I keep trying to wake up bits of the public so that at least there can be a public opinion on these bailouts.

Meanwhile, the present story seems to be getting even murkier, were that possible.

“Deja vu in asset-backed commercial paper saga”, by Jim Middlemiss, National Post, December 23, 2008.

One year ago to the day that the Pan-Canadian Investors Committee first claimed victory by announcing a “tentative” deal to restructure the frozen $32-billion market, the committee has confirmed it has a new “tentative” agreement that would lead to some investors being paid in full and others left holding long-term notes that will pay back their capital in eight years or so.
…

The deal is expected to include a 14-month moratorium on collateral calls on loans related to the notes, a widening of the spread-loss triggers, which will reduce the likelihood of margin calls on the leveraged loans that the paper depends on, and an additional $3.5-billion in funding to backstop the notes from the government. That’s in addition to the $39-billion of collateral and margin facility already in place to backstop the notes. [huh? where did that come from?] Originally, the committee was seeking $9.5-billion, but it’s not clear whether or how much the parties involved in the market are being called upon to ante up more cash to backstop the notes.

It seems like governments the world over are in the position where they don’t want to tell their constituents, “We’re sorry, we can’t fix this.” But there are problems that historians may someday call the “bailout dilemma”.

Governments can only afford tiny bailouts. These are too insignificant to do any good, and lead to more expectations of more bailouts. On the other hand, big bailouts can’t work. It’s like saying, “Gee, I’m out of a job and need income. I know, I’ll pay me and solve the problem.” It would need to come from outside the system to do any good, there’s no one on the outside to bail us out.

I wish the “mechanics” would quit trying to get everyone to throw more money at a terminal car. Isn’t it time we find a new, better way to get around?