Ken Houghton looks at the short term credit auction, the price of the winning bid, and then throws in one of the most common assumptions of economics: these guys must be rational.
His conclusion is no surprise: corporate welfare. His post is well worth a read.
As a by the way, regular readers know I’ve been saying all along the big banks were going to get a bail-out, but I figured it would come only through tax breaks. Apparently I misunderestimated the ways that public money can be funneled to large financial institutions. Can you think of others?