Geithner Plan: The False Dichotomy of Alternate Choices

Based on Meet the Press and This week interviews of Mr. Geithner, nobody at the the treasury seems to have seriously raised to the Secretary's attention, the possibility of a less costly, surgical, and more effective alternative through market making as I have advocated.

The False Dichotomy of Alternate Choices. False dilemma.

I cry a river over this.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Op-Ed Columnist - Financial Policy Despair - NYTimes.com

Op-Ed Columnist - Financial Policy Despair - NYTimes.com

I could not agree more with Mr. Krugman on the sense of desperation over this plan.
I have cried a river over this, and over and over.
And I cry again...

However we arrive at the same conclusion from different analytic paths and our prescriptions differ. My analysis remains this

Op-Ed Columnist - Are We Home Alone? - NYTimes.com

Op-Ed Columnist - Are We Home Alone? - NYTimes.com: "And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets — and fund managers are growing terrified of any collaboration with government."

Huh!...
My only quarrel with the article is the apparent assumption that the plan the government appears to be poised to announce is the obviously best and only game in town...

Once more, Mr. Friedman, would you read this?

Toxic Asset Plan Foresees Big Subsidies for Investors - NYTimes.com

Toxic Asset Plan Foresees Big Subsidies for Investors - NYTimes.com
Moronic disgrace.
Design complexity here is no substitute for discernment.
I cry a river over this.
See: http://knol.google.com/k/phil-kongtcheu/fair-value-pricing-government-market/

TALF Is Reworked After Investors Balk - WSJ.com

TALF Is Reworked After Investors Balk - WSJ.com

This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?

The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.