Tuesday, February 10, 2009


The amazing part of the above starts around 2:25. Hadn't heard about it.

Moreover, I infer from the way the market tanked during Timothy Geithner's speech this morning that there's not a lot of confidence in what he said. Or didn't say. This is disturbing, too. I suppose by "legacy assets" they're trying to distinguish the problems they inherited. But it sounds too much like the Bush-speak to which we'd been subjected for what seems like eternity: "Clear skies" inititiative. "Enhanced interrogation."

Too soon to say. Not thrilled, yet.

Not spending money, either.



Lacy said...

As we genteel southern ladies like to say, "it's time to piss or get off the pot." Trying something, heck anything will give us a frame of reference for what works and what doesn't. I remain hopeful.

Anonymous said...

Obama's superficial and dishonest treatment of serious problems might work at press conferences, but it works much less well among those we know are paying attention, e.g., people who have their savings on the line.

Today his Treasury Secretary, having presumably by now paid his past taxes, announced the next phase of the bank bailout plan. It turns out that this will involve a largely undefined "public-private partnership" to raise a trillion or so to buy off these "troubled assets" (i.e., the crooked sub-prime loans Fannie and Freddie did so much to push).

The stock market promptly tanked. . . .The MSM is saying that this is because Secretary Geithner's plan is short on specifics. The truth is that the market tanked because it knows exactly what the muzzed-over specifics will be: The few remaining relatively healthy banks will be forced to buy billions in poisonous assets. In other words, as ever in the nicey-sounding world of "public-private partnerships," the private parties will get hammered. In this instance, the remaining relatively healthy banks will be dragged under by being loaded down with toxic waste. (This is already happening with Bank of America, which ex-Secretary Paulson pressured into buying the black hole of debt formerly called Merrill Lynch). At that point, Obama/Geithner will declare -- guess what! -- a bank emergency requiring outright nationalization, as opposed to the sub rosa nationalization that's going on now.

It's not that investors don't understand what Geithner's plan will entail. It's that they DO understand. Those who own stock in relatively healthy banks will head for the hills, knowing that what the "public-private partnership" really means is that the private money they have invested will be effectively appropriated to bail out the dying banks.

This would be the moral equivalent of theft in any event, but it's a foolish theft to boot, since, as they have spent the last year and a-half proving, the dying banks are beyond rescue.

Of course it would NOT be foolish if the point were to pave the way for nationalization, with the added bonus of wiping out relatively prudent stock holders (i.e., Republicans) along the way.

So maybe it's not foolish. Just criminal.

Sid Schwab said...

anonymous: You presume a lot. Whether the situation is salvageable remains to be seen; in that we agree. I don't see the dastardly motives that you do. I see a situation allowed to get beyond rescue by the previous administration, and that drastic steps are required. In fact, the criticism from the left is that Geithner isn't going far enough. Time will tell.

Anonymous said...

"What we have here is a failure to communicate..." I am an experienced professional, and I am far from stupid. Yet, for the life of me I cannot understand how the "stimulus" money is going to be spent. And I bet the majority of the American people have no idea what is going to happen to these billions. And don't think our representatives in Congress are any different. I say, let's hear a plan in plain high school English that the American people can understand. When you give all of those billions to Bank of America, tell me exactly what they are going to do with it. Put it on paper and make them live up to the terms. Then you will see widespread support. Right now, unfortunately, it looks like it is all going down some black hole.

Sid Schwab said...

I agree completely.

Sid Schwab said...

P.S, anonymous 10:34 (why is it so hard to attach some sort of identifier, anyway?): Here's what Obama has said about nationalization:

"Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you'd think looking at it, Sweden looks like a good model. Here's the problem; Sweden had like five banks. [LAUGHS] We've got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would -- our assessment was that it wouldn't make sense. And we also have different traditions in this country."

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