Should the Paulson, Bernanke proposal be passed by Congress and signed by the President, it will add somewhere between $500 billion and $1 trillion in US debt. Both Obama's and McCain's economic programs didn't foresee this. How should they adjust their economic programs to cope with this enormous new debt load?
correct. if they are not very careful with this one of them will preside over the total bankruptcy of the US very shortly. bye bye dollar.
Its not really a bailout. Its more so a transfer of assets, 1 trillion of our cash in exchange for 1 trillion dollars worth of mortgages.
According to accounting standards they have to mark the value of the assets as they would sell in today prices, some of the prices are at record fire sale prices and may not represent the true value of the assets. Every time they write down the value of assets they need to raise capital to offset their losses, which means less money going to business to function. If the government holds the assets until the market stabilizes, whether a year from now or 5 it can outlast the extreme market condition and banks can get back to operating normally.