Reply #24: There are numerous takes on what the bailout entails.

[Igel]

Largely, I think, because the explanation isn't trivial and various factions have wildly divergent understandings of what the problem is.

My understanding is that the toxic paper's toxicity is that there's no market for it, given the uncertainty as to what it should be valued at, so that it becomes essentially worthless at market value. (Hence the "mark to market" problem). However, that doesn't mean that the paper is worthless; just that the uncertainty makes it effectively worthless. The treasury dept. can buy it up some of it at what it thinks is an accurate price and hold it until maturity, if need be; that seems to be one course of action, and it provides a new "market" price for "mark to market" to latch on to indefinitely--as long as people hold their paper and don't sell it. Disposing of mark-to-market rules would accomplish much of the same thing. However, having the Treasury buy up the mortgage-based securities also provides an opportunity for the fed to engage in a statistically valid valuation process to determine what the paper, worthless because of uncertainty, actually is worth. At that point, the uncertainty is largely stripped away, or at least quantified to within a narrow margin of confidence, and the paper's value is largely restored; this also obviates the "mark to market" problem.

In all three cases, there's no need to try to buy trillions of dollars' worth of securities to alleviate the problem.

If your understanding is that the $5 trillion's worth of paper actually *is* worthless, then the bailout becomes much more of a bailout, a simple transfer of dollars for valueless paper. Then the question is, Is the paper to be bought at market value (which would yield little, except a bit of liquidity, and would do something, but not much to prevent defaults), or is it bought at arbitrarily higher-than-market rates (which would be a simple asset transfer to the investment houses and banks, but would prevent defaults)? I find it easy to be against this sort of policy; however, it's not what I think the package entails.

As for *'s extensive landholdings Paraguay, the best evidence I've seen is that a governor in Paraguay said that he heard the same rumors the reporter asking him about *'s purchase of land down there, but hadn't actually seen any paperwork or documentation. From there, as with the multitude of rape victims billed in Wasilla, it seems to be very similar to the child's game of telephone, except that those later in the chain are credited with more reliability than those earlier in the chain, and nobody actually seems interested in trying to falsify the claims. But doesn't this cut to the heart of the scientific method that we all endorse so much? Not only do we value falsifiable hypotheses, but we value even more that actual attempt to falsify them, because only by that process comes any truth beyond mere observation.