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Originally Posted by dalakhani
To clarify, the plan isnt to "give" anyone money. The plan is to use up to 700 million dollars to buy distressed assets that are rotting on bank shelves and clogging up the flow of liquidity.
To put it simply: The govt is BUYING ASSET backed securites. Just like they would buy a bomb or a plane or a missille. They are NOT simply giving money to banks.
Now, some of the securities are probably going to be pretty toxic and go bad. If they do, you can sell the asset and recoup some of the 700 billion. Remember, they are not paying full value for the ABS's. So even if the market continues to decline you can still recoup most of your costs.
If the market stabilizes from here on out, the govt can actually make money. A lot of money.
The main issue is going to be determing buy prices. They have already stated that they are going to pay MORE than the firesale price. But how are they going to determine that?
The last point is the main issue.
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With all due respect, take the loss. Put new money into the market another way. We have to have money available to loan? Fine, but we don't have to buy their fk ups. Sorry, but they fkd up, and this idea that capitalism doesn't hurt (those who lose) is wrong. They need to lose, and if new money needs to be put in, it doesn't have to be put in to bail them out of their mistakes. Money needs to be available to loan, yes, but not in the way they have proposed to do it. That is welfare for the rich who fkd up. Take the hit. These market funds that are getting hurt are the same ones this a-s-s hole wanted people to "invest" their Social Security money in. When are people gunna realize just how much an a-s-s this guy has been? In July he was giving a speech about how stable the financial system was. O.K.? In F'n JULY. That is a maggot with a suit.