The Underground Imagination: Facts on the Government Bailout

An article on the bailout that I actually understand.

Wednesday, September 24, 2008

Joel said...: Quoting the article:

"OK, no one on Wall Street knows how to value these subprime assets and related derivatives. And nobody wants to own them right now. But they aren't going to be worthless. If Uncle Sam buys them, holds them for a while, and then sells them in an orderly fashion, he should get a lot of the cost back – maybe even most of it."

The fact remains that the government plans on buying the assets at above market value. I do not understand how this makes sense.

-Hey, want to buy this piece of paper? It's worth $1.50. No one else wants to buy it, but we need to sell it.

-Sure, how does $2.25 sound?

This is not to dispute the thrust of his argument, but there's a lot about this bailout that doesn't pass the smell test.; September 24, 2008 at 1:36 PM