Posted on 04/10/2009 9:52:28 AM PDT by mojito
Game theory tells us that a risk neutral gambler would pay $50 dollars for a coin flip that paid $0 for Heads and $100 for Tails. Game theorists would call $50 the value of the bet.
Suppose someone is willing to fund your gambling problem, and lend you $80 at zero interest. Better still, if you lose the bet you don’t have to pay him back. Under that scenario, the same gambler would pay $90 for the bet, giving him an even chance of winning or losing $10.
This is a microcosm of what the Public-Private Investment Program (PPIP) is intended to do: create an incentive for investors to pay $90 for a bet that is only worth $50. It is bad economics and bad public policy and it is probably fraudulent. Congress should act pre-emptively to halt Treasury Secretary Tim Geithner’s latest scheme.
(Excerpt) Read more at realclearmarkets.com ...
Why are only economists and traders screaming about this?
Where's congress? I haven't heard one Senator or Representative oppose this plan.
The executive branch now has free reign, and so long as they can throw billions of dollars around, most people will smile and nod.
This is a political problem -- and it will only be solved by politics pursued by other means.
I'm betting that TSWHTF when states begin defaulting.
It may start from the bottom up, when it will be necessary to repudiate unfunded federal mandates, and continue from there.
Or it may be when the dollar collapses overnight, with resulting $10/gallon gas and the truckers shut dwon the country.
Those are a couple of scenarios I'm putting out there.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.