Andy Kessler, a former hedge fund manager and author of “How We Got Here” (Collins, 2005), wrote an interesting opinion piece in the Wall Street Journal’s on-line version about the current “bail out” bill being debated in Congress.
The amount ($700 Billion) is staggering, but Mr. Kessler rightly notes that the government is getting something for their investment – namely a portfolio of loans and collateralized debt obligations (CDO’s). If the economy rebounds, and the housing market improves, Mr. Kessler argues that the portfolio could yield between $1 to $2.2 trillion to the U.S. Treasury, well in excess of the original investment.
The big “if” is how resilient the U.S. economy proves. There is obviously uncertainty here, but I’m inclined to remain optimistic about our long-term prospects. How about you?