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If you’re like me then you’ve been hearing all sorts of mentions about the Bailout but not finding many explanations (even from our Presidential Candidates, because they didn’t seem to be able to answer any questions about it on Friday night either).
It’s hard to find a single coherent description of what it actually is (aside from it cost $700 billion).
Apparently Congress has come to an agreement on one of the biggest government involvements in the financial market since the Great Depression, and here’s what I have been able to fathom…
The Treasury will get the previously mentioned $700 billion in smaller portions one at a time to purchase mortgages from failing lending companies either at a predetermined price, or in a bid with the market itself. Once the Treasury buys up the debts, they will then sell them in an attempt to make the money back. I’ve heard there’s a provision in the event the gov’t doesn’t make it’s money back, but haven’t heard anything about what it might actually be. Not sure who we’re selling it to in the effort to make the money back too. Aaaannnnd… yeah, that’s about all I’ve got right now.
The only other thing I’ve seen is that pretty much no one in government seems happy about the Bailout; McCain, Obama, Pelosi, etc… and they’re only going through with it because they all somehow came to the same agreement that it had to happen, because if it doesn’t happen, the whole U.S. will suddenly collapse or something.
I guess we’ll see what happens.
UPDATE: 29 Sept 08 Afternoon
I suppose it doesn’t matter now what the details of the Bailout are, or should I perhaps say were… as the House of Representatives voted against the bill 228 to 205, with 2 non-votes. As a result, stocks are plummeting and the gov’t going right back to the drawing board.
UPDATE: 30 Sept 08 5:13 am (from Ms. Missive)
Kevin Drum over at Mother Jones muses why the financial crisis still isn’t 100% clear to the public:
Our current financial crisis has never been explained well to the public because (a) it’s mind-bogglingly complex and (b) even the experts don’t entirely know what’s going on. And the Paulson plan was never sold well because (a) the initial draft was indefensible and (b) the theory underlying it was uncertain and complicated.
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