In my little post about This American Life’s show about the economy, I didn’t mention any particulars.
But one thing that seemed clear by the end of the show was that buying up the debt wasn’t as good an idea as buying shares in the troubled banks. The show’s participants were skeptical about whether the government would overcome the will of powerful banks (and their lobbyists), who would rather sell bad debt than shares.
But somehow, our government may actually be doing what the majority of economist think is the right thing. I know. I’m surprised, too.
But at least some of the bailout money will go toward buying shares instead of bad debt. There’ll surely be bickering about how much is the right amount, but anything is better than nothing.
What’s probably more important, immediately, is that the government will temporarily insure commercial paper (short-term loans to companies). Maybe that’ll warm the credit freeze a bit and we can all have a very credity Christmas.
I just noticed you don’t seem to have any comments on any of the recent blogs. I for one have been reading, just didn’t really have anything to say. So now I’m saying it.
The bailout is all about business as usual; rewarding people and companies for irresponsibility, greed, and recklessness, and blaming opponents for the predictable results of one’s own decisions and actions. As Mr. Trower put it, “The takers get the honey, and the givers sing the blues.” The middle class will pay for this, probably over $1T before it’s over, while the same execs continue to get paid obscenely for obscene activity, and the same idiots buy houses, cars, etc. they can’t afford, knowing “someone else” will pay for them.
No coffee yet, so any errors or omissions are not my fault.
Well, if the govt. buys shares in banks, then we could easily see a return on the investment, so the jury is still out on whether it’ll cost the taxpayers or not.
And the bailout doesn’t help people who defaulted on mortgages, does it? I mean, they still lose their houses, right? I could be wrong.
The story keeps changing, but I’d heard/read that part of the money is for troubled mortgages. The feds would buy the mortgage from the lender who would otherwise foreclose, and provide easier terms to the borrower. Earlier, there was even talk of helping people with car loans and student loans, but I don’t know if that made it into the final bill. Any time the federal government spends a bunch of our money to “fix” a problem, you can expect the problem to grow, and other problems to crop up.