There's only one way to fix the economic mess the country is in: the hard way.

"The only outcome here is that a fairly large number of people have to go bankrupt," said BYU economics professor James Kearl. "There is no solution short of that."

Kearl and fellow economists Richard Evans and David Spencer spoke to a fire-code-busting crowd on campus Wednesday about the financial crisis that has dominated news for weeks.

They started with a brief explanation of how we wound up in this mess: Subprime loans + rising house prices + bundling into securities + misrated derivatives = the mother of all economic bubbles. Then, housing market collapse + homeowners with no means to pay + banks leveraged to the hilt + most of the world holding the securities = PANIC!

The Plan

The rest of the story, anyone with a newspaper subscription, Internet access or a TV already knows. Bank lending seized up, a few massive financial institutions went under or were bought up, and Congress stepped in because no lending means businesses don't make payroll and people can't do things like buy cars.

"This no longer just affects banks who participated in the slicing and dicing," said Spencer, who added that the country is "surely in a recession."

That the government did something -- the $700 billion bailout/rescue, an amount equivalent to roughly 5 percent of the United States's gross domestic product ¬ ¬ -- was generally agreed on Wednesday as a good idea.

How it was executed was questioned, however.

Spencer said a direct cash infusion should have been the first step rather than the last, because buying up toxic assets didn't loosen up lenders. It also put taxpayers on the hook if the government can't turn the properties around. As it is, $250 billion is being pumped into the system, with half of that going to the nine largest banking institutions on Monday.

Internationally, other countries where banks bought up the bundled mortgages (tagged with AAA bond ratings, no less) are in the middle of their own bailout plans. Whoever handles it best is going to have the upper hand economically for a while.

"It really is kind of turning into a bail-out package arms race," Evans said.

SO WHY IS THE MARKET STILL FREAKING OUT?

"Even if it works exactly as Ben Bernanke and Henry Paulson hope, the economy is going to suffer a lot of pain. The resolution is not going to be easy. We are in a mess," Kearl said.

That's in part because the housing market isn't anywhere near the bottom. The further it drops, the more risky loans go into default, the more shaky financial institutions falter. Nationwide, values have dropped about 15 percent. There's room for another 12 percent drop, Kearl said.

(Speaking to a room full of students looking for good deals, that wasn't necessarily a bad thing, he said.)

The good news is that short-term, the U.S. is actually looking pretty good in relation to many other countries. The dollar is trading higher and treasury bills are selling briskly. But, said Evans, "there is a large negative effect for the United States in that our brand has been tarnished."

What happens once the economy stabilizes and the government finds itself with billions in corporate holdings is another question: "This is the Iraq problem. How do you decide to get out once you get in?" Kearl said.

WHAT CAN YOU DO?

"There's nothing you can do about most of this," Kearl said during a question-and-answer session.

Evans suggested making sure the students have a rainy day fund and to not "believe that your model covers every contingency."

All three said that eventually the market would right itself, as it always does. But they repeatedly deflected questions that sought advice of what to do in the meantime, including one about how to handle retirement contributions.

"You're asking a question that nobody on this panel could answer," said Kearl, "and if we could we wouldn't be sitting here."