http://www.rense.com/general83/baild.htm
The bailout is a drop in the bucket compared to what these banks need
It won't even attempt to begin to bail them out!
They are still praying for foreign help
But with our credibility gone whose really going to give it
Welcome to the Third world
Created by design
A bailout that is treated as a mere addition to the US government's already massive indebtedness will disconcert foreign creditors. There is a limit to the amount of debt for which the US Treasury can assume responsibility without undermining its own credit rating. The bailout, especially if the $700 billion proves insufficient and more is needed, could impair the Treasury's credit standing.
In this event, foreign creditors might not provide the funds needed for the bailout or would provide them only at higher interest rates, which would themselves undermine the bailout's success.
According to a September 29 report in the Washington Post:
"Twenty of the nation's largest financial institutions owned a combined total of $2.3 trillion in mortgages as of June 30. They owned another $1.2 trillion of mortgage-backed securities. And they reported selling another $1.2 trillion in mortgage-related investments on which they retained hundreds of billions of dollars in potential liability, according to filings the firms made with regulatory agencies. The numbers do not include investments derived from mortgages in more complicated ways, such as collateralized debt obligations."[Broad Authority, Lots of Money And Uncertainty ]
Leaving aside the collateralized debt obligations, adding the three mortgage-related instruments of the 20 financial institutions comes to $4.7 trillion of which $700 billion is 15 percent. If more than 15% of just these troubled instruments are bad, the bailout would require more money. At what point would foreign creditors see an endless pit?
If foreign creditors are to finance the bailout, it must be credible. The best way to achieve credibility is to combine the bailout with a reduction in other forms of US foreign borrowing, specifically the US government's budget deficit and the US trade deficit.
