Could we (the United States) ever see a profitable return on the assets the government is buying?
Best Answer
2082 points
alanj answered one year ago …
If whoever is doing these deals is smart about it, absolutely yes. These securities are secured by real estate and when real estate makes a correction, as it is now, it has always gone on to make new highs. So, if you hold onto the securities long enough as the underlying real estate increases in value the securities will become profitable, eventually. Unless, the securities are sold off before the underlying properties have increased in value above the price that the securities where purchased for. If you can find a price chart for real estate you'll see that real estate prices over the long term trend up with corrections along the way. (Note: The DOW does the same thing. This bear market will eventually turn around and go on to new highs.)
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411 points
jester112358 answered one year ago …
No, you can't make profits if you overpay for any asset. And if they don't overpay the bailout won't work since the banks won't participate. So, the American taxpayer gets screwed and no profits will ever be seen. Remember this is the government that set up fanny mae and freddy mac. These morons couldn't organize lunch much less de-aggregate and price complex mortgage securities-thats what the market does-and they aren't buying. You'd have to understand the probability of repaying the mortgages, % default, recovery amount, housing price evolution etc. and that doesn't look good. Bottom line, houses are historically overpriced, so if you buy the mortgages supporting these high prices, you're overpaying. And if you don't overpay you can't bail out the banks and overseas suckers (investors) who bought this garbage in the first place.
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249 points
engcomp answered one year ago …
Even if corruption doesn't play a part, which is by no means assured, the renowned incompetence of regulators will ensure that you, the tax payer, will NOT see a profitable return on these "assets".
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203 points
Future1investor answered one year ago …
NO! Because the Federal Reserve (not a government entity btw) plans to continue the practice of privatizing gains and socializing debt in order to alway be the one on top. This of course means at the total expense of the taxpayer and many times at the expense of the shareholders (the ones who do not get the inside track of when the Treasury and Federal Reserve are about to act).
Sure, Paulson has lightly hinted that perhaps we (taxpayer) will see a return. But it is all part of the fairy tale. http://www.marketedu.com/profile.cfm?username=Future1investor&viewblog =203
450 points
SallyG answered one year ago …
Although I can't argue with any of the prior comments, I believe that years after the formation of the Resolution Trust Company to cope with a similar but smaller crisis in the Saving and Loan sector (can anyone say "Keating Five"? and remember McCain's ties to same?) the RTC was able to sell back the assets purchased at break-even or small profit. This brings up a new question that I will post: How does this bailout compare to that of the S&Ls in the 1980s? (I'll check the date before posting.)
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