[quote author=“Mace”] I’m confused.

One say bailout is to save treasuries, implying that nobody want them.  Another say many folks rush to buy treasuries, implying that there are huge demand for treasuries.  Doesn’t bailout mean need to sell more treasuries which mean bailout can be successful since there are huge demand.

Please enlighten this poor soul.

Everyone wants the safety of Treasuries until they don’t. Mayor implies the underlying gigantic problem.
Treasuries are sold on nothing more that THE TRUST in THE US government - they are not backed up by gold or anything tangible. The US has been financing itself by obtaining huge lines of credit based on that trust.
700 billion will buy some time and keep up the trust.
Mayor is right that the bill does not address the root of the problem - falling house prices, it says nothing about the changing terms of mortgages or giving breaks to homeowners. It is instead provides temporary stability.
Hey, when you late on your credit card payment and you finally pay it, they still leave your credit line open )
If there is a slightest doubt that Treasuries can default - that would be the financial end of the US as we know it. Will not happen till 44th president takes the office.

[quote author=“enature”] ... Mayor is right that the bill does not address the root of the problem - falling house prices, it says nothing about the changing terms of mortgages or giving breaks to homeowners. It is instead provides temporary stability ...

First thing first, is there a need to address falling house prices?  AFAIK, house prices are declining sharply in previously hyper-speculation neighborhood.  Excluding those neighborhood, price didn’t drop that much.

Second thing, I thot it is clear that the bill is to address the credit crisis not the housing problem.  IMHO, this has to be the first step towards solving the housing problem if it needs to be solved.  Only when banks have sufficient capital, can they provide changing terms of mortgages such as increasing loan duration, x months no need to pay installment, no interest charges for x months, etc.  In other words, we have to save the banks before we can save homeowners.  The lack of credit is affecting the running of businesses which is more critical. The bill removes this housing distraction from the banks which is great, banks can perform their functions of lubricating the economy.

We all know the existence of the Creature and its ultimate consequences if it is not addressed.  But I can’t see how this bill is related to the Creature.  We’ve to tackle one problem at a time.

Look, we have TOTAL SYSTEMIC RISK.  RIGHT NOW.  Local and state governments get funding from both bond issuance and taxation.  BOTH are going right out the window.  Th private sector will be gushing jobs pretty soon and the FED is trying to backstop the entire financial network by buying up tons of paper.  Corporations aren’t able to sell bonds either right now because of complete lack of trust.  Would you lock up $20,000 to Goldman for 8% for 3 years?  California?  Of course not.  Cities and states have defaulted in the past.  If unions don’t cave in to the inevitable MASSIVE pay cuts and job losses, we could have major infrastructural problems with the public sector on strike.  Now, at the root of ALL of this is an ENTIRE financial network that runs on FUNDING and CREDIT.  Both are in jeopardy.  The Federal Reserve is printing, begging and borrowing as I write this just to maintain the APPEARANCE that we can get through this.  It is BAD.  And this BAD is putting our entire government balance sheet into severe risk.  This has caused all of the other governments, who own and buy TONS of Treasuries and MBS to demand a LOT more (purchasing of their bad debt - credit card, MBS and otherwise)....OR ELSE.  “OR ELSE” means the end of our current financial system.  If the bailout passes, the government would realistically need to purchase tens of trillions of dollars of MBS and other garbage to simply stave off the immediate problems out there.  They can only do this by printing tens of trillions and running up debt to unsustainable levels.  Since they can’t do this, they can’t save every one.  That means there will be huge bloodbaths for insurance companies, banks etc etc etc.  We are in a ***world*** of hurt right now simply because every aspect of our financial network runs on CREDIT, not CASH and DEBT, not SURPLUS.