CNBC:
The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.
"The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong.
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The government's effort to partner up with banks to purchase its toxic assets is a huge mistake. There are no assurances that banks will continue to lend, and in the best case scenario, they will continue to hoard cash and only lend to the those who can afford to pay the loan the back. In all likelihood, they will impose even more stringent credit standards. Unfortunately, that will leave out most of the working stiffs in this country who face the prospect unempolyment, who are already up to their necks in debt, and who are basically living from pay check to paycheck due to flat wages, bad public policy and free-trade. In essence, they want to continue our debtor economy where if you need money for any purpose e.g., education, home, car , and any other goods and services you have no choice but to see a banker. As opposed to re-creating or expounding on the economy the WWII and Baby Boomer generation benefited from, where wages were decent, where a wife did not have to work in order for a family to make ends meet, and where one did not have to over extend him or herself to keep a roof over a families head.
Geithner, being a Wall St. insider, is proposing the usual solution that Wall St. suggests for every problem: a public private partnership. A public private partnership is a nice way of saying privatize the profits and socialize the losses. This is THEFT!!! Geithner is a thief and Obama should get rid of him (and Summers) NOW before everyone loses confidence in his presidency. There are so many good economics professors who would do a much better job.
It will probably cost the taxpayers money. But we would have been stuck with those costs anyway if the banks failed. And if things aren't as bad as the banks think they are, and the hedge-fund investors are both smart and competitive, then the taxpayers could actually make money on the deal.
LOL!
We would NOT have been "stuck with those costs anyway". The banks are insolvent and the derivatives (their "private bets" with each other and their hedge funds) can be declared null and void.
THEN, we could issue a system of credit as a public utility--in other words, interest-free money issued directly from Treasury, NOT debt notes from the privately owned consortium of banks and private shareholders in the FED on which we pay 6% annual interest.
That is the way the CONSTITUTION planned it. It NEVER provided for a CENTRAL bank, let alone a PRIVATE central bank, it NEVER provided for interest-based debt notes issued BY that private bank, and it NEVER provided for our income to be taxed (which is how we "pay for" that interest on "money" created from NOTHING).
THE FED is a completely UNCONSTITUTIONAL, corrupt system.
http://www
From another article on HP, "Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit."
It seems to me that if they want to dislodge the Elite Executives in AIG and the Banks they have plenty of ways to do it now with agencies like the FDIC. This is an excuse to let them survive intact with their sick culture to do the entire thing again and with a lot less competition!
Geithner already said he would not use this new facility/laws for the current crisis!
See even the eggheads think that handing out trillions of dollars to U.S. institutions is counterproductive to put it mildly.
This showed up in my mailbox today.
Why central banks are making the mistake of treating this as a global liquidity problem, rather than a global solvency crisis.
"Contrary to what political leaders and their central bankers seem to believe worldwide, the problem of liquidity that they are striving to solve by means of historic interest rate drops and unlimited money creation, is not a cause but a consequence of the current crisis. It is in fact a problem of solvency which is digging " black holes " where liquidities disappear, whether we call these holes bank balance sheets (1), household debt (2), corporate bankruptcies or public deficits. In consideration of the fact that a conservative estimation of these "ghost-assets" reaches already USD 30,000-billion (3), our team considers that the world is now facing a situation of general insolvency affecting in the first place the most indebted countries and organizations (public or private) and/or those depending most on financial services."
http://www
I don't get why people keep arguing whether it's an illiquidity problem or an insolvency problem, when it's obviously both. And a confidence problem, and a plain-old-recession problem, and a Peak Oil problem, and (for the US, if not globally) a healthcare problem. It seems as though almost no one gets it, out here among the chattering classes. Fortunately, the guy who has to make the hardest decisions does get it.
Foreclosure Bank of America -- FBA
US Government creates an online bank that takes on bad assets(foreclosed properties commercial and residential)
Government sells stock to d public.
Government sets law all foreclosed properties are sold to FBA
Government purchases properties for half remaining balance of property after it is foreclosed on.
The government then raffles off these properties 2 d public.
d money amount that should b raised on each property that is being raffled should be d original loan price for the property,
a flat 100,000 for raffling each property,
and 25,000 for every 150,000 the property is worth which will go to the owners of stocks 2 b paid in dividends or 2 go towards payments on national debt or health care or education or whatever.
example
bank forecloses property that is worth $300,000.0
balance on property at time of foreclosure was $200,000
government pays 100,000 2 bank
Bank loses only 100,000k on property
government raffles of the property 2 raise $450,000 ($300,000 for original loan price. 50,000 for being a 300,000 property and 100,000 raffle fee. Once d target amount is met the property is then raffled off and winner selected. First come first serve.
(tickets 2 enter raffle can b any amount not 2 exceed $50 or $100($1 dollar a ticket is ideal) each 2 make it accessible 2 every legal american citizen.)
Winner wins a property worth $300,000.0
FBA makes 350,000.00 profit
The numbers are adjustable d business model is d point.
Stop Geithner now!
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CNBC | 03/24/09