"1. The money as I understand it does purchase bad loans. Those loans are not forgiven and provide in the long term an opportunity for the recovery of the funds. This is not a ridiculous prospect given that land values and property values are ultimately destined to rise in the US— even if they do suffer a temporary crash. This means that potentially, even the taxpayer could realize a return on this now terrible investment"Could well be wrong, but my understanding is that there is 'only' about 250 Billion in sub-prime loans, not all of which are even at risk of default. I've been led to believe the 700 Billion is to cover some of the credit default swap risks and keep certain institutions liquid and that this will involve a lot more risky and less collatoralized items for which there is no market value at all.
I've been led to believe the 700 Billion is to cover some of the credit default swap risks
Henry Paulson is an intelligent man who is trying deperately to keep the OLD broken financial model in place. A model that DOESN'T function to the benefit of most Americans and he wants the taxpayers to continue to subsidize and BAILOUT this outdated model in order to keep it in place and running. His solution is limited, short on details, and based on fear.
The limitations, one of which are the Credit Default Swaps involved.
The COMPLETELY UNCONTROLLABLE part of this entire bailout idea are these CDS ( Credit Default Swaps ) They are a 58 TRILLION DOLLAR worldwide market that is TOTALLY UNREGULATED... again, TOTALLY UNREGULATED and no one is discussing that aspect and it's pitfalls. As I have said before.. this BAILOUT is like putting a band-aid on a victim with multiple gunshot wounds. Good luck with that approach.
Also the following facts were pointed out at today's hearing.
South Carolina Senator Jim DeMint stated:
"The administration said the bailout of Bear Stearns would stop the bleeding and solve the problem, but they were wrong," "They said $150 billion in new government spending using rebate checks would solve the problem, but they were wrong again. They said new authority to bail out Fannie Mae and Freddie Mac would solve the problem without being used, but they were wrong again. Now they want us to trust them to spend nearly $1 trillion on more government bailouts. It's completely irresponsible."
I guess the definition for INSANITY is TRUE.
"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein