Oct 13, 2008
1 comment
The Bailout Will Grow
Since the start of the talk of bailouts, I thought that $700 billion was low. The price tag will likely be around $3 trillion dollars.
Several recent factors appear to lend credence towards that estimate.
1. The US Government appears to be moving towards taking direct stakes in banks;
2. Despite falling gas prices, the pain on US consumer may increase - if so, the government may decide to directly help the consumer and pick up a portion of the consumers mortgages/debt -much like Mexico did after the collapse of the peso in 1994.
Once the full cost of the bailout is known, their might be another short term buying opportunity in the market as retail investors re-evaluate the stability of the market and the US’s ability to pay. But I believe that most institutional investors have already factored in this size of a price tag and would be buyers at lower prices.
