For all that talk about the $700 billion bailout package and what it will ultimately cost taxpayers the Federal Reserve gave us a glimpse recently when they announced that the mortgage debt they took over in teh Bear Stearns rescue has been written down from $29.5 billion in June to $26.8 billion at the end of September.  That’s $2.7 billion in just three months or a  decrease of $900 million per month.  If that keeps up taxpayers would see nearly $11 billion in losses after a year.

The Fed is counting on the market stabilizing and for a return to normalcy in the credit markets but that is far from assured at this point.  Another problem is that taxpayers really don’t know what is in the Bear Stearns portfolio.  There could be some reasonably good debt that will regain its value but there is just as big a chance that much of the debt is of poor quality and that the writedowns will continue for the forseeable future.

It looks like we have truly mortgaged our future with the government rescue plans and our children and grandchildren will pay a very heavy price for this folly.