700 billion US-Dollars
In fact, some of the most basic details, 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.”Forbes Charlie Stross sums it up nicely (again):
throwing money at banks will, at best, save the bankers’ jobs the folks who got their institutions into this mess in the first place by neglecting the first principle of their job, which is this: banking is the art and science of risk management.
Bailing out banks will save the financial infrastructure, but won’t do anything about the 10-30 million people who were living in those properties that aren’t affordable or viable any more. Flushing up to 10% of the US population down the homeless toilet is the real screw-up, and of course the Bush administration isn’t interested in dealing with it. (They’re poor, and a disproportionate number of the sub-prime mortgage holders are black, and want me to continue?) The Bush administration is fairly transparent in its devotion to principle: it’s run by rich folks for rich folks, and that’s an end to it.
Never mind bailing out the banks: what needs bailing out is the human beings behind the collateralized debt obligations. The money would be better spent keeping roofs over their heads (and servicing those currently-non-viable mortgages, which action would, incidentally, keep the banks liquid).