We've been predicting "RTC2" here for years.
And now, it's come.
Get ready for the government to buy up all the houses. All the bad loans. All the foreclosures. All the losing lottery tickets. Trillions and trillions we're talking.
One small question though.
Where does all that money come from?
And get ready for the firesale of a lifetime HP'ers as the US government buys up and tries to get rid of at any price all those unwanted homes.
CNBC said Treasury Secretary Henry Paulson is considering creation of an entity like the Resolution Trust Corp. that was formed after the failure of savings and loan banks in the 1980s.
Investors were cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the real estate debt that has hobbled financial institutions and led to the intense volatility in the markets this week.
If there's an RTC-like entity, "it's going to take a lot of the bad debt off the balance sheets of these companies," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. That would alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again.