Paul Krugman has a nice description of how the bailout of bad mortgage securities would get paid for. In response, I commented:
In this description, is "the Public" predominantly the Chinese government and sovereign funds I keep hearing about, or is that hyperbolic xenophobia?
I've heard both that the bailout would be paid by the taxpayers (who would be "on the hook" for the assets, in case they have no value), and that the feds could actually make money by buying low and selling high.
Both of these seem to be ignoring that the bailout will be paid for with borrowed (or soon-to-be-borrowed) money, so even if the feds did sell off the toxic paper for more than they bought it for, the net effect might still increase the deficit.
In this description, is "the Public" predominantly the Chinese government and sovereign funds I keep hearing about, or is that hyperbolic xenophobia?
I've heard both that the bailout would be paid by the taxpayers (who would be "on the hook" for the assets, in case they have no value), and that the feds could actually make money by buying low and selling high.
Both of these seem to be ignoring that the bailout will be paid for with borrowed (or soon-to-be-borrowed) money, so even if the feds did sell off the toxic paper for more than they bought it for, the net effect might still increase the deficit.
