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Congress Needs to Take Accounting 101

The biggest problem with the $700billion plan was that it didn’t fix the fundamental problem—balance sheet woes—afflicting the firms that need help. Even if the legislation were passed, we likely would have seen a short-term recovery followed by more failures.

John P. Hussman, Ph.D., of Hussman Funds has a great, easy-to-read essay about these fundamental problems that you should read.

“Instead, the government is taking on financially non-viable securities and warrants on common equity, while failing to improve the capital position of these financial companies at all (unless it overpays). Taxpayers will not make money here.”