Treasury Secretary Timothy Geithner’s new Financial Stability Plan is more “bandaid” than comprehensive plan. It throws more money at financial institutions (including the ones that got us into this mess) rather than strongly supporting healthy companies (and prudent financial institutions) that provide jobs. Throwing good money after bad will continue to bankrupt us all.
Geithner Remarks on Financial Stability Plan (The Wall Street Journal Blog)
An elderly waiter with trembling hands was hurriedly spreading a pink and white checked cloth over the rusty green iron table, saying: “If the lady and gentleman wish to take their tea in the garden, if the lady and gentleman wish to take their tea in the garden…” I decided that if the shaking of her breasts could be stopped, some of the fragments of the afternoon might be collected, and I concentrated my attention with careful subtlety to this end.
Poem by T.S. Eliot, Hysteria
Despite all the stop-gap measures, I think things are getting worse. And that’s terrifying.
I agree with your sentiments
Timothy is to carry out an audit to determine which Banks are healthy and those in a terminal position, but he doesn’t mention how he intends dealing with the latter.
Another vexed question is how is he is going to value the toxic assets on Banks Balance Sheets, in determining their solvency or otherwise.
An asset is to be valued at the lower of cost (yes we now that) and net realizable value (know we don’t really know that because the market has dried up) and hence I suggest existing toxic securities are arbitrary over valued on banks Balance Sheets despite write offs for realized losses of sales and part unrealized provisional write downs.
The new money requires recipient banks to lend the cash injections back out again – to improve credit facilities, but as far as I can see the strategy and methodology remain too vague; hence it risks being ineffective until the question of solvency for those charged with the responsibility for credit is resolved.
Maybe the original idea of a forced reverse auction still has merit – e g The Treasury buys the toxic securities at the lowest price for that class amongst all banks mandated to bid to sell them off. Assets that must be disposed of can be determined according to sensible criteria such as those with a predetermined high default rate etc
Best wishes
I really hope the best for all of us…
a kiss!
I think it’s just common sense. To not make same mistake twice. And, for a change, focus of the job that is providing the food on our tables. As long as we are good at our job and add value to it there will be no pink slip. And even after that it comes and if one is good at what one does nothing is lost. Someone else will soon notice us.
So, you’re right. Let’s not start jumping around and just concentrate on what we are doing right now and make it even better.
Think of it as a reality check. A minority of us consuming raw materials at a rate that would require several planets were the whole world to match us. It’s unsustainable and we are just getting the wake up call.
Doing the same old, same old will not help the US recover … so throwing good $ after bad is a wasted exercise. They have to learn to do things differently. You are right to be worried.
I keep hearing that we will rebound by the 3rd Quarter?
I have barely heard of crisis since we started traveling. It was only noticeable in Costa Rica to a certain extend, where there were fewer Americans than before (I know you were there!). I think it hasn´t hit S. America yet…
I´m scared for Europe. I think Canada is steady enough.
Ah look at them all scrambling to do SOMETHING even if it doesn’t do a damn thing…too funny. Gotta love politicians. Or shoot em all, I can’t decide.
The world owes the world more than the world can pay.
Sera I got to run, will not be talking to you or leave comments for at least a week. Sorry, nothing personal…
The shit which goes done the drain in the financial markets is quite astonishing. to say the least. The fix is not in the needle. That’s my opinion. That’s what I think, and who I am. So yeah, I will catch up when I’m back.
Oh, but I thought Obama was going to be our savior and rescue us and bring change… I guess the gullible got fooled again.
Brilliant!! So much talent!
Good one! Love it!
Nice post, pretty much what I was wanting to find.