12 Nov 2008

Three Thoughts on the Bailout Switcheroo and Bogus Credit Crunch

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(1) Isn’t this hilarious that the $700 billion “Troubled Asset Relief Program” contains all sorts of money for various companies–here’s a partial list–but not one thin dime for troubled asset relief?

(2) So how do all those fools who were running around saying how much money the taxpayers were going to make on these purchases of mortgage-backed securities feel now? I admit, in this article I just cautioned that the government would fleece the taxpayers on both ends of the deal, by buying the “toxic” assets at overvalued prices, and then dumping them down the road at below-market prices to their cronies. It didn’t occur to me that Paulson might blow through the whole $700 billion on other Super Important Things before getting around to spending a cent on what (he told us) was necessary to avert a worldwide financial collapse.

(3) In late summer I formally incorporated my consulting business. As part of the process, I opened up a business checking account, and just for kicks–since Tyler Cowen and Alex Tabarrok were arguing about it at MR–I applied for a business credit card. Keep in mind, I am a relatively new business owner; I didn’t show any history of revenues to the bank. All they could do was run my credit history; I only had a half year of consulting income on my last tax filing (if they even checked that). Nonetheless, they approved me for a $7500 credit line (with purchase APR right now of 12.99%) and I had the card in about two weeks from the time of application. I asked the lady at the bank (when I was applying) if she anticipated any problems, what with the “credit crunch.” And she said something like, “Well we’re a smaller bank, you know, and we didn’t get into all that stuff that the bigger banks did. We’re being a little more cautious in our review process because of all that’s happening, but no, if there’s a ‘crunch’ we certainly haven’t felt it.”

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