So I’ve read the bailout proposal. At the size of a longer blog post, most people will hopefully be able to read the dang thing and think about it a bit, even if our congress doesn’t.
There are two items that strike me about this deal. For one, Congress, and us taxpayers are giving Mr. Secretary, one man (or woman) immense powers and cash, without any restrictions. Is that really a safe way to spend $700,000,000,000? When I spend $700 on Amazon.com, and it comes broken, you better believe I send it back, plus I take a lot of time to research how to get the most out of my money.
…Congress has what, five days?
To protect our ‘investment’ the secretary has these guidelines:
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Secondly; I assume that the plan will be for the taxpayers to buy these mortgages as the Secretary sees fit, and then sell them when the market goes back up again. Well, um...what if it doesn’t go up? But continues to decline in the foreseeable future?
In fact, you could make an argument that this bill and circumstances are set up exactly that way. Right now, the market needs money, so paying more for failed mortgages gives that quick infusion of money, and looks great in the short-term. Over time though, all of those quick sales at higher prices will come home to roost. Yet another bubble that will burst… this one caused directly by the government.
You just know, like everything else government does, in five years time people are going to look at this as a quick-fix mess.