As I understand it from the hearings. The plan here is buy these things at “Hold to Maturity” value. OK well that is pretty much saying at the original value. But lets say that they discount them some.
The next thing they are going to do is re-sell them to there buddies at a discount from there. This clears up more funds to buy more garbage. And every time they do this then they loose money. And I think the plan is to keep doing this until they max out the taxpayer loan. So basically they are going to loose almost all of the money. Of course they are not going to tell you that. And in the end they can just say well “We thought we were going to make money”, and then what can you do? Nice bankers game. Tax payer = sucker!
The problem is is that they CAN'T max out the taxpayer loan as there is no cap on it.
As the original proposal was written, the 700 Billion is only a revolving credit limit. Paulson (aka "Skeletor") can hold a maximum 700B of those bad securities at any one time. But he can repeatedly buy 700B of them and sell them for 100B for a loss of 600B any number of times, as the original 3 page bailout proposal was written. Unless they've added something new, there is no cap on the losses!
That is just one of the many reasons I'm opposed to this whole "plan".
LQ