Is my understanding any where near reality?
Is this a good idea, or a bad idea?
Depends. Do you think 1929 to 1941 were good for America as a whole or not?
Let's not forget that we have already started our generation's long war, which means we can't depend on an WWII analog to got us out the "Great Depression 2.0", so, yeah, I'm force to say that the just shy of a trillion dollar bail out is a good thing, in the long run.
The fact that both of us own houses is, really, when you get down to it part of the problem. I'll grant that my owning a house wasn't really my idea, and I sort of got sandbagged by my brother in law on when I had to get the mortgage, but I will point out that my mortgage is not one that got sold down the line, and that I'm not doing any of those weird exotic type things, and my interest rate is both fixed and fairly high. Still, if it wasn't for the fact that we were only going for a fraction of the house's cost, we should not have gotten the loan, based on the fact that I was, at the time, unemployed (and more or less un-employable).
We are pulling out of my death spiral, but it's a long hard row to hoe.