A few points:
1) This will absolutely dwarf the RTC bailout.
2) The government does not have the time to set up an RTC-like organization. The old RTC took almost 2 years to get set up. Therefore, they will just give the "power" to some organizations (likely the Fed, Fannie Mae, and Freddie Mac) to accomplish their foolish "goals".
3) Everyone needs to remember that this bad debt that the government (we) are taking on does not currently have "value" assigned to it. In other words, they have no clue what, and how much, they are dealing with. Without value, it is impossible to say that there might be a profit on it (There won't be).
Point 1 - absolutely dwarf the RTC - agree. Your point??
Point 2 - With the RTC they needed to make it up as they went, today we have the history to help us. Yes it will take some time but why don’t we have the time to set up an RTC organization?
Point 3 - I am amazed by your pessimism. Do you want to see another Great Depression to prove your point!! Clearly these assets have deflated values due to the panic in the market. Once you take the panic out, the values will return. As the RTC experience proved.
As for profit, if you are buying something for $.35 on the dollar, you have much more upside than downside. You keep forgetting that there are assets behind these mortgages.
But on the other hand, how can you assign a value to our providing housing for an unfortunate family? /sarc
Sorry, I know you are trying to provide a serious explanation.
your analysis is flawed.
we have a history to guide us. You also don’t realize that many of these items ARE collateralized.
Also the “buy” of aig was at the bottom of the barrel.
we should be thinking along the lines of the chrysler bailout. a cost benefit analysis. what are we buying for the dollar we are spending.
We should not be thinking like those executives who did the ford pinto analysis which concuded it was cheeper to let people die rather than fix the problem.