There's A Hole In My TARP...

...big enough to drive 700 billion dollars through.

I thought that if the government named its bailout program the Troubled Assets Rescue Plan, they might actually rescue some assets. The original idea was to buy the mortgage backed securities clogging the financial markets, hold them until the economy stabilized and then sell them again when they might be worth something.

Henry Paulson announced yesterday that he's given up on that idea

Now Treasury says they want to use the money to buy stock in banks, help individual consumers pay their mortgages, unfreeze the credit markets by helping out companies that offer car and student loans, and possibly even bail out GM and Chrysler*.

The reason this irritates me is that one of big benefits of nationalizing big chunks of the financial system was supposed to be that some of these securities would eventually turn out to be worth money and we the people might make a profit on our 700 billion dollars.

Maybe Paulson is right, and these really are the best uses for the 700 billion. One of the things I like about my job is that I don't have to figure out things like 'How To Save The Entire Economy' but it annoys me that one of the TARP's beneifts has been flung aside without any acknowledgment.

Finally I'd like to echo Spencer Bachus (top GOP member of House financial svcs committee) who asked "Where does this stop? We started with financial services, we went from banks to insurance companies, but now we're talking about manufacturing companies, automobiles." I'm scared the answer is, it stops when we run out of money.

*Incidentally, car makers are not in trouble because they bought worthless mortgage-backed securities. They are in trouble because they have giant costs associated with labor, pensions andhealthcare and don't make very much money selling cars. These are problems they've had for years, and I can't see how 25 billion dollars will help them now.