Anyone think that put options are a great buy on GM? Anyone think that GM will be at $1 per share in the next couple of years?
Well, if you haven't noticed, the economy has be driven by politics for the most part for better than a decade now. I think it's only natural that it becomes part of the discussion.
The biggest hurdle for the govt is AIG (wasn't C) 12bb is nothing when u think about the exposure AIG still has to the mortgage mkt. Ben isn't "printing" money "for the benefit of the American people."
Do you appreciate the "government will backstop our callous risk" precedent such a bailout has created for institutions that were fortunate enough to survive? Much anger stems from this aspect, IMO. Yes, this transaction worked out favorably. But do you also trade through your rear-view mirror? Tax-payer capital was put at severe risk and who is to say what would have happened if such capital injections went south? You pull a stunt like this as a private entity/fund placing your investors capital through unauthorized risk (regardless of profit or loss outcome), they will vacate your risk pool and/or sue. It would also seem prudent to keep any bailout treasury gains in perspective and how they are potentially offset by massive obligations of government guaranteed Fannie/Freddie books.
I am aware of moral hazard. However, my understanding is that the repercussions of a number of huge financial institutions going under at once would have potentially started a negative and unstoppable spiral. People with more information than I have, and whom I respect, believed this to be a real possibility. What would have been the cost of doing nothing in the face of a worst case scenario? As for your reference to perspective, this thread is limited to a specific case. I limited my response to this specific case.
Before we do too much backslapping, reflect on how much FNM and FRE have cost. Hint, a lot more. It actually would have been better for the Treasury to take a huge bath on C. Now they will use this as justification for the next bailout.
Oh, were you not consulted? Bad parallel. Whereas the WMD fiasco was perpetrated by an administration that told its intelligence personnel to "keep looking" and not come back until they found "something, anything," the concern over a financial collapse was much more broadly based and included the likes of Paul Volcker. I don't consider Volcker to be a political hack or someone who was lining his own pockets with bailout money.