The bailout of mortgages was completely mishandled and the real losers did not lose!

US Taxpayers are absorbing all the losses for the housing crisis instead of the bank bondholders. Customer deposits are the only bank liability that the US government needs to protect or bailout. When the crisis began the Bank’s balance sheet had plenty of shareholder equity and bondholder liabilities to cover loan portfolio losses. BUT our Treasury Department with TARP decided to take a Preferred Stock position and protect the bondholders!

Economically, today we US Taxpayers pay in fresh tax revenues that continue to subsidize “prior” economic transactions which produces ZERO in the way of stimulus or growth. What we cannot absorb is then paid by NEW borrowing of US Treasuries which further mortgages our resources and continues to enslave us to pay off “prior” transactions. All at the expense of bailing out bank bondholders.

The housing market is NO WIN situations. Whether you do anything or nothing at all? Why do they intervene the market with tons of bailouts? The honest buyers get the worst deals of all! No bailouts. Is this American way of democracy? If yes, this country went to far down. Sorry. In between these processes, someone is profiting money….

Our current Pump & Dump economy can only explode because the model produces no incentives and no new project investments.

Good luck,

Gary

Related Posts:

• Buffett Backs Second Stimulus, Calls First One “Viagra And Candy”
• Foreclosures will continue because the values of homes will continue to go down for some time.
• What About the Next $750 Billion of Writedowns?
• We now find out that the 700 billion bailout will be paid to foreigners, primarily China. You know China the people your government borrowed money from to give you a stimulus check!
• Allowing zombie banks to continue to operate and take bigger risks has only increased the costs of cleaning up the mess.

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