What a return!
Again, a very intelligent guest posting:
With the actions today the fed govt. “made” the 9 biggest banks in the country allow them to buy preferred shares which carry a 5% dividend (for the first 5 years, then 9% after that). Okay, if the 2 year T-Bill is offering at around 2% - then our government just effectively ensured it is going to pay 2% on its borrowings, then turn it around for a guaranteed 5% return. I know I may drink the kool-aid on what Paulson, Bernanke, etc. do – but, if I consider the US govt to be the largest “investment” I make yearly, through taxes, then effectively the “management” of my largest investment just guaranteed a return on capital.
October 15th, 2008 at 2:52 am
Will you work this one out a little further? I follow you but barely, and I think it is a message that is important to discussions about the bailout plans and the possible outcomes.