How much is this going to cost? “We don’t know”
September 8, 2008 7:53 am
This morning, Paulson is being interviewed by Steve Leisman from CNBC. Wow, great discussion…honestly, Steve did an amazing job and so far, I have not seen any softball questions. There is some interesting points to take away. One of the troubling comments from Paulson was that he did not know how much that this will cost.
He also agreed that the equity holders should bear the risk, yet the in the “help-out” plan they still kept the common shareholders alive and down, but not out. Down about 60% from Friday’s close for both firms and potentially much more ($0?) soon.
He also mentioned that it was not what he wanted to do, yet something that he needed to do. The Treasury Secretary was not answering the questions in a manner that showed he was happy with what
was done. In fact, I would go so far as to say that he felt that he had no choice. The plan was clearly well thought out if we believe Paulson (?) but it is still a wonder that Paulson has not idea what will be the cost will be to the taxpayer.This is even more concerning as Paulson said he “did not use a calculator” to come up with this plan. WHAT????????? How do you spend massive amounts of Taxpayer money without looking at how much that is going to be????
It was interesting to watch the equity futures pull back from their highs as Paulson spoke. Needless to say, he did NOT instill confidence in me. Too many “hopefully” and “not sure” comments throughout the discussion.
Question after question to Paulson had a response that was vague and clearly showed that he is scared and confused.
Warren Buffet was up next and he commented and somewhat praised the plan yet also felt it was “a step in the right direction” and clearly does not solve all of the problems.
Wait and see again… Short cover first…Then we see the trickle down, or bleed out.