Two interesting stories today - first, we just spent all the money in the US coffers in one fell swoop. Yay! Now here's where it gets interesting: also today, Wells Fargo offered 7 times what Citigroup had offered for Wachovia, and Wells Fargo isn't insisting on help from the FDIC. Why would anyone be buying a bank that has tons of bad debt on the books? Could it have something to do with the aforementioned bailout, and an assumption that the US government is going to overpay for those bad loans? I think it could.
I heard an interesting interview on NPR today, with people from some of the major ideological economic think tanks, where one person noted that, by definition, the bailout intended to overpay, because it's the market that sets the price. This theory would work better if the market for those loans wasn't so small, and the barriers to entry weren't so high, but still, it raises an interesting point. It appears we'll be given the chance to find out, since the bailout is on.