I thought I had seen everything until I looked at a copy of the U.S. Treasury's $700 billion bailout plan language. The language contained in section 6 of the document pretty much says it all.

The section reads as follows.

"Sec. 6. Maximum Amount of Authorized Purchases."

"The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"

The language as proposed would allow the Treasury to purchase bad debt instruments with the only caveat being that not more than $700 billion can be outstanding at any one time. In essence the Treasury can purchase $700 billion in bad securities and loans at any price they choose to. The Treasury can then sell that inventory at, say for example, $140 billion and then take a $560 billion lose on behalf of the taxpayer. The Treasury, can then turn around and purchase another $700 billion in bad securities and loans, then sell that inventory at a lose, and go on and on......... 

This conduct is absolutely amazing.

Hypothetically speaking, the Treasury should run up against the National Debt ceiling set by the Congress at some point and the game ends until the debt ceiling is increased. 

Both political parties in Congress appear to be extremely pissed-off at what has taken place. It is uncertain as to whether any elements of the current proposal will survive. Many members of Congress want nothing done at all.

Remember, a significant portion of the underlying mortgages, and other types of credit-related debt being used as collateral in the securities, which is proposed to be purchased by the Treasury, has already dropped in value, or been charged-off. The securities being purchased will never achieve full value. Too much damage has already been done, and more is occurring every day.