I thought I’d never see the day when the government could admit such a possibility.
“we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”
Congressional Leaders Stunned by Warnings
I watched Hank Paulson on Meet the Press and on Face the Nation this weekend, and boy did he not inspire confidence. He hemmed and hawed and couldn’t give a straight answer. He kept saying if Congress did not act quickly, the “alternative” would not be acceptable. I was waiting for them to ask, “So, what exactly is the alternative?” Of course they all avoided going there.
The plan would be to “invest” in illiquid assets on the books of financial institutions. And then sell them back to the market later. Come on, who are you kidding? Nobody is going to buy them later. One good question was how would they determine the price that the trust would buy them at? They said the “market” price between the buyer and the seller. OK, so the trust would buy all these worthless assets at face value that the institutions got them at and then the government would hold them forever since nobody would want them. Um, could you also buy my house during the peak price also?
All the taxpayers are on the hook for at least $700 billion. And everyone also admits that nobody really knows how much it would really cost. And that’s only the limit for now, they could increase that limit later.
And then also admit that they don’t know if this will solve the crisis. So, are they going to come up with another trillion dollar plan to bail out other companies and sectors?
And I’m outraged that the taxpayer will be stuck with all this. I don’t care about the suppossed CEOs that got away with millions. What I care about is the government bailing out all these companies with the excuse that if they don’t then something catastrophic will happen. The government should just let the free market work. If companies choose to make bad decisions, they them pay for it, not me.
The argument is these companies are too big or too important to fail. Well, if they keep on saying that the fundamentals of the economy are strong and that long term the economy is healthy, then you can’t have it both ways. Either the economy is extremely fragile and one company like AIG will cause a massive collapse of the entire system or that a failure of one company will certainly cause problems but not a total catastrophe.
Also I have a sneaking suspicion that some insiders are going to make a boatload of money on these bailouts. Paulson is going to be leaving in several months. Why not use his powers while leaving to provide the most massive bailout in the history of the universe and skim some of it to his friends and oversea accounts?