“I don’t see how we get out of this without either a financial meltdown or a political meltdown.”
If this Treasury plan does not get implemented, you will have both. The economy will tank and the Dems will win the Presidency and gain seats in the Congress. Then the costs will be much greater than $700B. And speaking of that, it is not a $700B cost (i.e. bailout). It is a $700B investment to free up credit in the markets. The government has the luxury of holding these securities until maturity if necessary, these companies don’t because of capital requirements associated with decreased asset values. As the economy & housing market improves the value of the securities the government will increase in value as well (or at least the underlying assets). Much, if not all, of the $700B should be earned back.
I’d rather invest $700B in these securities than spend much more than that in the Dem programs that they will pass, along with higher taxes, if they gain control of government.
My guess is some version of the Treasury plan will be passed by next week.
My guess, too.