It’s an Annenberg site.
see ya around

What the government is going to do is hold down the Idiots and carve out all the Crud with a rusty spoon (otherwise known as “buying at fire sale rates”). This will leave the Idiots with a lot less value, but the Idiots will also have no Crud, so they can go back to doing things that will actually make them money (and thus stop them from being Idiots).

Meanwhile, the government is going to turn all of this Crud back into something that’s actually valuable (we’ll call that “Gold”) by blatantly manipulating the real estate market as only a government can. They will use every trick in the book that they can think of to make the Crud Gold – and they will succeed, because the government wields a mighty hammer, and its name is Tax Rate. Comes right down to it, thanks to the Rusty Spoon the government has wiggle room when it comes to making better deals.

So, as Crud turns into Gold, the money gets given back to the government. Most people want to pay their mortgages, after all. The government either keeps the Gold and rakes in the monthly payments, or sells the Gold to people who want to rake in the monthly payments. There’s a complicated set of equations for that which most real estate professionals get wrong, too – but we’ve taught them how to punch the right buttons on the calculators, so that’s all right. Anyway, the money gets paid back to the treasury (IN THE ORIGINAL PLAN), plus the profit. As this system works, there’s a lot of profit.

Why the government? Because the government can guarantee hundreds of billions of dollars without risk. Plus, the government can muck about with the market in ways that private businesses can’t. Lastly, because nobody trusts an individual with this kind of control over the American real estate market.

That’s the original plan. What’s going on now is a three-front war between the desire to pork this sucker up, the desire to strip all the pork out of this sucker, and the desire to kill this measure as a quite intensive expansion of government into our lives. I figure that 1 and 2 will fight it out more or less to a technical win for 2, while 3 will at least take comfort in knowing that they helped hole the ACORN subsidy below the waterline and sunk it.

The banks gave out bad mortgages. Some didn’t pay them. But before that happened, they sold these mortgages to other banks, etc. in large packages.

Now those banks don’t have the money they expected.