This week has been one of the most tumultuous in years for Wall Street. Here's a recap of everything that has happened:
But this party ain't over yet. Congress will craft legislation this weekend to offer a general bailout to Wall Street, buying up bad mortgages–"illiquid assets"–to free up capital for struggling financial firms. This government action will cost in the $100s of billions according to Secretary Paulson, and perhaps up to $1 trillion taxpayer dollars.
Considering the other bailouts and loans handed out that would push government spending on this financial crisis near the $2 trillion mark.
With Washington Mutual and Morgan Stanley on the bubble going into this weekend, much like Lehman Bros. and Merrill Lynch were last week around this time, Paulson believes we have no choice but to continue the bailouts. Here's a rundown of recent government intervention:
That alone is over $700 billion spent or at risk, not counting operations costs for the FMs, lost interest, or loan insurance costs. And the government is left owning an insurance company and two mortgage companies.
Meanwhile, financial firms may still fail–even with the big bailout planned for next week. Its all is about adding confidence to the market, so that investors don't lose their shirts... and the American taxpayer is shouldering the burden.