Anyone interested in reading useful Q and A regarding the Bailout Plan, how it works, and how we got here with not too much opinion worked throughout, check out this site:
Some Really Good Questions
Just a taste:
Where will the $700+ billion go? What exactly will it buy and from whom?
That's the, uh, $700 billion question. Mortgage-backed securities were to be the main target, and banks the main sellers. But Hank Paulson and Ben Bernanke wanted a fund that could buy pretty much anything from anyone.
How, exactly, is this bailout supposed to 'save' credit markets?
Not entirely clear. Paulson and Bernanke described it as a way to jumpstart trading in mortgage securities for which there's no market at the moment, thus allowing banks to clean up their balance sheets and get back to lending. But a lot of economists outside government believe that the real problem is that lots and lots of financial institutions are insolvent--their losses, if they actually recognized them, are enough to wipe out their capital reserves. If that's true it would make more sense for taxpayers to give them cash outright, and take a big ownership stake in return (with the idea of selling it off a few years down the road). The Swedish solution, they call it (and longtime readers of this blog know it was being discussed here long before anybody else in the U.S. was talking about it). The version of the bailout plan voted down in the House Monday seemingly would have allowed Treasury to take such action. But it also would have allowed Treasury not to take such action.
Read more here.
By A. Suffragette
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