Lawrence Kudlow assures us that any assets bought by Treasury under the Paulson plan will be 100% owned by the taxpayer, which may even yield a profit to the taxpayer since the target assets are “now very likely under-priced because of the chaotic and frozen market conditions.” You see, the Treasury will be able to buy the assets in a “market auction” for like “20 cents on the dollar,” and maybe even sell them later for a profit. As such, Kudlow and his gang of supply-side apostles are pushing House Republicans to capitulate to the bailout by means of chop-shop broker tactics, and capitulate they will.

The problem is that the financial institutions know these assets are garbage and are afraid to sell them on the free and open market since the liquidation value on these assets would expose each institution’s insolvency. The financial system has run out of greater fools looking to buy this worthless junk. If they have value, we could let the market discovery process find it during bankruptcy. While some of the mortgages might have some value amidst the land securitized to it, many of the distressed assets include complex financial derivatives and particularized structured deals which are difficult to value. As a result of this politically rigged market, Treasury will pay 20 cents on the dollar for something worth zero to 2 cents. Thus, the financial elites will rely on a purchase from the last and greatest fool in the pyramid chain that has been our fractional reserve banking system, the U.S. taxpayer.

There’s nothing more embarrassing than entering into a sucker bet from a chop-shop broker. Unfortunately, the US taxpayer will be given no choice, it will be required to be the Greatest Fool of Last Resort.

Don’t fret comrades, at least we will own 100% of it.