Paulson's Bluff

It was a high stakes poker game. Each one at the table knew exactly what cards (toxic debt) they held. But not any one person knew the complete picture. Market froze up because no one wanted to call the bluff.

Enter the trio - Paulson, Bernake & Geithner. They picked a number - $700B. That is their guess. It is just as good as any.

Market was in a free fall until the TARP was passed at $700B. It has stabilized the market a little. It is still in bad shape, but not as bad as it could have been. And they haven't even used most of what Congress allocated.

And that is making our legislators mad. They want every foreclosure to be stopped. But that is not what the TARP was for. At least not as what I understood it to be.

Years from now we will better understand its significance. But for now, let's call it "Paulson's Bluff".