Holy crap.

[nonelvis]

It's not like I have any faith at all in the current administration, but this is just astonishing:

In fact, some of the most basic details [of the Wall Street bailout plan], including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Apparently there is no one in the entire U.S. Treasury Department qualified to even make a guess at how much this bailout could cost. After all, it's not like anyone over there is responsible for "[Serving] the American people and strengthen[ing] national security by managing the U.S. Government's finances effectively, promoting economic growth and stability, and ensuring the safety, soundness, and security of the U.S. and international financial systems."

We are so screwed.

Comments

[profrobert.livejournal.com]

It's not simply a matter of making a list, or even checking it twice. Generally speaking, assets are valued based on a market. If you, say, have 100 shares of AT&T, you can look it up at any moment to see how it's valued. But suppose you own a mortgage. Well, you can look at the interest rate and length, and then compute a present value. But some percentage of mortgagors default. So you build in an assumption related to the cost of foreclosure. But how much is the underlying real estate worth? You know what the mortgagor paid for the house. You know what other people paid for their houses and what they're selling them for. But suppose -- just suppose -- the housing market drops suddenly and precipitously. What's your mortgage worth now? Any time you're dealing with illiquid assets (i.e., assets for which there is a limited market), or where conditions are changing so fast that financial models no longer are reliable, you really can't know what an asset is worth.

[nonelvis]

It's the pulling a number out of their ass bit I object to. I understand the financial issues here are massive, and there's no way Treasury would ever get a completely accurate figure. But before we commit to $700 billion in spending, shouldn't we at least try to get a better picture of what's going on? What if the right number is $200 billion? What if it's $1 trillion?

[mmancuso.livejournal.com]

Illiquid. Snort. I'm going to use this word daily and incorrectly for weeks.