Staggering Numbers…

I am reading the paper, the web, listening to, and watching news. Yet I can’t figure out what the government is actually trying to buy with $700 billion. Mortgages ? Companies ? Stock ? Debt ? If the problem is $700 billion of mortgages, wouldn’t it make more sense to help the people who can’t make their payments do so rather than help the companies who are trying to collect on their poor debt ?

Mortgages seem like rather simple instruments. Someone loans, someone borrows. The scary stuff is in those mortgage backed securites, credit default swaps, and collateralized debt obligations – the sheer volume and interconnectedness of which nobody seems to understand anymore. I’m reading that some  of the major problems behind the A.I.G. and Lehman troubles was with the swaps. The market for these things is estimated at $58 trillion.  That’s almost 100 times the amount quoted for the bailout.

Interesting Statistic from http://www.nakedcapitalism.com/

Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion.

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One Response to “Staggering Numbers…”

  1. I think they felt they had to cough up the $700 billion precisely because they were afraid that all those connections that nobody can comprehend would come undone and spark a full blown depression.

    As I’ve said, this is what governments are supposed to regulate.

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