The Treasury Department indicated Friday it expects taxpayers will lose billions less from the financial bailouts than earlier estimated. The problem is, its revised forecast assumes Treasury's shares of bailed-out companies are gaining value despite this week's plunge in stock prices.
After this week's market action, any future estimate of recovery based on strong growth in stock prices needs to be heavily discounted. I think the government uses the same recovery models for the BP oil spill in the Gulf of Mexico. Lots of rosy assumptions and fuzzy math don't make for sober analysis, but somehow the public just sits back and accepts this at face value.
