I have a little bit of insight into this whole situation as my dad is a CEO of bank (not investment, trade/finance) and one brother is a broker for Smith Barney.

This all comes back down to Wall St's traditional nemisis, greed. The political parties are part and parcel to this as they are always pro-business, and since the economy is always the number one concern in any political campaign, they support Wall St. almost 95% of the time. Follow the campaign contriution trail, there has been a menage a trois between Wall St, the Dems and Pubs for 30 years. Guess the condom broke yet again...

This type of crap isn't new. There are significant bailouts about every 20-30 years. After 9/11 there were a number of bailouts. The S+L crises is another recent example.

This extends well past the lending houses now. Look at the new list of companies on the "do not short" list.

It's also far more than $1 Trillion - look here for a more comprehensive rundown:
http://www.econbrowser.com/archives/...n_bailout.html

This is going to have huge national security effects for the US. I wrote about this very subject in my SAMS entrance exam. The dollar is going to be worth next to nothing - I honestly think we may lose 30-40% of its worth. Budgets are likely to be slashed. I would not be surprised to see some of the major procurement items cancelled to pay for some other things (and at $200B for FCS, that's probably not all bad).

This is going to be a major league mess with the loss of millions of jobs, the continued weakening of the currency, and effects that we can't begin to comprehend yet because the financial system has become too complex and unwieldy (take note US military...)