Yes, yes! A Bailout Plan at Last!

All this talk and no one has addressed how they intend to value junk, if we don't use a market.

So I will offer a plan. Then we can look for any better plans.

Here's my plan = "The Plan version 1.0" :

How about they start by offering to buy at 1 cent on the dollar any existing mortgage backed debt anyone, individual or corpation wants to sell?

When no one offers to sell any more, raise that to 2 cents on the dollar.

Keep going, adding 1 cent per dollar a day to the offer, till the $700 Billion is invested.

Advantages:

* Comprehensible plan of action.
* No questionable computations.
* No charges of favoritism.
* Easy to audit
* And, I think, most subtly but most importantly, is that this would have an immediate calming effect on the market, and one that improved gradually over time.

After the first day, you may not know how much that junk in the vault is "worth" but you and everyone else knows that you think it is at least 1 cent per dollar. Each day its effective worth gets both larger and stabler, in a gradual fashion.

The advantage, to anyone who grasps complex adaptive systems, is that no abrupt "step-function" change is put into the market, which would reveal and trigger all manner of new instabilities and demons. The firm hand gets slowly firmer, the ones most in panic get resolved the soonest, and things simply get better over time.

* Oh, and it probably is defensibly prudent - the investing public gets the most face amount of junk assets it possibly can for each dollar invested.

* In fact, there could be a market in this pool of dubious assets being collected, which could bring in more cash and make the entire plan become self-funding after some point.

* Probably, just issue each American Citizen 2,500 shares of stock in this junk-asset holding agency, in exchange for the non-optional investment of $2,500 of their money being taken on as US debt. If people want to hold the shares they can, or they can sell them to anyone else who wants to buy them up. If this thing makes money, all US citizens make money. If it loses, hey, that was in the cards regardless, then.

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OK. Next? Who has a better plan than that?