{"id":192527,"date":"2009-03-21T21:47:00","date_gmt":"2009-03-22T02:47:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2009\/03\/21\/geithners-new-plan-same-old-same-old-failure\/"},"modified":"2009-03-21T21:47:00","modified_gmt":"2009-03-22T02:47:00","slug":"geithners-new-plan-same-old-same-old-failure","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2009\/03\/21\/geithners-new-plan-same-old-same-old-failure\/","title":{"rendered":"Geithner&#8217;s New Plan:  Same Old, Same Old, Failure"},"content":{"rendered":"<p>So, we now have a <a href=\"http:\/\/www.nytimes.com\/2009\/03\/21\/business\/21bank.html?partner=rss&amp;emc=rss&amp;pagewanted=all\">definitive leak of the features of Geithner&#8217;s plan to help the financial system<\/a>, and it&#8217;s the same old, same old:  The problem is not that the banks are insolvent, or that their assets are worthless piles of crap, it&#8217;s that the markets are just undervaluing them.<\/p>\n<p>The basic provisions:<\/p>\n<ul>\n<li>An auction of the big sh#@pile, which is a bad thing, because it <span style=\"font-weight: bold;\">only serves to expand taxpayer exposure<\/span>.<\/li>\n<li>The FDIC will lend about 85% of the money to buy this.<\/li>\n<ul>\n<li>These FDIC loans will be <span style=\"font-weight: bold;\">non-recourse loans<\/span>, which means that if <span style=\"font-weight: bold;\">those assets<\/span> bought with <span style=\"font-weight: bold;\">that particular loan<\/span> would be used to repay.  Any further losses would be eaten by the taxpayer.<\/li>\n<\/ul>\n<li>The Treasury will match, &#8220;the private money that each of the firms [4-5 investment firms hired by the Treasury, meaning Goldman and the rest of the usual suspects] puts up on a dollar-for-dollar basis with government money,&#8221; which means that the 15% that they have to buy to get the assets is now 7\u00bd%<\/li>\n<li>The Treasury\/Federal Reserve TALF lending program will be used to further expand lending to buy this toxic waste.<\/li>\n<\/ul>\n<p>This is what Geithner has been pushing for a long time, some sort of program to overvalue assets at taxpayer expense, all while, &#8220;firmly against imposing any restrictions on pay for companies investing money in the rescue effort rather than receiving money from it,&#8221; except, of course, any participants in this <span style=\"font-weight: bold;\">are receiving federal money<\/span> because of the subsidies.<\/p>\n<p>Dean Baker notes that the that unlike Timothy &#8220;Eddie Haskell&#8221; Geithner and Lawrence &#8220;Shoggoth&#8221; Summers and their Evil Minions<sup>\u2122<\/sup>,  the current market values of the securities are <span style=\"font-weight: bold;\">probably accurate<\/span>, because real estate prices remain 20% above the historical trend, and if houses fall another 20%, these mortgage backed securities now selling for 30\u00a2 on the dollar, which are the <span style=\"font-weight: bold;\">very top tranches<\/span>, would be near a dime on the dollar.<\/p>\n<p><a href=\"http:\/\/krugman.blogs.nytimes.com\/2009\/03\/21\/despair-over-financial-policy\/\">Paul Krugman<\/a> correctly calls it, &#8220;an open invitation to play heads I win, tails the taxpayers lose,&#8221; policy, and <a href=\"http:\/\/www.calculatedriskblog.com\/2009\/03\/geithners-toxic-asset-plan.html\">Calculated Risk<\/a> and <a href=\"http:\/\/www.nakedcapitalism.com\/2009\/03\/private-public-partnership-details.html\">Yves Smith<\/a> are similarly disparaging, though <a href=\"http:\/\/www.balloon-juice.com\/?p=18900\">John Cole is the one who best nails the situation<\/a>:<\/p>\n<blockquote style=\"color: rgb(0, 0, 153);\"><p>The Illness- reckless and irresponsible betting led to huge losses<br \/>The Diagnosis- Insufficient gambling.<br \/>The Cure- a Trillion dollar stack of chips provided by the house.<br \/>The Prognosis- We are so screwed.&#8221;<\/p><\/blockquote>\n<p>Seriously, tag team of Geithner\/Summers may very well be worse for the economy than Hank Paulson.<\/p>\n<p>For your amusement, here is Rep Brad Sherman (D-CA) opening up a can of whup ass on the CNBC Wall Street apologists<\/p>\n<p><object height=\"344\" width=\"425\"><param name=\"movie\" value=\"http:\/\/www.youtube.com\/v\/Zrt01TjLMDU&amp;hl=en&amp;fs=1\"><param name=\"allowFullScreen\" value=\"true\"><param name=\"allowscriptaccess\" value=\"always\"><div adblockframe=\"true\" style=\"margin: 0px; padding: 0px; overflow: visible; width: 425px; display: block;\">\n<div style=\"overflow: visible; height: 0px; width: 100%;\" align=\"right\">\n<div  style=\"border-style: ridge ridge none; border-width: 2px 2px 0px; padding: 1px; overflow: visible; vertical-align: bottom; -moz-border-radius-topleft: 10px; -moz-border-radius-topright: 10px; opacity: 0.5; top: -19px; left: -5px; z-index: 900; width: 48px; height: 15px; cursor: pointer;color:white;\" align=\"center\"><span style=\"font-style: normal; font-variant: normal; font-weight: normal; line-height: 140%; text-align: right; text-decoration: none; opacity: 1.5;font-family:Arial,Helvetica,Sans-serif;font-size:12;color:black;\"   >Adblock<\/span><\/div>\n<\/div>\n<\/div><embed adblockframename=\"adblock-frame-n32\" adblockframedobject2=\"true\" adblockframedobject=\"true\" src=\"http:\/\/www.youtube.com\/v\/Zrt01TjLMDU&amp;hl=en&amp;fs=1\" type=\"application\/x-shockwave-flash\" allowscriptaccess=\"always\" allowfullscreen=\"true\" height=\"344\" width=\"425\"><\/embed><\/object><\/p>\n","protected":false},"excerpt":{"rendered":"<p>So, we now have a definitive leak of the features of Geithner&#8217;s plan to help the financial system, and it&#8217;s the same old, same old: The problem is not that the banks are insolvent, or that their assets are worthless piles of crap, it&#8217;s that the markets are just undervaluing them. The basic provisions: An &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1004,985,982,1027],"tags":[],"class_list":["post-192527","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance","category-regulation","category-stupid","category-video"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/192527"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=192527"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/192527\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=192527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=192527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=192527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}