CNNMoney.com describes the planned $700 billion bailout as follows:
The plan would allow the Treasury to buy up troubled assets from U.S.-based companies and foreign firms with big U.S. operations. The aim is for the government to buy the securities at a discount, hold onto them, and then sell them for a profit.
Here’s the question: if these troubled assets are so cheap, why doesn’t anyone else besides the U.S. government want to buy them?
There are plenty of hedge funds out there with ample cash. Perhaps, if the assets are such a good deal, some European governments will want to get in on the bargain also, rather than let the U.S. Treasury get all the spoils.
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I am going to buy up all the CRT televisions. Their price can only go up right?
I thought China was buying it all…
Two things:
The Treasury, via Congress, can put the taxpayers on the hook.
The Treasury/Fed(not sure who makes the call) can print money.
If anyone thinks those are “bargain prices’, I’ve got a bridge to sell them in Alaska…
Could it be, I dunno, a case of market collapse due to total information symmetry?
Everyone knows that their assets cannot be valued without unwinding the transaction(s) underlying the asset. At which point, the asset itself becomes valueless – because the whole point of the securities was that you wouldn’t *have* to analyze the creditworthiness of the individuals behind the securities. Once you have paid to become one the classic “informed” traders, you don’t need securitization to trade.
The secondary mortgage market is the poster child of the total failure of government-created markets.
Seems like a bargain at only $700 — I might buy it myself for that.
Personally, this bill makes the cynical side of me suspect a conspiracy:
- The government knew a crisis and meltdown was coming
- It let the crisis happen …
- … so that it would have a chance to propose a bailout package like this that lets the government SIMULTANEOUSLY:
- Gobble up massive amounts of property all over the country
- Increase its control over major world financial institutions and markets
I couldn’t agree more – one of the key issues underpinning this crisis is people forgetting that risk/reward go hand in hand. Selling this bailout plan as essentially “guaranteed” return for the government seems to be very quickly forgetting the sins of the past.