From HSH’s Market Trends Newsletter:
October 3, 2008 — After an initial and shocking failure, elected representatives spent most of the week scurrying to come up with a “better” version of Treasury Secretary Paulson’s plan to use up to $700 billion in taxpayer funds to buy up bad mortgage and financial assets. In the end, the tab could run as high as $810 billion, with hopes that some of the assets can be resold back into the market for a profit. Of course, this assumes there will still be a market for them — or any market at all — when it’s time to sell them.
It’s believed that with such a plan in place, credit spigots will begin to crack open to a greater degree, and perhaps they might. There’s no certainty there, either. Investors may simply shed bad assets in exchange for cash, invest the money in 100% guaranteed Treasury obligations, and swear off any form of risks for the foreseeable future.
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