Not Sure What To Make of This

The U.S. Congressional Budget Office is reporting (pdf) today that the current estimate for the actual cost of the TARP program, originally budgeted at $700 billion will in fact cost taxpayers about $159 billion. And about a third of this will be accounted for by the GM and Chrysler loan/bailout program.

At the same time, it is clear that large banks, eager to forestall or avoid increased regulation, have begun paying back TARP funds before effectively cleaning up their balance sheets, an effort aided by changed accounting rules that ease fair value requirements. In other words, the much lower cost of TARP quite likely does not reflect the much higher higher level of toxic assets remaining on bank balance sheets.

Indeed, Bank of Canada Governor Mark Carney remains bearish, reminding us that the health of the financial sector is largely the result of public sector largesse (and accounting smoke and mirrors). So where are we? I for one am not quite ready to commit to the market again. I may miss the initial gains, and am happy to do so. But I remain a skeptic.