Monday, September 29, 2008

The Bailout Isn't Really A Bailout?

I just read this blog post [1] by somebody who sounds like they know what they are talking about [2] and... well, the fundamentals of the original "bailout bill" do not sound as poisonous to libertarian ideology as I thought it would. In essence the bill was supposed to act like a giant "reset button" and doesn't actually bail anybody out. In fact, the institutions holding on to sub-prime mortgage securities will actually still take a (major) hit selling those securities to the US Treasury. The question, I guess, is how does the Treasury figure out what to pay for these crap loans?

The ultra-crapified version that is failing in the House right now is the one with all the contingencies attached to it -- the ability for judges to rewrite the terms of a loan so the mortgage payer can keep the house regardless of who gets stuck with the bill, government ownership of banks, caps on executive pay, etc. You know, socialism [3].

[1] Tilt your head -- the author leans right a bit.
[2] It was published on the internet and therefore has to be true. Right?

[3] You know the saying -- first socialism, then communism, then alchoholism.

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