The Bush Bailout Plan

OK, so I barely understand the details of the bailout, but that still
puts me ahead of Bush.

Seriously; I have no misconceptions that a C- student who has never
run a successful business has ANY idea of the details or the
complexity of the bailout; hell, I know PhDs in economics who aren't
really sure themselves...so every time I read some news article where
he states uncategorically how necessary it is, or how the US economy
will go down the tubes without it, I have to wonder why is he so
adamant about it. What could his handlers have explained to him in
high-school terminology to convince him that we need to toss that kind
of money around, while we are bankrupting ourselves over a worthless
war, a tanking economy and a housing brick.

Here's my theory.

The overall bailout plan is fairly straightforward (if you neglect the
details): the US Gov't buys a truckload of 'bad' morgages (IOW, takes
ownership of a bunch of foreclosed properties from speculators,
mostly) at 'current market rates'. This infuses the banks who are
holding these bad mortagages with real currency, and they unload bad
debts, and its happy days for them; they dodged a bullet.

Meanwhile, the US Govt is holding title to all these properties that
it acquired at market rates, right at a time when the housing market
is rock-bottom. I'm not sure if they are buying these mortgages for
the mature value, their balance due, or if they are acquiring them for
the current sellable price of the property, but in any case, with
market conditions the way they are, its a firesale.

So in 3-5 years, now that the banking sector is back on its feet, the
housing anti-bubble has reinflated, and all the americans who are
terrified about where to keep their money decide that Real Estate is
the best place (since housing prices are so low), the market starts to
soar. Then the Govt starts selling these properties off...bit by
bit...until they have increased their profit multifold, just as any
homeowner wants to do.

The end result: there is a huge surge of profits from Gov't Owned
properties that gets applied toward the National Debt, and Bush gets
to claim from his comfy lecture tour circuit that he saved the day for
the National Debt, paid for the War on Terror, and salvaged the US
Financial system.

LOL

--riverman