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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.
The Obama Administration insists it wants to "partner" with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up.
The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as "fund managers" to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we'd have thought Treasury would encourage as many players as possible.
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.
The Obama Administration insists it wants to "partner" with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up.
The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as "fund managers" to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we'd have thought Treasury would encourage as many players as possible.
It's the equivalent of putting some poop in a box and wrapping it up all nice with a bow and charging people $5.00 for it.
The partners will slice and dice and wrap them up in convoluted "security" offerings and the unsuspecting "Joe" will purchase them because, more than likely, they will have a very attractive rate with advertised low risk of course.
The cherry on the cake would be if they started finding homes in 401K's via mutual funds...the ultimate slap in the face.
The thing is that since the chrysler bankrupsy and the haircut the bondholders took Geithners plan has no real takers. No one wants to be in business wirth the government it seems. So the loans just sit there and the governamnt has neither the people or the expertise to do it themselfs in valuing the packaged loans.Banks will do it slowly over a nmber of years which they really like because not all are toxic in any paskage.
It's the equivalent of putting some poop in a box and wrapping it up all nice with a bow and charging people $5.00 for it.
The partners will slice and dice and wrap them up in convoluted "security" offerings and the unsuspecting "Joe" will purchase them because, more than likely, they will have a very attractive rate with advertised low risk of course.
The cherry on the cake would be if they started finding homes in 401K's via mutual funds...the ultimate slap in the face.
Yes, it's 'poop de jour', they put enough perfume on it, so it smells nice, but after awhile...
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