The long awaited "toxic asset relief" program was rolled out today. Timothy Geithner had a long and exceedingly vague op ed in the Wall St Journal. The Dow is up 500 points at closing, so the market likes the idea. Or perhaps the shares of Citibank (one of the 30 Dow industrials) got a big boost. So on the surface the plan is working, at least for now.
Geithner's WSJ piece was remarkably vague as to who would put up how much money. Listening to Fox and WLTN I get the impression that us taxpayers are putting up the bulk of the money, with just a thin 6% cover layer of private money and 94% taxpayer money.
There is a lot of happy talk about how these toxic assets aren't really so bad and investors who buy them now will profit in the future.
There is some question in my mind as to why we taxpayers should be shelling out to prop up a handful of Wall St banks who threw vast amount of cash down sewers and now find them selves short. The vast majority of real banks, the ones located out in the real world rather than Wall St, don't have toxic asset problems. There are about half a dozen big banks that got stuck on stupid and lost all their money on the housing bubble. There is no reason to believe that these banks would be smart enough to make loans that grow the economy, so why keep them alive. Close them up, pay of the depositors and move on. They have proved their unfitness to survive.
No comments:
Post a Comment