Biggest Bailout Ever: Did the Government Go Too Far?

Posted Sep 19, 2008 10:39am EDT by Henry Blodget in Newsmakers, Recession, Banking

After a few weeks of trying to stand tough in the face of demands for a wholesale rescue, Hank Paulson apparently couldn't take it anymore. So now we'll have the biggest bailout in history, including:

A huge RTC-like government garbage can that banks can throw all their toxic balance-sheet waste into. (This time, the transfer will be made before they go bankrupt, unlike the case with the first RTC -a.k.a. the Resolution Trust Corp., a government agency created in the late 1980s to liquidate the assets of failed Savings & Loans)
A temporary ban on shortselling. (With the unfortunate implication that shorts are the cause of all this)

A federal guarantee on money-market accounts. (Including non-recourse loans to banks to buy high-quality commercial paper and meet money-market obligations.)

Not surprisingly, the market's up huge on this news. The moves should head off a run on money-market funds, restore liquidity to the financial system, and, as bank analyst Tom Brown puts it in the accompanying video, create a general "time out" for the panic to recede.

So what are the costs? Almost certainly:

Higher taxes
Higher interest rates on government debt
Bigger government deficits

When the alternative is the entire financial system going bankrupt, we guess these costs are acceptable. But we're not convinced that that was the alternative. Also, numerous questions remain. The most pressing is "What price will the government buy the toxic waste for?" (This price will determine how much additional capital the banks have to raise to offset any losses.)

Merrill Lynch shareholders are probably also wondering whether they can cancel the Bank of America deal. And Lehman would probably like to un-declare bankruptcy.

We also doubt that this move will prove the final bottom in the stock market. Unless the government makes a similar move on housing (which certainly seems more plausible, given this news), the housing problem won't up and go away. And until the housing problem works itself through the system, the consumer will still be under pressure. But the future certainly looks brighter than it did yesterday.


link

http://finance.yahoo.com/tech-ticker/article/63460/Biggest-Bailout-Ever-Did-the-Government-Go-Too-Far?tickers=mer,bac,fre,fnm,leh,aig

government f**ked it up and now we will have to bail out the banks. all I gotta say is some heads better roll!!!

I think this administration has finally shown what it's all about.

It's not any way shape or form practicing conservatism. Bush is a National Socialist. Compare what he's done to what National Socialists have done in the past and tell me where the differences are.

bank stocks are up 50% today alone.

the liquidity melt down was stemmed.

now then...

how do we get that 200 billion back into the Fed?


we don't.


we're screwed anyway.



only way out is to fire the bums and put protectionists in government.

and stop using oil

and stop buying broken crap from Walmart.

and stop buying south american fruit and veggies out of season.

and stop buying foreign cars, and yes, that means scrapping your beemer and mercedes. duh!!!!


and stop buying new homes

and stop overinsuring your possessions, yes downsize to junk! your wallet will love you.

and stop selling high tech to the world.

and stop teaching foreigners our tricks.

and.......


what? too harsh?

then who is to blame?


think about it, my "fellow" Americans!!!!!!!!!!!

Speaking of food, yet again, ( how do we always come back to this topic? I think it's because we are both aware that Food has historically been used as a weapon, any thoughts?)

Our kind and caring federal government has decided that they are going to start letting GE created animals be sold as food. Nice, a cow with a little mouse gene so it produces more milk...MMMM MMMM Good, the best part is, the FDA won't be requiring any labeling that seperates it from the regular stuff. (If theres any of that left.)