I think the main issue with your theory is that it's $38B in today's dollars. In the 1970s we saw a lot less independence between the Fed and White House and as a consequence severe inflation. Trillions of dollars of liabilities is not going to sound so bad after 4 years of double-digit inflation ...
Also, IIUC the guys in The Big Short would've lost everything if the government stepped in sooner since the banks controlled the price of the CDSs and could've maintained the incorrect price if they had a bunch of extra cash.
> Also, IIUC the guys in The Big Short would've lost everything if the government stepped in sooner since the banks controlled the price of the CDSs and could've maintained the incorrect price if they had a bunch of extra cash.
Yeah. "Markets can remain irrational longer than you can remain solvent."
Also, IIUC the guys in The Big Short would've lost everything if the government stepped in sooner since the banks controlled the price of the CDSs and could've maintained the incorrect price if they had a bunch of extra cash.