Heavy Lifting - thoughts and web finds by an economist
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Friday, March 06, 2009

Oh no - another awful idea

From this Reuters story:
WASHINGTON (Reuters) - The U.S. government plans to invite wealthy investors to invest in the bailout of the crippled financial system, The Washington Post reported on Friday.

The investors would be invited to buy up recently issued, highly rated securities that finance consumer lending -- without the risk of massive losses, the report said.
Guaranteeing returns without risk is not possible unless you have the power of the gun. The story suggests that up to $1 trillion would be "coaxed" out of the wealthy's pockets.

This is a bad idea no matter how pragmatic it sounds.

Prediction: Not enough of the wealthy's wealth is forthcoming in this scheme and the government decides that perhaps it needs to use a little more than coaxing - say seizure?


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