Comments on: Just add water (and hot air)… http://www.footnoted.com/market-meltdown/just-add-water-and-hot-air/ Morningstar's guide to what's hiding in SEC filings Sat, 04 Feb 2012 00:16:39 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Jack http://www.footnoted.com/market-meltdown/just-add-water-and-hot-air/comment-page-1/#comment-6424 Jack Thu, 02 Oct 2008 17:39:54 +0000 http://www.footnoted.com/?p=2729#comment-6424 I have found a couple of passages in the bailout bill that make it look like this structured as a revolving credit facility that never has to get paid back and is really only limited by the cap on the National debt. For example in Sec 115: GRADUATED AUTHORIZATION TO PURCHASE, it does not say that Paulson can buy $700 Billion of assets, it says that the "authority shall be limited to $700 Billion outstanding at any one time." So for example if He decided to buy $700 billion of assets, then he sold those assets for a loss, he would no longer be holding any assets, right? So, would he then be able to buy up another $700 billion of assets, sell them at a loss and keep paying for the shortfall by having the FED issue more debt? If so, then isn't he really only limited by the Cap on the national debt? Please tell me I am missing something. I have found a couple of passages in the bailout bill that make it look like this structured as a revolving credit facility that never has to get paid back and is really only limited by the cap on the National debt.

For example in Sec 115: GRADUATED AUTHORIZATION TO PURCHASE, it does not say that Paulson can buy $700 Billion of assets, it says that the “authority shall be limited to $700 Billion outstanding at any one time.” So for example if He decided to buy $700 billion of assets, then he sold those assets for a loss, he would no longer be holding any assets, right? So, would he then be able to buy up another $700 billion of assets, sell them at a loss and keep paying for the shortfall by having the FED issue more debt? If so, then isn’t he really only limited by the Cap on the national debt?

Please tell me I am missing something.

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