Greetings from the metropolis of Cedar Crest, NM. Where my weekends are filled with youth football, soccer…and then some. As I yell at my boys from the sidelines to hustle and tackle and kick….the number 700 billion creeps into the forefront of my mind. What in the heck is 700 billion?
What can one say about 700 Billion?
What does that number mean? I cannot even fathom seven hundred billion. I am used to using such a label on the number of stars in a constellation (I am sure I am off a billion or so). How about the number of grains in a sand pile. How about how old the earth is (okay…I am exaggerating now…right?) How about the number of cells in one’s body?
Next question is …how does someone come up with the number “700 billion” as the magic number to bailout our financial institutions?
Am I the only one that finds that odd…? “Oh….700 billion should do the job!” What is the bank failure formula?
Either way…something must be done….right? Either way….we are going to pay for it right? By the time this blog is posted….congressional leaders will have approved a bailout plan of some sort….at least some of us hope so.
I am not sure where I stand on this….and I realize that it does not matter. But what I do know is there will be a lot of opportunity for those who prepared for this. Everyone else will be in survival mode.
What is the truth?
The urgency of our congressional leaders to act was strongly worded by Bernanke during a commercial break at the most recent congressional testimony……..
“Senators, we live in a world that has bonds and bad construction loans and those assets need to be bought by men and women with balance sheets. Who’s going to do it – you, Chairman Dodd? You, Senator Schumer? I have a greater responsibility than you can’t possibly fathom. You weep for Bear Sterns and curse the banks just trying to get their collateral; you have that luxury. You have the luxury of not knowing what I know: that Lehman’s bankruptcy, while tragic, probably saved firms and that my existence, while grotesque and incomprehensible to you, saves markets. You don’t want the truth, because deep down in places you don’t talk about at parties, you want me buying assets – you need me buying assets. We use words like “foreclosure,” “Discount Window” and “TARP.” We use them as the backbone of a life trying to defend something. You use them as a punch line. I have neither the time nor the inclination to explain myself to a group of media hungry politicians who rise and sleep under the blanket of the very liquidity I provide and then question the manner in which I provide it. I would rather you just said “thank you,” and went on your way. Otherwise, I suggest that you purchase a defaulted option arm and pay par. Either way, I don’t give a dang what you think the American taxpayer is entitled to.”
Well….700 Billion seems to be the magic number NOW……unfortunately….there will probably be another magic number in the near future.
Until next time…..rob
Photo Courtesy: Jakerome – No way, no how, no bailout.