Sunday, March 22, 2009

Geithner’s Joke. Err, I mean Plan…

Latest WSJ article in Geithner’s own words below. I am inserting my comments in between paragraphs…
WSJ - Geithner - My Plan for Bad Assets…

The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.
My Comments: First of all, the FDIC is broke and has no money. All money must be printed in some form. The “private party” investors drive up the cost of clearing these assets. They do not share in proportion as do the taxpayers who I guarantee will not profit overall from this program. “Open to pension funds?!” You have got to be kidding me. That is in no way an appropriate investment for my retirement funds, thanks. That has a particularly foul aroma. I’ve also heard talk to open up a toxic waste ETF so that average Joes can participate. Gee, could it be that he couldn’t find enough hedgefunds?

Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets.
My Comments: LOL, love that one. Yes, we will be overpaying. Any amount over the current market price is overpaying. We are supplying money to a host of bidders to all bid against the same assets. That means that we are bidding AGAINST OURSELVES, of course we will overpay. He obviously is taking the American people for fools, and I can’t imagine why?

The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.
Let me translate… We are taking your dollars and giving them to middle men who will bid up the value of the toxic waste held by the bankers. Thus we will drive up the value of the assets ensuring that the taxpayer overpays. The middle men will drive the cost up further by taking a cut, and will make it easier for the people who caused this problem to escape. We know, of course, that the banks won’t lend anymore to people who are already saturated with debt, but we don’t really care, that’s just our cover.

We’re saved!