I think they (Geithner et.al.) know these assets are "toxic" but what choice do they have? (Obviously they should have let all those bozos declare bankruptcy - I mean to say - what choice do they have, based on their erroneous world view?)
Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.
The only choice is to create the bad bank. And to avoid too much screaming, they are doing it via a trick: by guaranteeing the bad assets rather than just buying them outright; that keeps a huge amount of debt off the books. (Sounds like Enron, doesn't it?)
Elliot Spitzer has been questioning, in is writing at Slate.com, whether the alleged crisis was real, or bullshit.
I think there's hope for America. In the old days - even 10 or 20 years ago - there wasn't enough realtime communication for enough people to call bullshit on this kind of crap. But now ... there's hope.
Read Nano-Plasm - you know you want to.
© 2005-2009 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.