ST Alpha - "I'm sure I'll get slammed down by the financial experts here, but my understanding of all these "bailouts" is that..." (Reading a Post)

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I'm sure I'll get slammed down by the financial experts here, but my understanding of all these "bailouts" is that...

Posted by Mop (aka rburriel) Jan 30 '09, 08:42

...the gov't is loaning (like a bank) or buying stock (like an investor) in all these companies (banks, automobile makers, etc.) This is not money that Citi can just spend and we'll never see again. The only way this money disappears is if the company goes under (which is incentive enough to make sure it doesn't). Loans will be paid back, with interest. Stock will increase in price as the company becomes more solvent. We'll get the money back, and then some.

Raul

Responses:

most of the bailout money for the big banks was not loans, the US Gov purchased preferred stock, and - tRuMaN Jan 30, 08:49 2
- That's why it's not a giveaway. The gov't will get its money back. -- nm - Mop Jan 30, 08:52 1
  - [deleted]
[deleted] 9
- so it's not a loan. and not a nacho. and Mop is silly. -- nm - oblique, eighth best slackertalker Jan 30, 09:00 1
  - It's a series of tubes! -- nm - znufrii Jan 30, 09:03
- *is amused at the idea that the government would have to pay capital gains tax on the increase in value of its equity stakes in the banks* -- nm - znufrii Jan 30, 08:50 4
  - [deleted] 3
    - Fair enough. But the common impression that the gov't is simply "giving" the money and walking away never to see it again is a misconception. - Mop Jan 30, 08:56 2
      - [deleted]
      - This goes under Jack's other post, above. -- nm - Mop Jan 30, 08:57
- *confused by the lack of nachos in this post* -- nm - The Calico Cat Coalition Jan 30, 08:49 1
  - I'm getting nachos this weekend. Loaded ones. -- nm - Diva Jan 30, 08:52
*wants to borrow your nacho* -- nm - mara Jan 30, 08:44

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I'm sure I'll get slammed down by the financial experts here, but my understanding of all these "bailouts" is that...

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