September 25, 2008

On Open Thievery & The Bailout

Warren Buffet’s Open Thievery

Buffet agrees to buy a $5 billion stake in Goldman Sachs. Later that same day, he is on CNBC for 20 minutes promotingthe Paulson Plan which would directly benefit himself. One day later, Buffet’s already made a $783 million return on investment.

Reading the Bailout Plan Clearly

The Paulson Plan requests authority for the Treasury Department to purchse up to $700 billion in mortgage-related assets at any one time. Ill-informed journalists serving as our news sieve, have interpreted the plan to be a lump sum $700 billion resuce.

In actuality, this means $700 billion is only the very beginning of the newly-acquired power wielding. The plans text below (emphasis added):

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.

One last thought on collusion and how it pertains to what will likely be our closed-door bipartisan bailout compromise, brought to you by economist Steven Landsburg:

"When an industry is dominated by two highly profitable firms, theory tells us that if there is no price war then there is probably collusion. In the case of the Republicans and Democrats the requisite collusion is on display for all to see. It is called bipartisanship."

No comments: