You should tell them that the Rubin- and Krugman-endorsed bailout of the US financial sector has cost $475 billion in Fed stocks of US Treasuries. $1,500 for every man, woman and child in the United States.
Granted, those Treasuries have been swapped for MBS. But if it weren’t for the price support provided by the Federal Home Loan Banks, Fannie Mae, and Freddie Mac, those MBS would be completely toast. A large percentage of the trillion-plus in Fannie and Freddie leverage over the past 9 months, the FHLBs’ $400 billion, and the Fed’s $475bn — X% of $1.8trn plus in toto — is toast. X is not a small number. And it was blown in 9 months.
That’s the real fiscal irresponsibility of the Bush Administration.
