Tuesday, September 30, 2008

Scale - part II

Of course, the market is back up today in a big way. So cost of failing to pass the bailout is now only about 1.12% of total wealth in the U.S., or about $650 billion.

So if today the stock market is getting valuations right, we just substituted a roughly $700 billion dollar loss in the stock market for a (maybe) $200 billion loss on the bailout. Is that a fair trade-off? It depends on how heavily invested you were, and how much longer you'd expect to be paying the taxes that will have to be raised to pay for the bailout. For a lot of people, I'm guessing that they are a) not heavily invested and b) old enough to not be paying taxes very long - so they're feeling alright with this.

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