Monday, March 23, 2009

Toxic Purchases

The US Government has published a bizarre plan to encourage the private sector to get involved in the disastrous mortgage business that effectively destroyed the US economy. And private involvement requires no risk at all- for the private sector! Treasury Secretary Timothy Geithner (pictured here in a BBC photo) announced the plan today suggesting this will kick start the world's economy. Stocks obediently tried to push uphill a few points.What I find so bizarre about the plan is that US taxpayers, who let's remember are not responsible for the mortgage fiasco are once again on the hook for these so-called "toxic assets" that Geithner wants to stick on the taxpayer. His plan assigns an arbitrary value to the garbage, for if it had value it wouldn't be "toxic"! -and offer sit for sale. A private investor ( not the likes of you and me!) puts in a million bucks, we that taxpayers put in nine million. Any resulting profits from this fiasco go to the private investor, any losses, and i can't possibly imagine how toxic assets could engender losses! - will be picked up by we the taxpayers.
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This plan becomes less ridiculous and bizarre when you remember where this 37 year old spawn of Satan called Geithner came from. He is a product of the Hank Paulson/Goldman Sachs investment banking school of rip-offs but the big problem here is that he has President Obama's backing. To say my two votes for President Obama are starting to taste like ashes in my mouth is putting it very mildly indeed.
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I lay no claim to a background in economics, though I did get out of the stock market in 2000 so I hold to the line that common sense tells us what should be done with toxic assets. Banks should, in the time honored fashion, write them down. If they go bankrupt so be it, we all suffer some chaos and confusion for a while then the small local banks and credit unions that didn't play silly buggers with their money take over and we take off again, perhaps more slowly and more regionally, but we re-start the economy using real numbers. This policy of trying to fake our way out of this crisis will kill us, our economy and our currency. I am really starting to think we are going to see a Depression of epic proportions even by the standards of the misery engendered in the 1930s, and I'm just some dude sitting on the sidelines praying my police job pays me enough to continue paying my mortgage.
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I am so frustrated I find it hard to express. No one around me wants to hear it, daily life in the Keys trundles along. Spring Break is over in Key West far sooner than usual, tourism is down, spending is down, foreclosures are only just starting to appear in the real estate market. Even the experts predict a worsening situation through 2009 and right now they can predict recovery in 2010 because it seems a long way away. 2010 seems like it will be the first full winter millions of unemployed Americans may be living in tents. God help us all.

2 comments:

bobskoot said...

Conch:

So much sage advice and hardly any comments. I feel so privileged to be able to start it off. I agree that we should just let the banks go bankrupt. I am also in disgust with the AIG fiasco, imagine doling out millions of bonus' $$ when you aren't making any money, but who cares, it is funded by taxpayers. I don't agree with rewarding those who made the bad decisions, and all of us who did nothing wrong are the ones who are going to suffer and have to pay all of this off. Of course our economies have been surviving all these past decades with borrowed money. Paying for the present with future, yet unearned dollars. Of course one day it was bound to happen and it finally caught up to us. Just like our parents who came out of the depression which really lasted from 1929 until the early 50's we had to live frugally only purchasing what you could save up for and pay cash for whatever you wanted. But this was before TV and life was simpler back then. You only purchased things that actually wore out, not upgraded because you wanted the newer model. I hope I'm not forced to live in a tent because I dislike camping.

bob
bobskoot: wet coast scootin

Conchscooter said...

I tried starting this blig six months ago but I preferred to add short essays on my other blog. That got unsatisfactory so I restarted this one and wnated to see if I continued to feel like venting. So far i do, and perhaps others can too. I don't really have advice or any certainty that my views have any validity but I will have an opportunity to look ack in a year and marvel!