$700 Billion and What it Can Buy

Since the financial rescue package was signed into law last week, financial markets across the world have taken the pace of their declines to a higher gear.  This has prompted people to ask what the Treasury is waiting for  Yesterday afternoon in a press conference, Secretary Paulson said that it "will be several weeks before our first purchase."  As shown in the chart below, when the TARP plan was first announced in September, that $700 billion was equal to less than 40% of the S&P 500 Financial sector's market cap.  Today, that $700 billion represents over 55% of the sector's market cap.  At this rate, by the time the Treasury opens up its wallet and starts spending that $700 billion, they might be able to buy the entire sector! 

 

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Comments

[a reader]

"At this rate, by the time the Treasury opens up its wallet and starts spending that $700 billion, they might be able to buy the entire sector!"

That's the best line of day.

On second thought, maybe that's the Treasury should do.