by Damozel | Part 1, in which we consider the despair of Krugman, the righteous disgust of Yves Smith, and the disdain of Atrios, is here.
At FDL, James K. Galbraith takes a look at the Geithner plan, concluding:
If I'm right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn't participate in the garbage-loan frenzy....
It's all about not-measuring true asset quality at the big banks, permitting them to escape a clean audit, and therefore preserving them as institutions, while forcing the inevitable shrinkage of the financial sector to occur elsewhere. In short, the plan seems to me to be a very bad idea. (emphasis added)
More bloggers react at Memeorandum.
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