So I'm reading about the new plan proposed to help those who face the risk of defaulting on their home loans and losing those homes through foreclosure. Without even getting into the very thorny issue of how dangerous it is for the government to intervene in free markets to eliminate risk and its consequences (and I'm talking about the banks, the automakers and other companies too), I think that when the economy stabilizes and starts to improve, the government is going to be sitting on a ton of cash.
First, the government received preferred equity stakes in the companies that it bailed out over the last few months. Those interests that the government holds will be paying rich returns, assuming that the banks, etc. return to profitability.
Second, the government is now going to own a preferred equity stake in millions, perhaps more than 10 million, single family residences. Now the government will have a stake in the next housing boom!
What? You say that Obama isn't requiring homeowners to give up the same preferred equity stake that the corporations gave up in order to get bailed out?
Never mind...
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