The long awaited details of Geithner’s “plan” for dealing with bad bank assets is finally out. Githener’s plan is disingenuous at best. If people want to be outraged at something, it should be over Geithner’s plan.
The long awaited details of Geithner’s “plan” for dealing with bad bank assets is finally out. Githener’s plan is disingenuous at best. If people want to be outraged at something, it should be over Geithner’s plan.
As I said yesterday, I don’t like it either and while Mish’s thoughts and reasoning are certainly correct, I think it can be summed up best by simply saying that there should not have been ANY bailouts period. The government should not be trying to run the the economy. That’s the markets job.
“Our nation deserves the Fed, the Treasury and Congress to stop acting like socialist fools.” They are doing that, but it seems to me their actions are tending more toward National Socialism or Fascism of the Mussolini type than pure socialism. In fact, it is my opinion that this financial crisis was manufactured by Bush and the Fed to set up conditions where all these bailouts and strategic power grabbing could take place. Obama is the “closer”. His job is to get it done just as quickly as possible and unfortunately he’s right on schedule in doing just that. The driving force behind all of this is big international money represented by the Goldman Sachs of the world.
Leaving aside the leftist politics of such an approach, it merely builds on one major cause of the problem in the first place — US income tax deductibility of mortgage interest (including cash-out refis). Mortgage deductibility has the effect of decreasing effective interest rates, enabling buyers to pay more for the same house.
Government guarantees have much the same effect. Once the government becomes part of the calculation people [i]usually[/i] pay more for things than they are worth. After Carter-era subsidies on “alternative energy” devices went away, prices fell hard and the industry more or less collapsed.
Now we have a proposal for taxpayers to help private parties to bid up the price — not the [i]value[/i] — of bundles of goofball mortgage paper tied to properties for which price was itself previously pushed higher than value in no small part by mortgage interest deductibility …? And people think this makes sense?
It is encouraging to see Democrats, as well as Republicans elected officials, not accepting any large bailouts for anyone, particularly those banking institutions that opened their doors to dip into that sweet low interest money trough when it started to flow.