So it’s come to this, has it Spot?
What do you mean, grasshopper?
Quoting Maureen Dowd as a source on financial matters.
Well, it sounds so bad when you put it that way. She did have some of the more pithy comments about the words from our new Treasury Secretary:
It wasn't only that Americans' already threadbare trust has been ripped by Hank Paulson's mumbo-jumbo and the Democrats' bad judgment in accessorizing the stimulus bill with Grammy-level "bling, bling," as the R.N.C. chairman, Michael Steele, called it.
The problem is that the "lost faith" that Geithner talked about in his announcement Tuesday cannot be restored as long as the taxpayers who are funding these wayward banks don't have more control.
Geithner is not even requiring the banks to lend in return for the $2 trillion his program will try to marshal, mostly by having the Fed print money out of thin air, thereby diluting our money, or borrowing more from China. (When, exactly, can China foreclose on us and start sending us toxic toys again?)
There's a weaselly feel to the plan, a sense that tough decisions were postponed even as President Obama warns about our "perfect storm of financial problems." The outrage is going only one way, as we pony up trillion after trillion.
Geithner is coddling the banks, setting it up so that either we'll have to pay the banks inflated prices for poison assets or subsidize investors to pay the banks for poison assets.[italics are Spot’s]
This is why recapitalizing the banks – the ones worth saving, anyway – by “injecting capital” in exchange for senior equity position is much better than buying the toxic assets directly. That way, the treasury and the taxpayer are behind the bank shareholders and executive stock option holders in the haircut line. Which is as it should be.
On the other hand, Spot listened to part of a hearing with Geithner testifying before the Senate Banking Committee. Sen. Jeff Sessions of Alabama thundered that the stock market had seen the plan and didn’t like it. Spot thinks that the stock market has pretty well surrendered its authority on what is a Good Idea at this point and wouldn’t put much stock in its reaction Tuesday afternoon.