Posted on 04/01/2009 7:59:58 PM PDT by An Old Man
I am changing my tune. Geithner's plan can succeed. Before anyone collapses on the floor or starts screaming that I have lost my mind, it's important to define what success means and what the plan is.
What Success Is Not
The first is not going to happen and it would be a bad thing if it did, even though Geithner is foolish enough to actually want that. Rather the idea is to make it appear as if there is a fair bidding process so that a fair market value of bank assets can be determined.
The key word in the above sentence is appear.
Geithner does not want a fair bidding process, nor does he want to arrive at a fair market value of assets. Rather, Geithner does want to avoid a hit to bondholders, at seemingly any taxpayer cost
The Real Plan
Here is the real plan that now seems odds on to succeed.
The Plan: Dump $500 billion of toxic assets on to unsuspecting taxpayers via a public-private partnership in which 93% of the losses are born by the taxpayer.
This is not a new revelation, there have been many articles on that theme over the past week. However, most missed the corporate bond connection.
Mike is on another roll. I believe he has this one nailed.
Banks get paid very close to par (98%). Taxpayer carries the burden in return the banks are leverage to the hilt in the PPIP. The treasury does not have enough funds to pull this off without Congress vote unless they funnel it through FDIC which has so called “unlimited resources”.
> Mike is on another roll. I believe he has this one nailed.
I am not sure this private/public partnership will work. As far as I can tell, even when offered promises of a guaranteed profit, private investors are leery of doing business with the government. Probably has some thing to do with the AIG bonus witch trials. Of course Geithner does have enough power to make these bankers an offer they can’t refuse.
No one else expects it to work either! The plan is designed to dump the whole thing onto the taxpayers.
Why do I think all of this misses the point?
Could it be because I think it absolutely outrageous that the taxpayer is bailing out banks and mortgage companies that made stupid decisions?
I have a warehouse full of machinery that is worthless today because all of the potential users are no longer in the USA.
Should I be bailed out at 98%?
And there is that little matter of the deficit.
Outrageous trashing of the taxpayers.
“No one else expects it to work either! The plan is designed to dump the whole thing onto the taxpayers.”
That is correct and the end of the story.
It will not work.
Sorry.
I read it too fast the first time and I am the one that missed the point.
Like so much of Obummer, on the face it looks dumb but when we finally figure out what he is pulling on us we see that he is not dumb.
Just evil.
An evil Marxist.
> Why do I think all of this misses the point?
I outlined my opinion in the reply. Yes, Geithner is trying to stiff the tax payers with this private/public partnership. At this time, it is unclear that he will succeed.
> Could it be because I think it absolutely outrageous that the taxpayer is bailing out banks and mortgage companies that made stupid decisions?
No argument there.
> Outrageous trashing of the taxpayers.
Well, since less than 50% of the population actually pay any taxes, this might not be a serious political issue.
Precisely what the author is stating!
He closed this article as follows:
Geithner's Arrogance Revisited
Let's revisit Geithner's Arrogance Knows No Bounds .
Rep Gresham Barrett: "The last question I have guys, which is the $64 million question or I guess I should say $64 trillion question is: What's the backup plan? If everything fails what do we do? Where do we go from here?"
Treasury Secretary Geithner: "Congressman this plan will work. This plan because of the authority provided not just by Congress but the treasury and the Fed gives us broad ability to do what you need to do to get through a financial crisis like this. It just requires will; It's not about ability. We just need to keep at it. We just need to work with Congress to make sure we do this on a scale that will make it work. "
Returning to the original thesis, Geithner's statement about "will" now makes sense.
The "will" Geithner is referring to is the "will" of Congress to allow the Treasury and the Fed to sell off our future and the future of our children to prevent the bondholders of U.S. financial corporations from taking losses.
Unfortunately, as it sits right now, that part of Geithner's plan can succeed. However, Geithner's plan sure as hell will not revitalize our economy.
Nor will it help you sell the machinery.
Just evil.
An evil Marxist.
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From Soros and 0bama on down, these demons have no souls.
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