But on Sunday, 60 Minutes had a great story on the next mortgages that will become everyday words to Americans. And they’re called “Alt-A” or “Option Arm” mortgages. Check out the video story after the fold and more.

The gist is this: there are thousands of adjustable rate mortgages that will re-adjust upward in the next few years. This will increase monthly mortgage payments. Many will not be able to pay for a variety of reasons: job loss, bought the property for investment, etc. These properties will go into default and thus bring down the values of more mortgage-backed securities that are owned by financial firms around the world.

The thought process for these mortgages was much like subprime – that housing prices will continue to go up so it won’t matter.

Could more write-downs be in the future?

These mortgages fall back to the main overarching idea that we began our business journalism studies with: Americans have been keeping up their standard of living with debt for years with little saving. And now the bursting of this bubble will hit another group of mortgages – according to this story.

But the piece’s kicker does end on a positive note as the asset manager Whitney Tilson, who leads the dourness of the piece, says it’s a great time to invest in stocks?

“Does that mean that the stock market is gonna continue plunging as we’ve seen the last several months?” Pelley asks.

“Actually we’re the most bullish we’ve been in 10 years of managing money. And the reason is because the stock market, for the first time I can say this, in years, has finally figured out how bad things are going to be. And the stock market is forward looking. And with U.S. stocks down nearly 50 percent from their highs, we’re actually finding bargains galore. We think corporate America’s on sale,” Tilson says.

Her research division had nothing to do with the high leverage that Morgan took on or its investments in mortgage-backed securities. Her division has continued to make solid, consistent profits for Morgan Stanley.

So if Rep. Barney Frank and Sen. Bernie Sanders are talking about cutting the bonuses of EVERY employee at every financial institution that has received part of the the bailout money I couldn’t be more opposed to the idea. Is it fair to penalize thousands of people for actions they had nothing to do with? And it is more than likely that these employees will be penalized in some way (either by losing their job or receiving less compensation) by their employer without the hand of government getting involved (I get into this later).

Check out this interview Bernie Sanders (I-VT) recently did with CNBC. At the 1:56 mark a host chimes in:

“Senator your proposal looks rather punitive and mean spirited…It’s one thing to say to take bonuses away, when you’re getting federal money, from the big brass, that got us into this mess, but you want bonuses deprived of every Wall Street employee…You want the secretary at Goldman Sachs not to get a $30,000 bonus that she could put back into the economy. And she did nothing wrong.”

The comments made by Barney Frank (D-Mass) have been kind of vague as to whether they would go after executive pay or the pay of every Wall Street employee. The one below calls incentive structure on Wall Street “perverse.”

“The incentive structure of the finance industry should be looked at closely,” says Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. He plans to hold hearings on Nov. 12 and Nov. 18 and says he will raise the subject of bonuses. “It’s a perverse structure if it’s heads I win and tails I break even.”

WTF? What is he talking about? I’ll admit that I’m not a big fan of Frank. It’s kind of scary to me that he’s the chairman of such a powerful House committee. But he’s also a total hypocrite. In the past election cycle, he received more political contributions from the securities industry ($192,000) than any other industry. He is doing the typical play we see in Washington all the time – denounce something in public, but support it behind the scenes.

But in the end, I think all of this is a moot point because these firms are already going through major cost cutting by laying off thousands of workers (Morgan Stanley announced job cuts today) and bonus payouts will likely follow. When Morgan had a couple of terrible years a few years ago, they erased bonuses for thousands of employees.

I agree with Greg that the negative economic impact on New York would be huge if bonuses were frozen for all Wall Street employees. But I think the companies will be cutting, or reducing, bonuses on their own. And all this talk by Frank, Sanders and other Democrats is nothing but populist bloviating.

If it were my decision, I wouldn’t give a dime to Wall Street to pay for CEO bonuses. But, as we all know, it’s not up to me.

I saw a segment on “The Early Show” this morning that posed this very controversial question to the experts, which made me decide that I really don’t care if these CEOs get their bonuses or how much the bonuses are–the thing I mostly care about is: Where is the money coming from?

Goldman Sachs and Morgan Stanley each have $6.8 billion and $6.4 billion, respectively, set aside for bonuses. However, U.S. taxpayers are saying that these bonuses should be eliminated.

“I may not understand everything, but I do understand common sense, and when you lend money to someone, you don’t want to see them at a new-car dealer the next day,” said Ken Karlson, a 61-year-old Vietnam veteran and freelance marketer in Wheaton, Illinois. “The bailout money shouldn’t have been given to them in the first place.”

On the other hand, Massachusetts Sen. Barney Frank says that none of the money from the bailout will be given to bonuses and that “all of the money is to go into new loans.”

While I don’t feel too strongly about either side on this issue, I think it’s a moot point. Losing a bonus is a much nicer gift than losing your house or losing your job.

Here’s the CBS piece I talked about earlier.

My favorite line in this piece is: “If firms don’t pay out the big bonuses, they’re afraid they might lose the top talent.”

Which leads me to ask: Would it be so bad to lose the people that got us into this mess in the first place?

John Mack “quickly signed,” the Wall Street Journal said in its coverage of the Treasury meeting with America’s top nine banking chiefs on Monday.

Maybe he did, or maybe he actually signed in alphabetical order — which would put him somewhere in the middle. “Before the meeting, John J. Mack said his bank, Morgan Stanley, did not need capital from the Treasury. It had just sealed a $9 billion deal with a large Japanese bank,” according to the New York Times account of the same event.

The details here might paint different pictures of Morgan Stanley, but the outcome is all the same. Mack and each of his peers definitively signed away on a $125 billion cash injection (executive pay caps included). Both papers clearly made that point in their coverage of the Washington gathering between the nine CEOs, Henry Paulson, Ben Bernanke and other government officials.

And the initial objections, the arguments, the speculation over who signed first vs. who signed last were all part of a great CEO bluffing game. The most eager to sign might seem least confident in the eyes of his investors, but the last to throw in his cards and take a portion of the split pot might lose his best bet.

Not even the clean John Stumpf of Wells Fargo could afford that bluff.

The reasons are countless, but in today’s news alone:

The Dow fell 733 points, bringing it down to 8,578, and all major indexes lost at least 7%.

JP Morgan’s third-quarter earnings fell 84%.

Citigroup continued its litigation against Wells Fargo for billions of dollars in damages over a lost bid for Wachovia.

And all that toxic debt is still floating around.

The credit crisis has only begun to show how bad it can get, and just like with oil reserves, nobody knows where the bottom is. The poker faces are officially off.