Wednesday, November 26, 2008

America waded deeper into bureaucratic manure on Tuesday with the unveiling of yet another bailout acronym. This one goes by the letters TALF, which in case you haven’t heard, stands for Term Asset-Backed Securities Loan Facility.  Unlike TARP (Troubled Asset Relief Program), which was a bailout “facility” for banks and other institutional lenders, this one is mainly for consumers. "As the economy is turning down,” explained Treasury Secretary Paulson, “it is very important that lending be available to consumers."  It seems not to have occurred to the man that perhaps consumers are not in a borrowing mood, even on such blithefully easy terms as the Government might wish to provide. The price tag for this latest acronym? A reported $800 billion. But, hey, who’s counting? If that number is correct, and if you toss in the Citigroup “rescue” surreptitiously tacked and glued into place over the weekend, it’s been a pretty expensive few days for taxpayers.  Citi will get $20 billion in up-front money so that the company can maintain payroll, but another $306 billion in portfolio assets will also receive blanket guarantees from the Government. Helicopter Money Concerning TALF, if its purpose is to rain down helicopter money on America, the chopper reportedly won’t even be airborne until February. The initial plan is for the New York Fed to extend up to $200 billion in non-recourse loans to holders of asset-backed securities backed by highly rated consumer and small business loans. This is not a bad idea as far as bailout concepts go, since it is designed to help liquefy a lending niche that so far has somehow managed to survive on its own.  But that doesn’t mean the niche has room to grow, or that it will even be viable come February. Our guess is that by then even