The theory that bailout legislation recently defeated in the House of Representatives would make money for the federal government has been propagated by the financial media. But according to a recent report released by the International Monetary Fund (IMF), a profit is unlikely.
The September 2008 report from the IMF stated the chances of the government recouping anything more than just a fraction of the bailout costs is unlikely. Alex Patelis, head of international economics at Merrill Lynch, explained the report and cited history as an indicator on CNBC's Sept. 29 "Squawk on the Street."
"What you find in the IMF report is of course that banking crises happen all the time," Patelis said. "If you look at the history of banking crises - that on average they cost about 13 percent of GDP to the government, both in terms of direct recapitalization costs, but also lost revenue."
One of the chief proponents of the bailout has been CNBC's Jim Cramer. Cramer said there was a chance the government would make money on his Sept. 23 show.
"And it looks like Washington will be taking an equity stake in any company that takes part in the plan, which means there's even a chance to make money rather than lose it," Cramer said.
If Congress were to pass a proposal in some form, the government stands to get back just pennies on the dollar of the bailout's total cost, according to Patelis.
"And unfortunately, the average ... recouping is about 18 percent of that cost - that is what the government manages to take back in return," Patelis added. "So the odds are not really in favor of the Treasury making a profit on this top program."
Opponents of the bailout disagree with the proposal for a myriad of reasons - including cost and expansion of government power.



















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Scary Numbers
September 29, 2008 - 15:06 ET by BlondeNow, those are some really scary numbers.
That, along with the basic unconstitutionality of this government bailout, are two of the soundest reasons I've seen to let this fiasco go down the tubes.
We need to shout this and hammer it home, I don't want to see another iteration of today's fiasco in two weeks. The more they blather, the more instability in the markets. Put a fork in it.
David Gregory, do you know which damn network you lie for? ~ Uncle Jimbo, @Blackfive
Spin
September 29, 2008 - 15:50 ET by SchnikeysNow they're going to try to spin this one off as one of President Bush's failures, as if there weren't any Democrats involved in its path to serious consideration.
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"My morality is your morality."
Where's the main street panic?
September 29, 2008 - 15:39 ET by LastlibertarianNormal
0
As a buyer at the largest auto auction company in the world,
Manheim, I haven't seen any sign of the alleged small businesses panic let
alone slow down. It's actually the opposite. Prices on most off lessee cars
have been going up 2 to 5 percent over the last 2 months.
Can the real world prices of over 50,000 cars a week
be wrong?
Normal
0
Freedom isnt Free
September 29, 2008 - 15:51 ET by third eyeAll the hot air coming out of Capitol Hill is not by itself, enough to thaw the credit markets. We need something with a bit more kick, and if that means intervention -- so be it.
»→ ACORN killed it
September 29, 2008 - 15:54 ET by Cool ArrowWhen it became obvious the Democrats could not be trusted with clean legislation even in time of crisis, right thinking Congressional members realized they could not trust their leadership.
Pelosi allowed the package to be poisoned.
"I've got a bracelet too" - Barack Obama
Cool, ACORN was taken out
September 29, 2008 - 16:04 ET by bassndudeCool, ACORN was taken out of it.
Save a SeAL, club a liberal!!
Yep.... It was the voices
September 29, 2008 - 16:08 ET by bigtimerYep....
It was the voices of the people.
...and the voices of Pelosi....and Barney.....and Dodd....and Reid....and the leftist msm...
"America isn't the problem...America is the solution." ~ Rush Limbaugh
»→ Understood bass
September 29, 2008 - 16:21 ET by Cool ArrowBut that attempt by the Democrats to hijack the legislation soured the pot for a lot of legislators.
It was proof positive the Dems will pass up no opportunity (regardless of situational gravity) to campaign.
Haven't seen such gratuitous silliness since the Paul Wellstone memorial gathering.
My point is that the Dems tipped their hand early, and couldn't be trusted afterwards.
"I've got a bracelet too" - Barack Obama
I agree Cool. And there
September 29, 2008 - 16:27 ET by bassndudeI agree Cool. And there were a lot of liberal groups still in the mix. And the goverment could have gone out and bought up retirement funds. The last thing I want is for the goverment to screw up my retirement. And if they got their hands on it, they would screw it up. Look what they did to SS.
Save a SeAL, club a liberal!!
Plus I heard that they just
September 29, 2008 - 16:40 ET by bigtimerPlus I heard that they just handed the 110 page bill late last night, so you know a whole bunch of congress-critters never even had time to look into the Bill that thoroughly.
As if that ever made a difference for a bunch of them on the dems side anyway...
"America isn't the problem...America is the solution." ~ Rush Limbaugh
The chickens are coming
September 29, 2008 - 15:54 ET by bigtimerThe chickens are coming home to roost...
Excellent information.
I hear the latest is they are going to try to cram this down our throats again anyway in the Senate, then pass it back to the House.
Time to speak loud and clear again ....the msm doesn't get it...they never do.
The reps listened, they have to be reelected...
Wall Street is shocked, shocked I tell you...along with a lot of politicians.
The absolute most delicious back and forth I have ever in my life heard today on the stock market shows was on Fox business channel, Liz Clayman got her head handed to her...rep. McCotter Michigan put everything as plain and simple as anyone could to her....and she still ate the pages...these msm elites as he called them, which is correct by the way, just do not get it, the people spoke, they listened.
I am going to look for a video of that later...I have never seen anything better, and it really is a must see to explain the beauty of it.
"America isn't the problem...America is the solution." ~ Rush Limbaugh
Please
September 29, 2008 - 16:14 ET by LastlibertarianYes, please post a link should you find it.
Considering the 100 to 1 calls against this bill, it's suprising that anyone voted for it. Gee, sounds like the immigration bill of 2 years ago.
Good thing our elected representitives listen to the will of the people. /sarcasm
Bailout will make a profit
September 29, 2008 - 16:06 ET by east tennessee johnLet's see Buffet is in for $5 billion in Paulson's old firm. Banking controlled by 3 major players, one of them Rubin's, all of Goldman's (Paulson's)competitors gone except Morgan Stanley. No perp walks for Fannie/Freddie felons, sure sounds like a good deal to me. Let's see, 82% of $700 billion=$574 Billion, at best, price tag. From many ACORNS,ahuge financial problem grows. B.H. OBAMA, ACORN FIELD TRAINER
I wonder what
September 29, 2008 - 16:06 ET by 10ksnookerWould happen if we just terminated the CRA and then the Tax Reform Act (TRA) of 1986 -- That would make all these empty homes targets for buying by investors who want to pick up rental property.
You remember the TRA, that is what caused the last disaster and had the RTC formed to take over the foreclosed mortgages. The Democrats tried to end the Reagan boom in 1986, by crashing the home investment market.
Free market solutions, something Democrats seldom understand.
While you all at NB are
September 29, 2008 - 16:25 ET by jdhawkWhile you all at NB are sitting around pointing fingers at somebody or anybody, I have a number for you $800 billion.
The above number is $100 billion more than the bail out may cost off of
us. That is what Americans, you know us fat cats, lost in the stock
market in a single day - today.
I presume that you all at NB make money from the advertisements that
you sell on this web site. If you look at Google's stock today, that's
how they make a living as well, you will see what your future receipts
are going to look like as reflected in their stock price.
At some point, you all at NB have to educate your readership. The
Congress needs encouragement to act not who did what to whom and when.
Unlike the great depression, where they didn't act until there was
great harm on main street, we have a chance to get ahead of this.
Time is of the essence. I urge all of you on this web site to
write, e-mail, or call your representatives and tell them to get behind
this bail out and get it passed.
Oh, by the way, even if this passes, we still have a recession to
get through. Yeah, a recession, but not a depression. There's a
difference.
BULLSHIT!!!
September 29, 2008 - 17:06 ET by c5thenIf 20% of the big financial institutions fail and get bought out by the others, it will not cause a recession, let alone a depression. Allowing the FED to determine who gets what in late night back room deals is exactly what caused the Great Depression after the 1929 market sell off. It is how the international finance powers gobble up assets and capital on the cheap.
The FDIC insures all the deposits. Jow sixpack will be fine. It's the wall street greedy CEOs who are quaking in their boots.
»→ jdhawk
September 29, 2008 - 17:08 ET by Cool ArrowI could swear I answered this post in another thread.
Was it a bad day?
"I've got a bracelet too" - Barack Obama
"At some point, you all at
September 29, 2008 - 17:30 ET by ckc1227"At some point, you all at NB have to educate your readership. The Congress needs encouragement to act not who did what to whom and when. Unlike the great depression, where they didn't act until there was great harm on main street, we have a chance to get ahead of this."
Get it through your head: Socialism caused this, more socialism won't fix it.
don't cry hawk
September 29, 2008 - 19:16 ET by porpoiseboyif the "800bil" lost today is real......so be it. that's what happens with bubbles...should the gov't have rescued the telecom industry? i hear all the business "experts" freaking out....they never learn. if the market is based on false assumptions ( like that bad paper was good paper ) it has to correct itself. even if people can't get loans like the used to for awhile. stop your whining hawk. your dem friends...barney frank et al have been caught spending all our futures by legislating that banks loan money to people who can't afford it....read that houses for the poor & unemployed. i have seen the video of frank deriding the conservatives who warned about this years ago. he said they were being irresponsible for suggesting that fannie and freddie were anything but on the most sound financial footing possible..he went so far as to suggest obliquely that it was somehow un-american not to lend away so all the poor could have houses. this is a problem caused by the legislature ( uh, they make the laws ) not the excutive branch of the govt. get over it, take your lumps and get back up. the percentage loss today was not even in the top 10 percentage losses on record. the sky is NOT falling, this is just a correction.
Why is no one mentioning the oil price plummet too?
September 29, 2008 - 17:01 ET by c5thenAs the DOW tanks so does the price of oil. Interesting, no?
It's partially the fear of an economic slow down coming, but not all. It seems that the speculators are bailing big time too.
America should Profit off the Obama Economic Disaster
September 29, 2008 - 17:06 ET by Lame CherryWarren Buffett made 31 billion off of American workers in this economic disaster he helped generate and so did his fellow comrade, Soros, in 4 billion in one quarter who both support Marxist Obama.
The IMF is full of socialist nation rapists as much as the World Bank.
I pointed out that Paul Wolfowitz was removed from the World Bank, because he was giving money directly into the hands of poor individuals in Africa, instead of the lump sums stolen by Obama relatives and just as soon showing up in European banks profiting the select cartel banks.
America should make a profit off of this European and their proxy nation rapists inflicting this on the United States.
My blog posted here last night showed this started with Hawaiian banks in a massive money laundering scheme to get the Chicoms into the US stock market.
Obama did a like scam in Chicago with Bill Ayers and Obama was part of the defeating S 190 which would have stopped this money laundering in debt which John McCain's bill was based on.
There are numerous safe ways that America can profit from this and make these robber barons pay.
I will give 5 examples.
1. Like Teddy Roosevelt break these trusts of Buffett and Soros who are nations rapists and confiscate the money they stole and lottery hand this money out to American families. The Buffett Soros rape would give a $500,000 rebate to over 300,000 American families as there is around 160 billion in stolen profits from those 2 alone.
2. Instead of setting up a 700 billion dollar tit for tat. Keep the 700 billion, put it into an overlord bank backing key loans.
3. Treasury seizes the millions of dollars sitting in Congressional campaign donations from Fannie, Freddie and other quasi government bodies into these poor robbers in Congress and pay off as many houses for families at 80%. Even poor people can afford on an FHA loan at 3% $20,000 on a 20 year mortgage.
Money repaid each month goes to paying off as many houses as possible each month.
4. Cut the debt out of the companies in trouble, repackage it in low interest loans to the companies which they will be required to pay off.
Sell that debt to investors in tax free dividends for retirement. No new debt or selling will be allowed and the debt on schedule is retired in a few years.
5. Let it be known the European financiers and their American proxies will loose their Federal Reserve banks if they do not clean up this mess they created to profit off of the poor in 1 year, so America is making a profit for it's citizens.
In addition, from their personal finance accounts in Switzerland they will be taxed 1 billion dollars as day out of their hundreds of billions until this debt starts showing a long term profit not harming the west.
This entire mess was created for nation rape to install Barack Obama. The people who created it did so, because there was profit in it. Make them make a profit in this for America or they will loose their profits and Mr. Obama will dumped by the side of the road tonight and America will have this mess solved in 6 months.
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
Bailout
September 29, 2008 - 17:26 ET by east tennessee johnThere was $800billion lost in value in the markets today. Does that suggest there is no underlying value to the stocks that make up the various markets, or is there a herd mentality towards believing no value exists?Why should there be a resolution to this issue without any accompaning form of accountability? If this were a Republican debacle, other than being for years, gutless, there would have been summary executions by now. A decision will be reached when all the appropriate asses are covered. As far as NB commentators are concerned, by and large they form a highly well informed group, who are probably more aware of the consequences than the DC Insiders and friends who created and are the sole persons responsible for this mess. Obama talks about the failure of a philosophy, afraid to say but imply, market capitalism. As usual, he'swrong. It is the success of greed, malfeasance, lack of oversight, mismanagement, dishonesty that was organized through political contributions and donations to "community organiztions", to create activist constituient groups, to simply bleed the treasury in pursuit of a "higher" goal. As ACORN Field Trainer BHOBAMA said, from little ACORNS HUGE FINANCIAL PROBLEMS GROW.