stabilizing mortgage backed assets (which are NOT worthless) will ensure that each one of US doesn't need to petition the FDIC for our âinsuredâ funds held at our too big to fail depository institution. Even so it still may not work. In a sense each of us are ALSO in the banking greed game. How? Because anyone who keeps money in a bank account or in a CD presumably is earning a higher rate of interest than if we invested those funds directly into Treasury securities. We too are skimming the spread. Do we ever stop to think that there's no free lunch. Would a bank pay us a higher rate on deposits than the Treasury pays us if their was no risk? Of course not. The banks wouldn't need to pay a âriskâ premium. Instead there'd be parity pricing between Treasuries and CD's. Thus we too are complicit. We gladly suck up the higher yield but we don't buy enough insurance. Here's a quick analogy as to how each of you can place yourselves in the bailout puzzle. Most of us have insurance on our homes. Some of us know we're at higher risk do to living in a hurricane, earthquake or flood zone. Because of that we pay a higher premium than those in less dangerous locations. We're sort of a junk bond. No insurer really wants our business unless we âpay upâ for coverage. Easy to understand. A property insurer would rather write a policy in Cleveland than Miami. Now let's assume the unthinkable. (which one day will probably occur) A killer Cat5 wipes out Miami causing hundreds of billions in losses. Within weeks a relatively milder Cat2 hits NYC but do to the regions density causes another 100b in losses to insurers. Maybe we can even throw in a 6.8 trembler rocking the Los Angeles basin. My insurer and your insurer might be insolvent. Jeez we did the ârightâ thing all those years dutifully paying our premiums while the insurance execs played corporate events with Ernie Els. Now we're stiffed. No house and no check in the mail. The country would be in chaos. Any of us thinking Allstate is any less leveraged or exposed than LEH is making a delusional mistake. While our insurance premium may seem high-the truth is in a Sigma3 event there is no amount of premium compensatory to the open ended, naked risk. If in this case if you were a victimized home owner would you oppose a Federal bailout of Allstate? Or would you suck it up and say no biggie? If your insurer was in fine shape but your neighbor and his 5 children were literally going to be out on the street forever because their insurer had gone under would you oppose the bailout?