Is Geithner Dealing with Toxic Bank Assets the Right Way?
Mike Shedlock would answer that he is not. Read this article to find out why: “Geithner’s Galling (and Dangerous) Plan For Bad Bank Assets”.
Shedlock takes on some of Geithner’s main premises for his current fiscal policy.
First, Geithner claims that the causes are far-spread and complex for our current crisis. Shedlock contests that the problem is simple, while the available solutions might not be enticing,
“Actually the root cause is simple to understand, micro-mismanagement of interest rates by the Fed, Fractional Reserve Lending, and Congressional spending run rampant.”
Shedlock further argues that Geithner’s plan to buy overvalued assets (bad loans etc.) is at taxpayer expense and ends with a zero-sum benefit.
In summary, the author claims that the economic slowdown does not provide a good environment for borrowing or lending, even with a purchase of actual toxic assets. This is useful for anyone that might be considering short-term debt consolidation.
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