This is a piece about the recent financial troubles.; I begin with a confession. I am a sociologist and that makes me instinctively distrusting of most economists.; It is a fault, or an advantage, or both, but in any case a different lens.; So read critically.

Second confession.; My struggle for understanding crystallized when I read a piece on the Huffington Post by Dean Baker, my favorite economist.; Baker has great credibility with me from some searching conversations a decade and more ago.; At that time he was warning with great strength and detail about the housing bubble.; I felt I needed to try and understand his point of view.; Not surprising to me, I largely agree with him.; This writing can be seen as an echo and development of Baker's thinking.

The core problem, the primary landmark, is the collapse of the housing bubble.; Our house has recently lost $200,000 in market value, a small part of the $4-5 trillion loss in housing equity in the United States.; This is no problem for our family.; We have a modest mortgage debt that we hope to pay off in a few years.; We have something on the order of $500,000 in equity remaining.; If the housing bubble continues to rupture, as Baker predicts, we may lose another $200,000 in equity as part of another $3-4 trillion decline in U.S. housing equity.; That would bring the selling price of our house down to roughly the replacement value of rebuilding plus a little something for the land. Our family would be just fine with this, but, sadly, a lot of other families would not.

Many families who borrowed money based on the then-market price of their houses are likely to be faced with owing more money than the current market value of their house.; They have negative equity.; Some will just bravely continue to pay their monthly mortgages to stay in their homes and hope for an upturn in value.; For a myriad of reasons, others will need to sell.; Selling at a loss will be hard on families and some will go bankrupt.; Some families will just step away from their mortgage and leave the loss for whoever holds the mortgage. In some cases the indirect holder of such mortgage is a national banking Kazakhstan.

A lot of very wealthy people have lost a lot of their wealth in the last couple of weeks because they, like Kazakhstan, bought a lot of financial security instruments (complexly packaged and named) that were backed by unsound investments in mortgages.; Such losers bought, and then lost, the declining equity in overvalued housing mortgages.

The start of the cascade of financial trouble is not really so hard to understand.; Wealthy investors, including the shareholders of banks and insurance companies that bought a lot of over-valued mortgages, are hurting big time.; Banks are failing and so did the mammoth, and at least partly corrupt, AIG insurance company.

If that was the end of the story I could sit back and let the economy adjust.; My pension payments might decline modestly and I couldn't finance another renovation on our house.; I might have to pay cash for our next car in a few years.

Now we get to the Paulsen bailout story and argument.; It starts with the financial troubles I have just described and projects that a cascade of much bigger problems: massive bank failures, inability of companies to get credit for managing their cash flow needs much less getting cash for expansions, people radically dialing down their spending because of losses and unemployment and fear, and then further rounds of business failures on top of financial failures because of decreased retail buying.; This can be summarized as the fear of sliding from recession into extended depression.

An additional part of the negative cascade would be massive reductions in tax revenues which in turn leads to massive cutbacks in government spending, a loss of a lot of the safety net for people in need, and an increasing inability of the federal government to intervene to stimulate the economy.; If all this happens then even my family is hurting, maybe hurting big time.; Our family could probably ride out a depression better than most, but the situation for our children and grandchildren would look pretty bad.; With a real depression the equity in our house, based on market value, might fall way below replacement value because no one would be buying.

The Paulsen cascade nightmare is a truly grim story.; So the core policy question is how to stop the cascade.; The Paulsen answer was to prop up the economy by having the federal government, and ultimately the taxpayers, absorb a lot of the loss in housing equity by buying bad mortgages.; That didn't pass the House for a variety of sound, and not so sound, reasons.

The Dean Baker alternative answer, as I understand it, is to use the $700 billion, or a comparable amount, to shore up access to credit for businesses and let the housing bubble finish bursting down to a level at which the market price of a home is roughly equivalent to its "true value."; I read "true value" as roughly equal to replacement value plus something for the land. Bernanke and the Federal Reserve can, and probably will, provide some of that money for standard operating business credit without any legislation.; It certainly has the resources for at least the first phase of such credit support.; An important unknown is whether the Fed has the resources to handle all the credit need.

The strength of the Baker answer is that the money goes to where it is needed the most, providing enough credit for businesses to operate at a normal level.; That purpose is, after all, the most basic purpose of the Federal Reserve system.; Maybe some of the credit would be supplied by foreign investors who see self-interest in stopping a nightmare version of a downward cascade.; If businesses stay in business, then there is employment, money for buying things which keeps the economy turning over, and tax revenues.; The Congress and the new president will still have a lot to do.; Money spent by the government, for whatever purpose, needs to have fairly short term impacts on improving the economy.; (Thank goodness for the counter-cyclical impacts of Social Security, Medicare, etc.); One of the key credit problems to be solved is making new mortgages available for house buying at the "burst" level, and/or adjusting existing mortgages.; At the burst level such mortgages presumably have "real" equity and are therefore good investments, once again perhaps the safest investments a family could make.; At the reduced prices a lot more people should be able to afford a reasonable mortgage to buy an existing home and there will be a lot of people who will need such homes.; For those who cannot buy, there should be a lot of homes for rent at affordable prices as the bubble washes out of the system.; And, if business is functioning, then stocks will have some value, though that value may be based, once again, more on shared profits to stockholders rather than on speculation.

The problems with the Baker answer, from my point of view, are two-fold.; One is the complex relationships of the U.S. economy to the world economy: balance of trade, holdings by foreign countries and investors in everything from treasury notes to ownership of U.S. businesses, money markets and capital flight, and more.; That is too complex for me to estimate.; The second is how much of the pain in these adjustments will fall on those with low-incomes, those living on retirement incomes, those who are unemployed, those who have lost all their wealth which was tied up in their houses, etc.; I tend to measure economic policies by what happens to the "least of these" rather than to the wealthy.; I cannot figure this out yet but circumstances look grim. "Get a job" is a limited solution in a recession, much less a depression.; My plea would be to remember that money directed to the "least of these" is spent almost immediately and that is good for the overall economy even though it doesn't help the Yacht makers.; (I think used yachts are going to become a lot more available as well.)

The bill passed by the Senate encompasses two minor aspects of the Baker approach in addition to the basic Paulsen package.; The temporary increase in the guarantees of bank deposits from $100,000 to $250,000 is of little value to most depositors but will be of help to some small businesses who get added protection for their usual operating funds.

The passage of tax break extenders for alternate energy companies and some other enterprises pumps a little more money into the general economy.; The most basic support of the Baker solution, as mentioned above, is likely to come from Federal Reserve action to expand credit to banks so that they can make more loans for ordinary business purposes. And now for some slightly good news.; With the economy in trouble the price of oil is falling quickly.; Wait a couple of days for your next gasoline fill-up.; I've already noted that declining housing prices, though bad for equity, are good for people who need to buy or rent a house to live in.; Speaking as a sociologist, I note that the U.S. has a lot of excellent housing, a lot of automobiles, and a lot of other infrastructure.; There can be a lot of pain in the redistribution of these assets, but at least there are a lot of assets to redistribute. That matters even though it looks like just gloom and doom from the setting of the economic stories.

I end with this thought.; We live in a great house and continue to share it with others.; We have a great 9-year-old car that gets good gas mileage and should run well for many more years.; We are very fortunate and we are thankful.; Many of you who receive this email also have a lot to be thankful for as well.; So forget about revenge and blaming.; Focus on our abundance.; Do your jobs.; Help where you can.; Spend wisely. Use it up and then recycle it.; Vote for the candidates that you think are most likely to help us get an economy that also works for the "least of these."; Remember that Jesus came to save our souls and not to make us wealthy.

The Rev. Pat Conover, now retired, is the former legislative director for the UCC's Washington, D.C. office.