Republican and conservative apologists for the bailout consistently push the vain hope that somehow taxpayers might yield a profit out of the Paulson plan. In their simplistic analysis, they argue that all Treasury has to do is buy up a bunch of failed mortgage securities at some discount, say 20 cents on the dollar, and later sell them back to the market when things are normalized. The problem with this analysis is that it doesn’t take a complete view of the portfolios of these companies. What’s really killing these investment banks and large insurers is the credit default swaps they … Continue reading There’s No Due Diligence on a Sucker Bet