The scheme is actually pretty simple. Please forgive my primitive graphics abilities.
The fund will buy mortgages from the banks at market value, and then re-sell them back to the banks at a discount. The fund will then repurchase those mortgages from the banks, who will sell them back to the fund again. The same product (perhaps an ill-advised mortgage for a half-million dollars taken out on a house in the distant suburbs of Las Vegas) will be bought, then resold, then re-bought and re-resold in an endless spiral of profit-taking. The taxpayer will lose on every transaction, the banks robbing the treasury each time each mortgage, or package of mortgages is swapped.
It is amazing to observe the greatest transfer of wealth in history, from Main Street to Wall Street, from the many to the few. What is even more amazing is that nobody seems to be stopping it.
“Professor George W. Bush”
http://www.ilovepoetry.com/viewpoem.asp?id=96018
THE ABSENT a MIND PROFESSOR
Comment by tsumbra — September 29, 2008 @ 9:38 am
Alex don’t forget that the choicest properties would be sold to his buddies at a much reduced rate. McCain only has 10 or 12 houses, surely he could use a couple dozen more. Then there are the rest of the overfed, bloated, no neck politicians who will want their cut of the loot.
Comment by kerry — October 1, 2008 @ 11:03 am