Bailouts: Where's all this cash coming from?

A couple hundred billion here and a couple hundred billion there. What's a few billion between friends? The government is spending hundreds of billions of dollars to sustain banks, AIG and the big mortgage aggregators, Fannie Mae and Freddy Mac. Is it really clear what we're buying as taxpayers? The money's being used to buy "toxic assets" but there is no clarity about what prices we're paying for subprime mortgages or other assets from banks to keep them solvent.
Citigroup's pricetag for a bailout grew by another $20 billion from the original $25 billion. The government also agreed to shoulder another $300 billion in losses from bad assets. How did Citigroup and the government come up with this figure? Do they just pull these numbers out of a hat? As a taxpayer, do I really want to own a business whose mismanagement makes GM look like a beacon of efficiency? Would it make more sense for the government to pay $30 billion to acquire all of Citigroup and close its doors? Taxpayers might be better off given the rising price tag for this mess.

Barry Ritholtz, who writes "The Big Picture" blog and is an investment strategist for Fusion IQ, says the bailout pricetag now exceeds $4.6 trillion. It is more than the combined cost of the Marshall Plan, NASA, the New Deal, the Louisiana Purchase, the Korean and Vietnam Wars, and the Iraq invasion. Bloomberg did some calculations and said the overall package is over $7 trillion. In other words, this is $24,000 for every American. I think the economy would have been a lot better off if The Fed and the Treasury just cut each person the checks. A $96,000 check for my household would eliminate my debts, pay a few years of tuition at a state college for my daughter and still leave enough for me to buy a car (effectively helping Detroit's autoworkers). Is that any less worthwhile than giving it to some poorly managed banks?

Instead, the Federal Reserve and the Treasury are keeping the printing press going and for no certain benefit, for ill defined objectives and for assets that do not have a clear market value. Our economy will be that like a South American banana republic when this is all done. We'll be begging the Chinese to lend our government more money and the dollar won't be worth much of anything. To top it off, President Bush and his Treasury Secretary have been absent in terms of providing leadership during this economic crisis. Could we just accelerate the Obama inauguration and evict Bush from 1600 Pennsylvania Ave?

McCain-Obama debate -- McCain overplays his hand

Debate 3 Observations...
-- Sen. McCain gave his best performance and actually won the first half hour of the debate.
-- Sen. Obama remained cool. A CNN commentator said Obama's performance reminded him of a boxer who was ahead on points in the 15th round. He didn't allow himself to take many risks, because he knows he's ahead. He went in low key and stayed Presidential.
-- Sen. McCain is not terribly convincing when he tries to go negative. My college roommate, a Pat Buchanan fan, is more convincing and cutting the way he criticizes Obama. Attack ads are a Bush strategy and reflect the Bush-Rove-Atwater way of doing things. McCain built a career fighting politics as usual. Unfortunately, he wedded himself to them during this campaign. He's a lousy actor when he tries to use them. I wish the McCain of eight years ago was running against Obama. He went negative and played stuff that resonated with the Fox News and talk radio crowd, but Obama's connections with Acorn and Ayers were adroitly deflected as non-issues.
-- Joe the Plumber fell flat. Sen. McCain tried to play that card and it didn't resonate with regular folks. It created a bit of a media stir, but there's not a lot to it. I'm not surprised by a plumber making $250K a year, because there's plenty of work there. However, someone making that much money is not going to generate a lot of sympathy. Obama is addressing health insurance, the economy, and the financial crisis as his issues. McCain tried to pull the Reaganesque approach to connect with folks by personalizing an issue to justify reducing taxes. However, reducing taxes is not necessarily the solution to our nation's financial problems.
-- Sen. McCain was way too callous when he dismissed the "health" of women as a factor in the abortion debate. He probably alienated a lot of independent women voters with his air quotes gesture. He's playing to his base, but that's not going to win him this election.
-- Bob Schieffer did a great job with the questions asked and threw in enough tough ones to keep me happy. He had the sense to ask about the growth of deficits under both candidates' plans. CNN posted the actual question that was asked to show when the candidates were drifting off topic.

That's all for now. My favorite candidate was Ron Paul, but it's a shame he's not running. He would have generated a real debate on the issues and the role of government and taxes.