Friday, 17 October 2008

Joseph Stiglitz on how Hank Paulson is ripping off the US taxpayer

Joseph Stiglitz, Nobel Prize winner in Economics, has a telling piece on the Guardian’s 'Comment is Free' site. It compares the rip off terms US Treasury Secretary Hank Paulson imposed on US taxpayers in offering $250 billion to US banks with those made by US billionaire investor Warren Buffet for this putting money into Goldman Sachs. Stiglitz writes:
‘the US taxpayer got a raw deal. There is no comparison with the terms that Warren Buffett secured when he provided capital to Goldman Sachs. Buffett got a warrant - the right to buy in the future at a price that was even below the depressed price at the time. Paulson got for the US a warrant to buy in the future - at whatever the prevailing price at the time... The Paulson plan responded to Congress's demand to have something like a warrant, but as a matter of form, not substance. Buffett got warrants equal to 100% of the value of what he put in. America's taxpayers got just 15%.’ Read the rest here.

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