The more I try to digest the $700 billion taxpayer bailout of failing financial institutions proposed over the weekend by the Bush administration the greater my chest pains become. Other than its aim -- to buy up distressed mortage-related assets -- there is nothing to like about it and much to fear.
The prescient Kevin Phillips, the former Republican strategist, explains to Bill Moyers why we should be frightened -- very frightened.Hat tip to Barry Ritholtz at The Big Picture
3 comments:
We cannot afford that. We will end up paying for it and a depression will ensue, period.
Thanks for posting this. I found you via Jaliya.
Highly reccomend the top post at MoonOfAlabama. This is nothing but theft, pure and simple.
My understanding is that we are, as a nation, buying damaged goods that everyone else is afraid to buy. It does not mean that the damaged goods are worthless, only that the market has frozen up for lack of reliable information. No one knows the true value of these goods, so the owners cannot raise cash on that basis. Strapped for cash they are in danger of failing and setting off a chain reaction of failures.
The federal action has hopefully put a floor on the valuation, which will in turn preserve the residual that may in time be stable enough to resell.
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