This story comes from the category: "Is anyone surprised?"
Well, numbers have been released and analyzed that have shown the value of investments on behalf of American taxpayers as part of the Federal bailout has decreased significantly in a very short amount of time.
It's not too surprising, of course, as our financial system has been in chaos for months. But this is good information to point out to refute the argument that our bailouts were not really bailouts since they'd bring positive returns.
That could eventually happen, but for the moment, things aren't so good.
From MSNBC:
Stock intended to eventually earn taxpayers a profit as part of the Bush administration's massive bank bailout has lost a third of its value — about $9 billion — in barely one month, according to an Associated Press analysis. Shares in virtually every bank that received federal money have remained below the prices the government negotiated.
What's $9 billion among friends, right?
Since this is my money -- and the money of probably most of the people reading this, I think we have a right to know how our investments are doing. Here's another number to think about.
Now, however, the value of that common stock is less than $18 billion. If the government exercised all its warrants to purchase the stock today, it would lose money on 51 of its 53 agreements. Taxpayers would be out $9.3 billion.
So that means out of 53 investments, just two are making any money for the taxpayers. Here's a fair question: if your stockbroker's advice was right 3.7% of the time, would you stick with him?
Likewise, should we keep giving Paulson our money for socializing the losses of banks?
Do we have any chance of recouping our losses? That's the argument made by Paulson and others in the Administration. That they're not "day traders" and eventually we can make it all back! But not all economists would agree with that.
"It's a complete mistake to think this is a good investment for us," said Paola Sapienza, a finance associate professor at Northwestern University's Kellogg School of Management, who spearheaded a September protest of the bailout by more than 200 of the nation's leading economists. "It's a gamble. It's like going to Las Vegas."
Indeed.
Perhaps this is a Grover Norquist wet dream. If our government loses all its money making bad investments in a quixotic attempt to save the private financial sector, then there won't be any money left to use the people's money providing services like healthcare to the people!
Today we found out that in November, more than a half million jobs were lost. Perhaps our money would be better spent providing a social safety net for people out of work or at risk of losing jobs. Perhaps if we had universal healthcare, businesses would be able to afford more employees. Perhaps if our tax dollars went into building schools and sustainable mass transit, instead of a Ponzi scheme created by Wall Street and exacerbated by the Administration's loathing of any regulations, we might see a better return on investment.
January 20th cannot come soon enough.