Thursday, September 18, 2008

Well, duh....

Some "economics" that even McCain should be able to understand.

The market rebounded today over 400 points on the DJIA. Why? Because of this:
The federal government is nearing completion of a broad plan to reduce the systemic risk to financial institutions, according to sources familiar with the thinking of Federal Reserve and Treasury Department officials.

[...]

The details of the plan remain unclear. The sources, who asked to remain anonymous because they are not authorized to discuss the plan, said it was intended to put some solid ground under the banking industry.

Market analysts have described one likely approach: A fund capitalized by the government and private banks that would buy troubled loans from banks, giving the banks more money and fewer problems.
Why does this make the markets happy?!?!? Why, silly, because of this:
While it is unclear what form such an entity would take if, it could be costly for taxpayers, said Stone. "That is why you need intense pain for people to be willing to do it. You are still putting significant taxpayer money at risk," he said.
Not "stockholder's money at risk". The finance companies can just shovel their bad debt off onto the gummint, and "keep on keeping on". What a deal. What a uniquely Republican way of dealing with things. All the profits, none of the responsibility. Let other people paper over and pay for your mistakes. Without accountability, their philosophy can flourish again, leading us to bigger and better ... uhhhhh ... well .....

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