A parade of senators, Republican and Democrat are congratulating themselves and each other tonight for passing the $700 billion giveaway to "save the economy". They did throw the common folk a bone in the form of some tax relief. I guess that makes it all okay.
You may be unfamiliar with the meaning of some of the terms and phrases being tossed around in reference to this crisis. Let me clarify some.
"Sub-prime mortgage" - Loans made to people for more than they could possibly pay back, secured by assets that are now worth much less than the loan.
"Mortgage Backed Securities" (MBS) - Essentially, shares of the above mortgages, sold to banks and investment institutions in large bundles.
"The credit markets are clogged" - The banks have no cash. They spent it on these MBS's which had been carried on the balance sheet as "cash equivalents". The problem is, nobody wants to buy them so they aren't really cash equivalents.
"We must free up the credit markets" - We're going to buy these shares of subprime mortgages at a price pulled out of thin air by Henry Paulson.
"We will sell these MBS's back to the open market to redeem the taxpayers' investment" - We're going to sit on these things until the heat is off.
"Doing nothing is not an option" - Doing nothing would cause the markets to take their natural course, exposing the whole convoluted scheme that caused this mess. Politicians would be voted out. Lawsuits would be filed. Voters would be very angry if the truth were to come to light. Best to let it fester for as long as possible.
Yes, Republicans and Democrats have come together in an unprecedented manner to cover their collective behinds. Some voted against the bill, but only after its passage was assured. No member of either party made a serious effort to put a stop to this. I for one will no longer vote for the most competent stooge or the lesser of two evils.
Let me make this absolutely clear for those of you who haven't yet caught on. Your money will be given to banks, so that they can loan it back to you. You will pay your money back to the bank with interest. After the shareholders, employees and execs get their cut, some of the remaining net will be paid back, not to you, but to the government who brokered the transaction. They are, at this moment, on national television praising themselves in the highest terms for pulling this thing off (assuming it passes the House) because they are now 100% convinced that we are indeed, just as stupid as they've always hoped.