jamesrage

Interesting.

You won't believe where that $700-billion bailout figure came from | Top of the Ticket | Los Angeles Times

Here's something that John McCain and Barack Obama and Sarah Palin and even longtime Washingtonian Joe Biden probably don't know. Not to mention Bob Barr, Ralph Nader and Ron Paul, who usually knows everything.

It's a fascinating footnote to the economic and political bailout debate that's kept so many people from more properly focusing on the pennant races and the Colts' problems in the last week. (Incidentally, do you think we'd have had this big fight if President Bush had called it a "rescue" plan instead?)

Our buddy from two lifetimes ago, Carl Lavin over at Forbes.com, points out a fascinating paragraph buried in a story on his website late last week by Brian Wingfield and Josh Zumbrun.


Bad News For The Bailout - Forbes.com

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

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chevydriver1123

Pathetic simply pathetic, if this whole mess doesnt convince people that government is grossly incompetent I dont know what will.

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SouthernDemocrat

Well, I guess thats one way of looking at it. The other way of looking at it is that we don't know how much the bailout will ultimately be because deregulation over the last 3 decades has removed all transparency from the markets. Thus, all we can do is make an educated guess.

Just because right wing ideologues have succeeded in making the government incompetent and ineffective does not mean that the public sector is going to be incompetent and ineffective at carrying out every responsibility we place in it. Instead it means that we need to start looking for competence in those we trust to carry out those responsibilities.

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jfuh

Dan already posted this exact same topic.

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danarhea

Yea, I posted this a few days ago. They just pulled a large number out of their asses, and expect the taxpayers to foot the bill. In a pigs eye!!

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jujuman13

If the financial institutions are in the dire straits they claim to be, then it would make sense for them to accept that the Treasury and by definition the Taxpayer SHOULD have equity in their institutions.
It is an absolute certainty that eventually these Bankers will sort out this mess they themselves have created.
Conversely if this mess is not actually as bad as they say it is, then there would be no need for them to give up equity for this loan.
Apparently they are unhappy at the thought that they should give equity in their own Institutions.
For this if no other reason I say tell them to go jump.

Thank you Jamesrage for posting this subject.

Jessica

Wow.
That's all I have to say.

donsutherland1

FWIW, there is actually some method behind the proverbial madness of merely picking a large number. The objective involved is to restore market confidence. Here's what former Treasury Secretary Rubin wrote in his autobiography concerning U.S. debt guarantees for Mexico.

In this [loan guarantee package for Mexico], we were employing a corollary to Colin Powell’s doctrine of military intervention. The Powell Doctrine, which became well known during the Persian Gulf War, says that the United States should intervene only when American interests are at stake and that intervention must be with an overwhelming level of force.

No “right answer” or formula can exist for how much money is enough in such circumstances, because restoring confidence is a psychological matter that varies from case to case. In this instance, Tesobonos were on the minds of market participants and we decided to make available more than we thought Mexico would actually need. Like a big military arsenal, a large financial one can make a considerable psychological difference to the markets. If investors believe that a government has sufficient resources to right itself and that reforms are in place to deal with the underlying problems, the outflow should stop.

Source: Robert E. Rubin and Jacob Weisberg, In An Uncertain World, New York: Random House, 2003, pp.12-13.

American

Simply amazing! There is no way that Paulson gave Bush this, as his rationale for the amount. He must have lied his ass off.

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NoMoreDems-Reps

This SLOPPY accounting is starting to sound like a covert Money grab.
With $700B they could just take ~60K give it to each person that
went in to default, get them locked in at a fixed rate and get them
the payment size that they started with. This way everyone would
be saved not just the Big Corporations and CEO's.

I think the $700B was a rough order estimationI read)
3Million bad loans in the US X $235K (Average) = $705B

I think Congress is now trying to pass this bill quickly the nobody has a
chance to find all the bad details. Re-call you representatives and Tell them
to give safe guards to the tax payer or No bailout !

Corperate welfare is big bussines in America ! Go REP&DEM Duopoly (Go away)