Tuesday, March 24, 2009
Geithner's plan, more looting of taxpayers for Wall St...
Examining the details of Tim Geithner's bad assets reorganization plan looks like a further defense of the business as usual on Wall St that got us into this mess in the first place. The lauded public/private partnership that is supposed to buy the toxic assets from banks breaks down like so. 6% of capital is put up by private investors, 6% is put up directly by the government(taxpayers), the rest is financed with FDIC backed securities(which again is basically the taxpayers on the hook). Any profits off the assets would be divided equally, while any loss would only cost the private investors their initial 6%. So half the profits, 6% of the losses, it's not a bad deal if you have the capital to put in.
Here is a useful analogy of the latest Geithner plan.
Picture a car full of screaming people shooting off a cliff, plunging to their deaths.
Now freeze frame.
Back up the film until the car is still a few feet from going off the edge of the cliff.
Now a guy in a nice three piece suit walks into the frozen frame of car, people screaming, etc. He opens the doors one at a time and goes thru everyone's purses, pockets, wallets, and what not taking all their money, closes the doors, and walks out of the frame counting the money.
OK, now roll film.
Here is a useful analogy of the latest Geithner plan.
Picture a car full of screaming people shooting off a cliff, plunging to their deaths.
Now freeze frame.
Back up the film until the car is still a few feet from going off the edge of the cliff.
Now a guy in a nice three piece suit walks into the frozen frame of car, people screaming, etc. He opens the doors one at a time and goes thru everyone's purses, pockets, wallets, and what not taking all their money, closes the doors, and walks out of the frame counting the money.
OK, now roll film.
