Suffice to say that in my opinion, the U.S. taxpayer is going to take a beating in this. And I'm furious — not surprised, but furious — that we're in this position at all.
One of the things which sets me off: The current spin from supposed "experts" who state that this bailout will actually be profitable for the taxpayer. Barry Ritholtz explains it far better than I:
Big Picture: Latest Bailout Plan Spin: It's a Money-Maker!
The spin reminds me of the classic retail stock jockey. The guy has buried his clients in a series of bad trades, bad judgment, poor risk management -- all motivated by his self-interested, commission-generating trades. The only way out of the money losing mess, pitches the broker, is a big, Hail Mary trade.
Hail Mary, indeed. Let's all buy the "worst of the worst" mortgage securities in existence (we will), pay above-market prices for them (we will), borrow and/or print scads of money to do it (we will), and hope that the housing market recovers and loss rates don't worsen and values magically stabilize and then rise at a rate greater than inflation (they won't).
After listening to a fair amount of local talk radio (OKC-based) the last couple of days, I'm staggered by the amount of misconception that's out there regarding the (latest) bailout. Given what's happened, I suppose I shouldn't be surprised. Some choice snippets I recollect:
"It's just a loan. We're gonna get all our money back anyways."
"Why are we doing anything? Even if Wall Street collapses, eighty-five percent of the folks around here won't notice a thing."
"They're making a big deal out of mostly nothing, is what I think. What happens to Wall Street makes no difference to me."
"If Buffett is buying, then that's good enough for me."
Folks who think they're going to be somehow immune to all this are nuts. Folks who think that Buffett and Gross aren't "talking their book" are naïve.
Yeah, keep believing it: The U.S. taxpayer is gonna make money on this government-run Hail Mary.
Right.
And pigs will fly.
