Wow, and just when I was coming around on the whole bailout plan, the House of Representatives defeated Bailout, plan B, just a couple days after minority leader John Boehner torched Bailout, plan A. I think I've finally got my head around the whole short-term credit market and the commercial paper market enough to where I can see the banks' need for lots of capital. But I really love that invisible hand stuff! If the banks need money, some private entity should be able to pony up some money to buy the so-called "toxic debt" that may be worth only 50% of face value, but at a price lower than what the federal government would guarantee in order to make a profit, of course. However, if the "toxic debt" is truly worthless, the holders of said debt should completely write it off their books and see where the chips fall after that. Because, as we've seen this week, the markets hate unknowns.
But the reason I was warming to the Bailout, plan B, was because of the following three provisions:
1) The taxpayers would have gotten something in return; stock, warrants, some say in the companies they'd be helping. The potential to make some money back was there.
2) A provision to at some point pay for Bailout, plan B, if not in the rising future value of the "toxic debt" itself, then in the raising of taxes to cover the expenses. Plan B was not very specific about how not to leave a big gaping hole in the federal budget, but at least it required someone else 5 years in the future to have to deal with it.
3) The money would have been apportioned into three slices with some Congressional control over future dispensations. I'm more comfortable with taxpayer money being spent only if needed.
I hope all three of those provisions make it into Bailout, plan C.
But too bad. All moot. With Main Street's failure to give Wall Street a huge amount of money, Wall Street will be singing the blues on Beale Street because no one's partying on Bourbon Street or going to Broadway, and no one's shopping on Michigan Avenue, which reduces the number of advertising contracts from Madison Avenue. I'm glad I don't live on any of those metaphoric streets.