You know the $700 billion bailout that was passed to create a “Troubled Asset Recovery Program”? Well, Secretary of the Treasury Henry Paulson has decided not to buy troubled assets. Instead, he is buying bank stock. According to ABC,
“Paulson said today, he knew when the bill was signed the purchase of trouble assets wasn’t the right solution to the problem.” But. . .but. . .that’s not what he told Congress or the American people. Did we just give him a blank check with a $700 billion line of credit to do anything he wants to with it? We are also going to bail out the auto industry, people behind on their mortgages, and who knows where it will stop? If YOU want a bailout, here is a link to the proper form. (HT: ABC)
It seems to me that you can’t get out of an economic problem by just printing money and giving it away. Can you?
UPDATE: See this account of the bailout fiasco.
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This so bugs me. Everyone (business or homebuyer) who did it right doesn’t get a nickel. Isn’t it a better investment to give more money to people who actually know how to use it?
I feel like the good kid in class who did his homework properly but the kids who didn’t do their homework at all are getting to pick prizes out of the treasure chest.
Now that I think about it, isn’t this socialism?
It seems to me that Paulson came to the realization that investing tax payer dollars in defunct assets wasn’t the wisest economic decision making. Frankly the wealth of these investment firms was based on air and imagination and it’s not something that they can just bounce back to their previous levels from, no matter what the Fed pumps into them. Rather, they’ve reached a state of equilibrium where their assets are realistically valued, which means that they lost some money, but at least there’s some stability in their pricing.
Paulson has realized this and now needs to figure out something else to do with the $700 billion check in his wallet. The best thing he could do would be to send it back to congress and say “Actually, never mind. I don’t need this. Go build some schools or take a chunk out of the national debt or something.” But that’s not how bureaucracies work. The money is there, it needs to be spent. Besides, even if he did send it back, Congress and W would still want credit for pulling us out of this “crisis” (which will, in all liklihood, work itself out naturally) and would find some other economic agency or department to shovel the funds off too.
I would like to know what’s going to happen to the majority of the bailout money once the Democrats take control of the White House. From what I understand, the majority of the bailout $$$ and where it goes will be decided under Obama’s term. And Paulson has set a dangerous example by telling the American people he would do one thing with the money and then changing course midstream. Where’s the accountability?
This is looking a lot more like the Weimarer Republik than I would like. We have people printing money like it’s going out of style, and government officials making up the law as they go along.
I guess this is what you get when you hire people from bankrupt investment firms to head the Treasury. Sigh.
I have vowed to never vote for any representative who voted for the bailout. I think its time for a whole lot of other people to vow the same (and for some sensible people to run for office in 2010).
Well, according to the Jewish calendar, apparently this -is- a year of Jubilee. . .
I hope the lesson folks learn out of this is that government cannot fix our problems. The best thing they could do is return that $700 billion (Forbes says the total cost will be up to $5 trillion) to the treasury, and let the economy self-correct. However, I suspect, with the Democrats totally in charge now, the lesson they’ll take from it is that $700 billion isn’t enough money.
This is why drawing and quartering should be legalized as a constitutional form of punishment for those tried and convicted of this kind of behavior.
Of course, the likely recipients of this sentence would be the ones who would have to pass such legislation.
Carl, Carl, you know perfectly well that drawing and quartering is only allowable for babies in the womb or partially delivered in this country.
I want mine, I want mine, I want mine
I can see the castles burning, I hear the czars childen screaming, you might say that I am dreaming, but we’ve seen it all before, there’s a knockig at the door
Never again, never again, never again
When will the news cover this stuff? When will people realize that we’re heading for a REAL collapse. Not only the bankrupting of parts of the economy, but the bankrupting of the GOVERNMENT. Paulson really looks like a joke right now.
I agree with Bryan (@5). Why are we tolerating this? Why is an economic downturn an unacceptable consequence? Aren’t they natural? Since when do we believe that recessions are an UN-natural economic phenomenon.
Why is anyone surprised by this turn of events. Reading the TARP legislation as it was passed gives away the truth–Congress passed an open ended bill. The Secretary was given authority to do/buy whatever he wants. Even before accountability regs are written he is encouraged to do “something,” whatever that is.
The problem here is that now everyone who didn’t read the act is running around feeling betrayed. Remember the truth–always read before you sign.