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A Little Funny Math Just for Fun (or, how screwed up is this really?)



October 13, 2008 – Comments (0) | RELATED TICKERS: GE , GS , BAC

$700b in subprime mortgages by 2007.

About a $200b loss in property values on those properties. 

Cost to bail out all the mortgages and avoid all the other hassles?  About $200b but with rights to real estate to the taxpayers. 

What we did instead:

Took over Fannie and Freddie for likely cost of about $50-100b.

Gave JPM deal on BSC worth about $30b.

Bailed out AIG for about $125b and counting.

Paulson Plan: $700b.

Bank Capital: $250b.

FDIC actions: tens of billions so far.

FED actions: tens of billions so far.

So, if we needed $200b, but put in about $1.6t (see WSJ which added if all up so far, hmm, might have been FT), we're too the good by $1.4t.  Ummmm, wait a second.  We spent $1.6t for a $200b problem.  Why'd we do that.  Oh yeah that's right. It would have been socialistic to bail out the mortgage holders.  What did that Napolean Dynamite guy say?  Freakin' idiots!

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