Think of the Financial Industry in America as a great big Rental Car company... Imagine the own a lot of cars of many types and ages that they make money on.
NOW ...things go sour. They have too many cars and some cars are too old to get a good price for on the market. At some point ... they can't sell the cars - they almost have to give them away to keep enough cash on hand to maintain the good cars. On top of that the word got out there are a lot of old cars in the fleet and people stop renting from them very much or the company has to charge twice as much rent as usual to keep their cash flowing. The NEWS MEDIA ADDS TO THE PANIC.
THE FED first tried to save the car fleet "buying more gas" but that would go on forever. (low interest loans and etc). SO - they BOUGHT the older cars instead. The taxpayers will OWN those cars and they will be sold back over time so the "bailout" will probably cost taxpayers very little once the cycle is completed. But for now- the cost to buy those old cars is about a TRILLION DOLLARS.
" BAILOUT " is not the best term. Rather - a hard to swallow word comes into play - " NATIONALIZATION " of hard to sell properties UNTIL they can be RE-SOLD to the private market without WRECKING the system -- is more like it.
The "trillion dollar" extra debt scare is NOT very well explained either . It is not expected to be money spent outright as in the war against terrorists. We (the government) expects a return on our "investment". Even if we taxpayers do not get all our money back for the "cars we bought" the total debt will be a Lot LOWER compared to the real possibility of HUGE losses in values to our HOMES , our JOBS and our BUSINESSES . (a trillion would look pale by that number and your kids will be selling matchsticks on the corner).
It is NOT a plan most CAPITALISTS are happy with but the alternative is the end of capital flowing at all. "shades of 1929"..Globally. In 1929 the government refused to get involved in any easing of the crisis. Bad mistake. Let's not think like that.
NOTE: - the Government has taken over companies and formed conservatorships on a temporary basis in the past to solve one or another financial or political issue and to prevent a crisis. This time - it seems like a lot bigger effort than any in the past. America will NOT ALLOW this temporary measure of "nationalization" of a segment of businesses assets to become permanent. Look for a return on this investment over the next five to ten years and the government releasing its ownership back to private ownership. It is very likely you will come out NOT OWING ANY EXTRA TAX.