The bail out is a money grab and some see through it. That's why the deal is not flying. If you guys are going to trade this, make sure you know what's happening.
Here's something simple that could be done instead. It's short so take the time to read it: http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html
Another easy thing that could be done is for the Treasury to implement price controls on these instruments rather than enforcing mark to market rules on the balance sheet. This way, the banks just carry them until they can write off the losses. The free market for these instruments is completely non-functional anyway, so this isn't going to break anything that isn't already broken. It will put a big on drain future profits though, so the banks don't want this. If it's such a great deal for the taxpayer to hold these securities to maturity, change the rules so the banks can hold them! Nobody is talking about this as an option, the next paragraph explains why.
The big problem is that few understand these securities. They aren't just "dud loans". They are all based on cash flows from mortgage repayments, but they are NOT simple packages of mortgages. They were created in tiers of risk profiles for different investor requirements. This means many of them have internal gearing. Some of them have a LOT of gearing with little or even ZERO claim on the PRINCIPLE repayment. Care to guess which ones the taxpayer is going to be offered? The worst of the worst, no doubt, because the bail out can't buy even a small percentage of the lot that are in trouble.
This bail out is no nationalisation. It is no New Deal. It's a money grab by the big banks. Plain and simple.
