As the Bush, Paulson, Bernanke and crew scramble to make another attempt at passing a bailout bill, one wonders why passing the risk and potential reward (unlikely, that) of these mortgage-based assets to the Government would solve the problem.
Yes, the U.S. Treasury has deeper pockets than private parties. But with a 350B$ price tag, or 700 B$, even the
How the bailout might work to the benefit of all? First there is the considerable benefit of remaking a market for these assets again…. even if they must sell at a loss.
Next would be by avoiding (or quelling) a panic. The panic avoided would be the overreaction by the markets to the souring housing market and the mortgage-derivative securities.
But is it an overreaction? The Nakedcapitalist suggests otherwise.
At any rate, the lack of transparency makes the extent of the problem very difficult to gage