adoo, please spend some time educating yourself on the new PPIP. It's complete trash. "Better than nothing" may work as you're stumbling out of the bar at closing time, but is probably not the best approach to the credit crisis.
it is so easy to just criticize, for the sake of criticizing, and offer no solution, reminiscent of a certain repugnant Republican Congressman from Ohio
here....read...i don't feel like explaining this piece of trash. http://www.treas.gov/press/releases/tg65.htm
you tell me that this is a bargain for the taxpayers when they are left holding the bag if we allow the private side to pay these kinds of prices. http://zerohedge.blogspot.com/2009/03/ridiculous-marks-of-toxic-assets.html
awww....lookie here...it looks like the taxpayers are already getting to bend over and take it. excellent design there treasury. http://www.nakedcapitalism.com/2009/03/has-gaming-of-public-private.html
oh ffs...you really know how to lay into 1 point to try to distract. yes...the whole plan is not a complete give away. the large majority of it is. does that make you happy? it's a get out of jail free card for these banks holding these crap assets. btw here is more commentary on this piece of garbage http://www.nytimes.com/2009/03/23/opinion/23krugman.html?_r=1
so how do you guys feel about the fdic becoming a lending institution that gives out non-recourse loans with only 7.5% down to buy overpriced assets? can i get a hell yeah to that plan? good work timmmmay!
<a title="View 2009-03 PPIP Save the Day on Scribd" href="http://www.scribd.com/doc/13705490/200903-PPIP-Save-the-Day" style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block; text-decoration: underline;">2009-03 PPIP Save the Day</a> <object codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,0,0" id="doc_655662499620461" name="doc_655662499620461" classid="clsid:d27cdb6e-ae6d-11cf-96b8-444553540000" align="middle" height="500" width="100%" > <param name="movie" value="http://d.scribd.com/ScribdViewer.swf?document_id=13705490&access_key=key-20pxj57uk7qqodr70te2&page=1&version=1&viewMode="> <param name="quality" value="high"> <param name="play" value="true"> <param name="loop" value="true"> <param name="scale" value="showall"> <param name="wmode" value="opaque"> <param name="devicefont" value="false"> <param name="bgcolor" value="#ffffff"> <param name="menu" value="true"> <param name="allowFullScreen" value="true"> <param name="allowScriptAccess" value="always"> <param name="salign" value=""> <embed src="http://d.scribd.com/ScribdViewer.swf?document_id=13705490&access_key=key-20pxj57uk7qqodr70te2&page=1&version=1&viewMode=" quality="high" pluginspage="http://www.macromedia.com/go/getflashplayer" play="true" loop="true" scale="showall" wmode="opaque" devicefont="false" bgcolor="#ffffff" name="doc_655662499620461_object" menu="true" allowfullscreen="true" allowscriptaccess="always" salign="" type="application/x-shockwave-flash" align="middle" height="500" width="100%"></embed> </object> <div style="margin: 6px auto 3px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a href="http://www.scribd.com/upload" style="text-decoration: underline;">Publish at Scribd</a> or <a href="http://www.scribd.com/browse" style="text-decoration: underline;">explore</a> others: <a href="http://www.scribd.com/tag/money" style="text-decoration: underline;">money</a> <a href="http://www.scribd.com/tag/tips" style="text-decoration: underline;">tips</a> </div>
http://www.nytimes.com/2009/03/27/opinion/27krugman.html?_r=2 Op-Ed Columnist The Market Mystique By PAUL KRUGMAN Published: March 26, 2009 On Monday, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.” Leave aside for a moment the question of whether a market in which buyers have to be bribed to participate can really be described as “better functioning.” Even so, Mr. Summers needs to get out more. Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis. But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic. The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that. And the financial system wasn’t just boring. It was also, by today’s standards, small. Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company. It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation. After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America. And finance became anything but boring. It attracted many of our sharpest minds and made a select few immensely rich. Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans — all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process. But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption. Sooner or later, things were bound to go wrong, and eventually they did. Bear Stearns failed; Lehman failed; but most of all, securitization failed. Which brings us back to the Obama administration’s approach to the financial crisis. Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago. To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago. But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules. As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.
Krugman has a darned good point. As those of us who were adults back then, when finance was "boring," can attest to, it really was boring, stuffy, difficult, and frequently exasperating to deal with a bank or a savings and loan. And, compared to the madness of the last several years, it was safe. There is a lot to be said for safe, folks. Boring it may have been, and the profits were smaller and harder to get, but damn it, you didn't have to worry much about your money.
I think Roubini is being too optimistic with his stated assumptions. The economy doesn't seem like it will flatten out, and the admin will not admit that this is a handout of the highest order. Give credit to Timothy Geithner's new toxic asset plan http://www.nydailynews.com/opinions...mothy_geithners_new_tox.html?print=1&page=all By Matthew Richardson and Nouriel Roubini For the economy to be viable, the financial system must be healthy. For this to occur, the system needs to be cleansed of its poorly performing loans and so-called toxic securities backed by loans. This way, once creditworthy institutions and individuals come to the market looking for capital to borrow, financial firms will be in a position to lend them money. Secretary Timothy Geithner's new toxic asset plan is a serious step in the right direction in that it creates a public-private partnership to buy the troubled assets of financial firms - in other words, to do the necessary cleansing. Up until now, with all the government bailouts, the financial system has been barely treading water. With this plan, it will still be a hard swim, but, at least, there is a path to shore. The plan essentially calls for private asset management firms - private equity, hedge funds, mutual funds, pension funds - to invest side by side with the government. The private investors need the government because there are so many bad loans held in the financial sector that only the government's balance sheet can handle taking them over. The government needs help from private investors so it doesn't get hoodwinked by the banks. Why will investors participate? The deal is structured so that firms will be responsible only for losses on their initial investment. The hope is that by giving this big "freebie," the government will induce investors to participate, and that competition among them will lead to higher offer prices for the loans and securities, thus encouraging banks to sell them. A lot of ifs, but if indeed successful, the plan accomplishes mission No. 1, namely the removal of the bad assets from banks' balance sheets. Even if banks wanted to do this on their own, they can't because the market for these illiquid assets has dried up. But let's not have any illusions. The government bears the risk if and when the investors take a bath on the taxpayer-provided loans. If the economy gets worse, it could get very ugly, very quickly. The administration should be transparent in making clear that there is still a wealth transfer taking place here - from taxpayers to investors and banks. Also, while this plan is designed by the Treasury, many of the big guarantees are being made by the Federal Deposit Insurance Corp. and the Fed. Why not use only Treasury funds? Well, then the administration would have to deal with Congress. While the populist hysteria of last week suggests this end run might make sense, there is something a little worrying about circumventing the legislative process on such a huge investment. Moreover, there's the issue of transparency - or lack thereof. No one knows what the loans or securities are worth. Competing investors will help solve this by promoting price discovery. But be careful what you wish for. We might not like the answers. Finally, we have to anticipate the likelihood that some banks will resist selling their loans and securities. Why? Currently, the government has been giving them the option to keep holding them with the hope that market conditions will improve. Going forward, the government must insist on the banks' involvement in the new program. The reason that financial institutions must be pressured is that they are the cause of the financial crisis. They took advantage of loopholes to avoid regulatory requirements, taking a huge bet on securities they were never meant to hold in the first place. What happens if removing toxic assets from a bank's balance sheet at near-market prices shows it is effectively insolvent? Then we will have to face the elephant in the room. We may then have to start asking, "Why keep insolvent banks afloat?" And having asked that, we will have to search for ways to manage the ensuing systemic risk. Either way, once the plan is fully implemented, we will be entering a new phase of the financial crisis. The water is choppy. Let's hope we are strong swimmers.
I hate this crap. I mean I have lot of cash, but don't know where to put it. I have no faith in the equities market or cash.
