Comments on: Will the Geithner plan work?

By: Bob Williams

Bob Williams — Tue, 24 Mar 2009 13:20:11 +0000

Slight correction to my earlier comment: "As for me, I favor intellect over blind faith and not the unrelenting criticism of people that are trying like the devil to make things better."

Whew!

By: No One Important

No One Important — Tue, 24 Mar 2009 11:43:37 +0000

The problem here is that it is a "heads, investor wins, tails, taxpayer loses."

If nationalization is needed, then do it. We take the risk, WE get the reward.

Otherwise, it is just another give away of our tax dollars to others who didn't earn it.

Why are Obama and Pelosi SO opposed to slashing taxes across the board?

More money in OUR pockets, we pay BILLS, we pay down DEBT, we save and we SPEND. Our "own" stimulus in our own areas.

Our LOCAL TAX COFFERS benefit. More money in banks via deposits mean they are MORE LIQUID.

More money in our hands gives banks more confidence in ABILITY TO PAY.

It's so simple. All it takes is the democrats giving us OUR money back that WE ALREADY EARNED.

But Pelosi won't even forgo the Congress' automatic 4900 raise of OUR money that THEY took.

Aren't they like Aig? Rewarding themselves for failure?

By: Isabelle

Isabelle — Tue, 24 Mar 2009 10:15:51 +0000

Thank you, David. Professionalism at its best.

Infamous principle of leverage – Indeed, ironic.

Why the recent uproar over the AIG bonus scam when their enethical and deceptive practices have been know for quite some time?

-looking forward to a sunny forcast in the financial sector as it's been raining for far too long.

By: J.V.Hodgson

J.V.Hodgson — Tue, 24 Mar 2009 10:13:49 +0000

Oh David, would it be that this is so simple as you say!
It is not! the problem is not a socialist style bank nationalisation or selling toxic assets to the government or a combination of government or private investors. The problem is the same whatever you do except that when the government pumps money in that allows the banks to lend to stimulate good parts of the Economy.
The problem is a whole bunch of people like it or not are going to suffer because of a property market asset bubble, huge speculation in currencies, commodities, stocks and bonds that had no economic fundamentals behind those transactions and the property bubble and speculation elsewhere exacerbated by Leveraged borrowing by hedge funds which is almost now a bad debt to the banks created a geometric effect on Insurance companys who failed to see the real level of risk.
The reality if 10,000 was an index in 2007 end somewhere in future 7,000 is the best that can be hoped for i.e a 30% loss to banks hedge funds and main street. whether that is real cash or debt exposure depends on each indivu=idual but we will all apparently be 30% worse off unlees we create the same problem over again = put appropriate regulations in place!!
Regards,
Hodgson.

By: Jade

Jade — Tue, 24 Mar 2009 07:25:19 +0000

I agree with Jennifer H. completely.

I'd add that even well-regarded economists like Simon Johnson know that Obama needs to break the power of the oligarchs NOW. That's not what he is doing. Instead, he is helping them gain even more power. Very bad move.

By: Steve in Las Vegas,NV

Steve in Las Vegas,NV — Tue, 24 Mar 2009 07:01:36 +0000

Sounds a lot like gambling to me, but if I make a bad bet, nobody has a bailout for me.

By: Apostate Democrat

Apostate Democrat — Tue, 24 Mar 2009 04:48:00 +0000

Geihtner, Summers, Dodd and Obama are all owned by the by the financial services industry. The taxpayers are going to pony up 95% of the cash for the trash and the "private investors "(i.e the same people who created this mess) will put up 5%. So once again the ordinary Americans will be forced to assume most of the costs and the risks of fixing the mess that the over class has created. This is the change we are supposed to believe in?

By: Dan

Dan — Tue, 24 Mar 2009 04:38:21 +0000

Yes I'll take some of that, provided those that did already have not choked on it, otherwise count me out. Its like a mine field, the private can walk 200 meters ahead of me, where he steps and did not get blown away, I will follow.

By: BNS

BNS — Tue, 24 Mar 2009 04:35:14 +0000

Isn't there one other thing to consider? The O Administration recently floated the idea that judges will be able to make decisions about how much certain home owners will have to pay back – in other words, some people may get the principle lowered on their mortgages.

My questions is: Who would be interested in investing in these toxic funds if some judge may come up in the future and lower people's mortgage principles – thereby lowering the value of any investment?

Am I understanding this correctly?

By: lysh

lysh — Tue, 24 Mar 2009 04:35:11 +0000

Try to remember it's the worst economic crisis since the depression. It's not like there's any great options. While Republicans and Democrats enjoy plentiful ammo hit each other with, remember this; it's either let the banks fail (which would cause all sorts of terrible problems people haven't even thought about) or create huge debt by putting the economy on life support and hoping it revives itself.

The best solution likely lies somewhere in between.

By: Christopher Jennings

Christopher Jennings — Tue, 24 Mar 2009 04:34:00 +0000

Ok...let me get this straight. What got us to this point was the way things worked before: Banks held homes and let private investors come in and put a small percentage down on the house in the hopes that the value would rise and both could make a profit. Housing prices then get overblown and housing market comes tumbling down allowing the world to enter a long-lasting global recession. Hurray??

The Obama-Geithner plan: GOVERNMENT (meaning our tax dollars) hold homes and let private investors come in and put a small percentage down on the house in the hopes that the value would rise and both could make a profit. Sounds familiar right? Can you guess what's going to happen next???

(Just so you know all I did was copy and paste what the banks and private investors were doing before the collapse of the market and replaced only one word......Bank for Government (us!))

By: porchhound

porchhound — Tue, 24 Mar 2009 04:11:45 +0000

For the unfailing Obama supporters I say this: he knows absolutely NOTHING about economics and has to rely on his old Prof Geithner to think for him. This isn't about getting out of Obama's way, it is about the absurdity of following the lead of someone like Geithner who was part of the original problem in the first place when he was at the Fed. If the gov't (us) is going to take 95% of the risk why not take it all as well as 100% of any profitability? What IS the point of taking the lion's share of the risk and the lamb's share of the profit unless you are wanting to line someone's pockets?

Additionally it is INSANITY to be contemplating this huge deficit so that OBAMA can carry out his three-pronged approach to re-engineering our way of life. Wait UNTIL the economy recovers before you spend even more money we don't have.

By: Jim

Jim — Tue, 24 Mar 2009 03:52:01 +0000

This problem is so complex that No One Group can device a coorect plan. We need the intellegetual giants like Gietner and O'Bama as as peopel and poeples at the all levels of corporate amercia. We need the titans andme lower level experience and with businesss knowledge to lead us through the CRISIS!!!!

The Plan will go through many startss and starts!

By: Samuel

Samuel — Tue, 24 Mar 2009 03:49:31 +0000

I have read this column by David while sitting in Shanghai, China. I have just written an essay about what is happening in both China and the U.S. and much to my consternation how China is getting ir right and we are getting it wrong. From afar, one of my concerns has been the lynch mob mentality of going after AIG. I fear that we are going to do more long term harm to our country for the precise reason that David mentioned. Like them or not, be jealous of them or not, but we cannot scare away the major players in our capital market by threatening them with retroactive tax penalties for obtaining benefits that are legally theirs. This lynch mob mentality will scare people away from our capital markets and cause some of our best and the brightest in the future to think twice about careers in our capital sector.

By: John New Jersey

John New Jersey — Tue, 24 Mar 2009 03:47:54 +0000

David,you should try not to be such a brown noser to the Obama addministration.Do you really think its a good idea to spend trillions and trillions of dollars that we dont have.Obama will spend more money in two months, then Bush spent in eight years.

By: Ken Sanders, Vancouver, Canada

Ken Sanders, Vancouver, Canada — Tue, 24 Mar 2009 03:36:05 +0000

I don't think Timmy can pull this off. Like it was posted here already .. they call these TOXIC assets. And they are not referred to as that for no reason. Not many buyers will step up and more time will be wasted. I agree with Krugman. Nationalize the Banks. Let those with Toxic Assets go broke. The Bozos on Wall Street were sickening once again to-day in their exuberance. And more innocent suckers were sucked back into the market. I don't see this Rally going much farther. It's just a game for those irresponsible clowns.

By: Bob

Bob — Tue, 24 Mar 2009 03:29:47 +0000

Obama is always thinking a few steps ahead. THis plan is simply being put out there to justify a takeover of the banks in a few weeks (which is the correct thing to do). He is doing this so that he can play the 'we tried everything else' card.

By: bob

bob — Tue, 24 Mar 2009 03:26:05 +0000

Celeste:
- I'm confused, if Obama is for the Geithner plan, and you're for Obama, then how can you also be for Krugman's nationalization plan? Believe they're mutually exclusive.

- so if the Geithner plan will work because of greedy Americans, and Obama is behind the plan, does that make him in favor of greed? And if not, will he give his latest book deal money ( $500,000) to charity even though he's not gonna get a tax deduction for doing so?

- So why are those of us against national health dumb?Have you ever considered that you might be wrong ( and thus the dumb one)?

- What Obama " magic" should we not criticize- free condoms? mag/lev trains from Disneyland to Vegas? how about the largest deficit in the history of the world for the next TEN years? Also, maybe you could list his qualifications and accomplishments that tuened you on in the first place.

- As to criticizing BO, did you not criticize Bush? Bet you did. I remind you that only 53% elected him. The rest of us will continue to exercise our right to free speech until it gets taken away- our apologies.

By: Paul Schierhorn

Paul Schierhorn — Tue, 24 Mar 2009 03:24:32 +0000

The government, as The New York Times reported this morning, would lend "private investors" (quotes are mine) nearly 95 percent of the money for an investment.

I am so very middle class.
I have ten grand to invest. I bet other people do.
David,
Should we as citizens become a part of those "private investors"?
Do we leave it to somebody else to "invest" or do we put up?...
Are there enough of us to invest that ten grand... and make the difference?
We all screwed up. We weren't minding the store.
You break it, you buy it. We broke it. Either actively or passively.
Now we pony up to fix it.

By: UzhasKakoi

UzhasKakoi — Tue, 24 Mar 2009 03:20:54 +0000

And how this plan different from the Nick Leeson's the took down Barrings? Now, if we are lucky and it works, everyone may be happy (unless Frank, Dodd, Pelosi, Reid, Shumer go bananas and tax investors out of their mind retroactively). and what if it does not? Would Geitner go to jail? Frank? Pelosi?

Just imagine that cell .... for all this money could public at least have live streaming?

That's the only condition under which I agree to this Monopoly game.