How is Geithner's plan different from the phony manipulations

[leftofthedial]

that created the toxic assets in the first place?

We don't know what the toxic assets are, really.

We don't know what they are worth, really.

We don't know if there is a market for them, really.

We do know they are so hideously awful that they brought the world's entire financial industry to its knees. (We've already given them more than 2 trillion bucks worth of bandaids and aspirin.)

So now we propose to bundle up whichever of these vile things the banks want to get rid of into some sort of security not all that different from the derivatives that created (maybe) those toxic assets in the first place.

We the people (directly or indirectly) will put up 94% of the money on behalf of any private investor who is willing to buy these hideous worse-than-vials-of-Ebola-virus pieces of paper that represent something no one understands, but surely someone will act as though they have value.

If they sell, we get 50% of the revenue (not profit).

So, we get to own 94% of the risk of the worst of these mysterious things that are so vile that they have all but destroyed the global economy. If miraculously somehow one of them sells, the most we can expect in return is 50% of whatever they sell for, which will almost certainly be less than what we paid for them. Is that right?



Heckuva deal Timmy.

[Fresh_Start]

1. thats what I understand as well

I'm trying to think how they will legally game the system. I haven't figured it out, but I'm certain "they" will.


I know you can't possibly imagine that the big banks would collude to the advantage of their investors at the cost to the taxpayer, but lets pretend for a minute.....
Big Bank A, buys the toxic assets from Big Bank B
Big Bank B, buys the toxic assets from Big Bank C
Big Bank C, buys the toxic assets from Big Bank A
The net effect is that all three of the big banks now are responsible for only 6% of the risk which they created, leaving the poor taxpayer to suck up 94% of the remaining risk to the investors of Big Bank A,B and C.

I think its time to buy Big Bank A,B, and C stock. For taking on only 6% of the risk, you can earn 50% of the revenue.

[leftofthedial]

2. Geithner is a crook.

He should be worse than fired.

[TahitiNut]

3. Well, by buying the CDOs we can make the chain of CDSs moot.

:shrug: It seems to me that there's a fundamental failure to comprehend the "daisy chain" of 'securities' ... how a group of mortgages can be sliced and diced into 'tranches' and sold as 'securities' (CDOs) and then the buyer can package them yet again and sell them as DERIVATIVE 'securities' (CDO-2s) and also trade in 'insurance' (CDSs) on the debtors' continued payment ... and have ALL these paper transactions treated as "money" (assets) but then have a problem forming a "free market" in which the VALUE of these assets (mark to market) is represented on the owning company's balance sheet and how that affects their solvency ... and how that solvency, in turn, triggers the conditions of CDSs (the location and volume of which is known only to the owners) ... and so on.

What beggars the imagination is the way in which the daisy-chain of 'derivatives' can effectively amplify every DOLLAR of mortgage debt (by some working class schmuck) into THIRTY DOLLARS of 'money' (called assets, securities, or whatever) on the books of banks, insurance companies, mutual funds, pension funds, and other companies worldwide.

There's about $11 TRILLION worth of mortgages in the U.S. The total residential housing in the U.S. amounted to about $20 TRILLION until the 30% (or more) of burst bubble ... having an unknown impact on the $11 TRILLION worth of mortgages , actually ... by guesstimate being about $2 TRILLION. HOWEVER, the daisy-chain of derivatives has magnified this to an aggregate of 'assets' held on balance sheets of about $60 TRILLION. So ... isn't it 'worth' a trillion or so to keep the $60 TRILLION House of Cards from collapsing? (And this doesn't even count the other kinds of debt besides mortgages that are collapsing as well.)

It's like trying to repair the engine of an airplane while it's in flight, I guess.

[Tierra_y_Libertad]

4. Mind boggling doesn't even begin to describe this monster.

The "ripple effect" of all this isn't just going to be economic, governments will fall, millions will be made homeless, millions will literally starve, because a bunch of financial "wizards" (with a lot of help from the politicians in their employ) devised elaborate get rich quick schemes that collapsed and continue to collapse.

Followed by "remedies" devised by the same bunch of wizards.

Just trying to get a grasp on it is like meditating on one of those Zen koans where the "answer" is perpetually just out of reach.

[leftofthedial]

5. The Hindenburg is burning

Geithner is trying to convince us that if he can only pump more hydrogen faster, it will stay afloat. (Plus, his buddies own the hydrogen dealership.)

[Hubert Flottz]

8. The Bright Boys have created the Mother Of All Mind Fuc*ers.

I think Bush was the curse of the millennium we were warned about. I hope Obama and his crew really do have a workable plan.

[cliffordu]

7. Thanks pal....

you finally scared the shit out of me...

Time to stock up on seeds and .22 cal ammo, I guess.,,,,

maybe some bicycle tubes and tires and a dozen chains......

[girl gone mad]

6. Last I looked, it was 8.5 trillion, not 2 trillion. n/t

[leftofthedial]

9. a trillion here,

a trillion there . . .