Ask yourself: Do you know anybody who will benefit from the $700 billion bailout? The plan is for the government – that is, taxpayers – to buy mortgage-backed securities, not mortgages, from investors.  

So here we are, at the tail end of one of the greatest profit-making eras of all time and the coup de grace: buyers of bonds backed by subprime mortgages get a government aid package to ease their losses. Who will decide how much aid they get? Henry Paulson, former chair of Goldman Sachs and one of  the individuals who benefited from the sale of these bonds. That’s who. 

In the words of a chief economist in the Clinton administration: “It’s a straight subsidy to financial institutions. You’re essentially giving them money.” Said another economist, this one from the Reagan White House: “This is scare tactics to try to do something that’s in the private but not the public interest. It’s terrible.”

Does Congress have the wherewithal to stop it? Hard to know. Certainly their track record is not promising, having just completed governing through an era of sharp profits and stagnant wages. Why would anyone have confidence in that institution?

In fact, talk now from the Democrats is of expanding the authority of bankruptcy judges—that’s right. Once you’re wiped out as a result of the subprime mortage you bought you may, may, get a break from a judge on the loan or interest rate. But, again, you must first go broke, and file a formal bankruptcy petition. Bank lobbyists are warning, already, that if bankruptcy judges interfere with mortgages, the cost of mortgages will go up because banks will be at greater risk. That means recovery in the housing market will be harder to achieve.  

There is just no give in the world of money unless of course you are the recipient of Henry Paulson’s largesse.  Think he’ll be popular at the country club?!