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March 23, 2009



I did a defense of the Admin at

Just to be contrary.

Nathan Piazza

Doesn't all this depend on what the value of these assets really are? And won't the success or failure of this plan have to depend, to some extent, on the ability of potential investors to evaluate their level of risk? Will the huge investment management firms that are the proposed bidders be bidding on things whose value they truly have no clue how to estimate? Or will they be working from some kind of privileged, insider knowledge?

Because otherwise, Geithner's plan seems to be nothing more than the creation of a new bubble that lasts long enough to transfer bad assets from one kind of financial institution to another.

It reminds me of this old joke about a kid who sells turds to his friends by calling them "smart pills". Are the potential buyers of these assets in any better position to evaluate their worth than the banks that currently own them? And if so, I'd like to know how and why - are they scurrying even now to identify the parts of the "poison" that is least poisonous? Is Geithner basically inviting them to play a game of absolute roulette? (Because there really is NO way to evaluate these assets, and there never will be. And nobody in the world knows any better than anyone else what they're worth?)

Because it seems to me that a big part of what may be going on here is that it is precisely the people who gamed the system in the first place who know where the opportunities and the risks really lay - but they're not saying, because having such knowledge is potentially extremely valuable, AND simultaneously incriminating.

In other words, the people most well-positioned to benefit from Geithner's plan are exactly those who got us into the mess. It's like paying Lex Luthor to stop the time-bomb he planted in the center of the earth. And THAT's the dirty secret of the Geithner plan. That the only way out of this mess is to reward criminal behavior with massive profits at taxpayer expense.

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