PBS NewsHour
ABOUT US  |  LOCAL TV LISTINGS    EMAIL   PRINT
TopicsVideoRecent ProgramsTeacher ResourcesThe Rundown: news blogSubscribe rss | podcast


REGION: North America
TOPIC: Business & Economy
PBS NewsHour
The Business Desk with Paul Solman
Not a blog but a "q-and-a" (pronounced "quanda"), this page is about the basics of economics. Its premise: there are no stupid q's. And if some a's seem dim, take heart: I can brighten them up in response to objections, corrections, refinements. Comments on posts feature yours, and my responses. Enough of you now frequent and query the quanda that I post most every day. Haven't seen your q yet? Send it again. All a's should be taken with a shaker of sodium chloride, if not a Lot's-wife's-worth. And speaking of salt, the mustache and "hair" in the photo has a lot less of that condiment, and rather more pepper, than can be seen on TV. Think of it as time travel.

« Previous Entry | Main | Next Entry »

What Are the Chances the Government Will Profit on the Bank Bailouts?

Name: Peter D.
City & State: Miami, Fla.

money roll; AMagill via Flickr

Question: It seems that almost all of the news we hear about the government's bailout of the banks is negative, as if the American taxpayer will never see another dime of the bailout money again.

But isn't it true that when the banks finally get back on their feet and start turning a profit that not only will we get our money back, but that there is a real potential for the government to actually make a profit? Perhaps even enough money to pay down the national debt?

Just what are the chances of the government getting its money back and making a profit to boot?

Paul Solman: 42.7 percent. Wait, I take that back: 9.32 percent. No, sorry, that's a typo: 93.2 percent.

Look Peter, I was with you all the way through most of your second paragraph. Absolutely, there's a chance taxpayers will win on the bank bailouts, in a number of ways, most obviously, if the preferred shares we've gotten in banks rise substantially above the price we "paid," and we sell them at a profit. The first rule of investing is "buy low, sell high." No one can deny that by historical standards, the government bought pretty low in this case. (One can of course deny that it was a good deal: "historically low" does not preclude LOWER.)

As to paying off the national debt: uh, no. That debt has topped $10 trillion dollars of late. There is no plausible scenario, short of hyperinflation (in which dollars become relatively worthless), by which the profits on taxpayers bank investments will yield that kind of money.

-- Posted May 22, 2009 | Comments ( ) | Permalink

TrackBacks

Listed below are links to blogs that reference this entry: What Are the Chances the Government Will Profit on the Bank Bailouts?.

TrackBack URL for this entry: http://www.pbs.org/newshour/mt4/mt-tb.cgi/1327

Comments

 

 

Archive

April 2012
Sun  Mon  Tue  Wed  Thu  Fri  Sat
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30          
 

 
» See All Entries

Paul's Video Reports
Paul Solman on Twitter

NewsHour economic coverage is funded by a grant from: The Alfred P. Sloan Foundation
The PBS NewsHour is Funded in part by: The John S. and James L. Knight Foundation Additional Foundation and Corporate Sponsors
Program
Support
From:
Copyright © 1996- MacNeil/Lehrer Productions. All Rights Reserved.