Monday, September 22, 2008
The Paulson Gift to Goldman SachsJonathan Weil at Bloomberg explains that Paulson proposes to do more than just buy the troubled assets of incompetent and foolhardy banks and investment houses; Paulson proposes to pay them much more than those assets are worth:
Since the financial crisis began last year, banks worldwide have disclosed $519 billion of losses from writing down assets. Consequently, many of them don't have enough capital left to absorb more losses. And unless their stock prices go up a lot, they can't raise any more.It is very difficult to see how we will recover more than a small portion of the $700 billion gift we are about to bestow on Morgan Stanley and Paulson's own Goldman Sachs -- this bailout looks a lot like the funding of the Iraq War, likely to cost us all a lot more than the optimistic Republicans promised.
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No subject for immortal verse
That we who lived by honest dreams
Defend the bad against the worse."
-- Cecil Day-Lewis from Where Are The War Poets?
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