Pretty strong words. What do we get for our money? Are we buying a new car? A vacation home? A tank of gas?
A stream of future cashflows from people who are paying their mortgages.
Some of them will default, but most won't. So the paper we are buying is going to be worth something down the road. That;s why the 700 billion Paulson is asking for should be viewed as an investment. The question, however, is whether it's a good investment, and that all depends on the price the government pays for it. I'm inclined to think Paulson is going to overpay, which is why I oppose it.