I'm Certainly No Economist, But

While watching our presidential candidates, and all the other lemurs of Washington, scramble to see who could look best standing upon the slumped and beaten body of the "bailout" package, I couldn't help but feel sorry for Mr. Paulson. If allowed to buy these distressed loans at a discount of say, 60 cents on the dollar, than the treasury has a real chance of making some money (possibly an obscene amount money) once valuations return. Where am I wrong on this? Behind these loans are assets and the Treasury can continue to pump capital into the economy and be pro-growth; once the economy grows asset evaluations grow. Of course, how long is it going to take for the market to rebound and the economy to grow again? But if the treasury's margin of safety on these loans is large than it shouldn't take much for them to turn a profit. A profit that could do a lot to clearing out future budget deficits. Then the next president, and the bleary eyed automatons know as Congress, can take all the credit and turn that excess cash into pork, such as the deeply disturbing and theocratic "faith based initiatives."