Okay, so I made the last part up.
But Treasury Secretary Henry Paulson’s series of statements today regarding the latest proposal sounded like those spam emails in my inbox promising everything from riches to more energy. And just like those “too good to be true” messages, Paulson’s messages were a little too over the top to be believed.
Paulson didn’t offer a lot of specifics during his press conference today but made enough noise that the gist is there. I expect that he will turn over a package to Congress that will offer to buy massive amounts of debt from sinking banks. If all goes according to plan, if the housing market recovers, if the government gets a big enough discount, if the government can find a willing buyer when this is all said and done, then the government could make a profit. That’s a lot of ifs.
How much will this deal cost? Senator Richard Shelby (R-AL) who is the ranking member on the Senate Banking Committee has tossed around a figure of $500 billion. If that turns out to be true, that will bring the total bailout to date to $1.3 trillion (considering $800 million already earmarked).
Paulson, however, is quick not to characterize this as a net expense to taxpayers because if all goes well (there’s that if word again), the government will get what is being referred to as “saleable and income-producing assets.”
Hmm… Buy low even if you can’t afford it. We swear you’ll make a profit later. It’s a great investment!
Isn’t that thinking how we got into this mess to begin with?
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Amen, sister! Will this country NEVER learn??? I’m starting to think it’s something in the water…
It’s the old “shell” game – Which shell is the pea under? Turns out it’s not under ANY of them.
We have lots of casinos here in Iowa and they advertise “loosest slots” (whatever that means) and 97% payout, but the gamblers still lose.
As long we continue to elect people who want to play fast and loose with our money, this is what will happen. (I know Paulsen wasn’t elected, but his boss was.)
@ Jean – that’s funny how the casinos use the 97% as if it’s a good thing. 97% on 100% of your money means they’re keeping 3 cents for every dollar put into the slots. Hmmm, give $1 and get back 97 cents, i’d definitely say that’s how are government’s been thinking lately.
What we have here is the socialization of risk.
As a limited-government enthusiast, I hate to say this, but something had to be done. I’ve been out of work since February, and if the financial system goes kablooey, hiring will come to a complete halt. Ya, it’s “socialization of risk,” yada-yada, but spare me the moral-hazard argument — no one ever learns anything anyway. The economy simply has to be patched together, otherwise you guys are going to be joining me in the… well, not the unemployment line, because I didn’t file for unemployment (I had been working as a W-2 contractor, so although I was eligible, I don’t think that’s what unemployment insurance is for, so I took a pass), but we’ll be finding out firsthand where my Dad’s tedious Depression stories came from….
Urb
Taxgirl said ” Isn’t that thinking how we got into this mess to begin with ” ?
Taxpayer says ” Why yes, as I see that is absolutely correct. ” Taxpayer follows with ” And that is what will continue to keep us in this mess and more to follow unless something changes and SOON. ” But to that:
The Powers that be say ” La,la,la–I can’t hear you. ”
While the taxpayer wishes that her Gram was still around to remind her how crappy things got during more than one bygone era….so I can have my facts straight as I watch history repeat itself…but, I digress…
Anyway, Right on the head, Kelly
Great post! I think the big “if” is the idea that someone else will buy this debt down the road from the government. I mean it’s “bad assets.” Everyone knows this. So why would anyone buy them? It’s not like a few years ago when de-regulation came and everyone said these credit derivatives would be wildly profitable. Now we know that they are a bad idea — as Warren Buffett once called them: “Weapons of financial mass destruction” (and that before this mess really blew up).
So, since everyone really knows what they are, why would anyone buy them? Which means we will, in fact, be stuck with the bill.