The Geithner plan, the good and the bad.

Tim Geithner today was on Meet the Press selling to the public his plan to shore up the toxic assets and alleviate the bank’s balance sheets. Right now the banks are crippled because they aer holding assets whose value nobody truly knows, some rough estimates suggest that the value of these mortgage based securities could be 50-70% lower than their original purchase price. At this point banks do not want to let go of these assets because they are partially hoping that prices will rebound and in part because they are waiting for government intervention. The latter is my speculative guess and their prudence certainly paid off given the Geithner plan.

Tim’s plan involves bringing in private moneys to offer them incentives to purchase these mortgage based securities. In other words, Tim thinks that private investors are going to use their own money to buy up assets whose true worth is impossible to evaluate at the moment. You are probably thinking, why would any private investor put money on the line for such a dubious “investment”. This of course is a great question, because it is entirely impractical to force essentially worthless assets down the throat of anyone, let alone private moneys. So the government will subsidize these purchases! That’s right, for every private dollar there will be a matched public dollar and this will incentivize private funds to pour into this system and shore up the toxic assets. If this works, private investors will walk away with a handsome profit while having half of their risk subsidized. Unfortunately Mr. Geithner was purposely deceitful and vague on Meet the Press, after all he is trying to sell this proposal and being truthful would have significantly impeded his effort.

He alleges that if this fails, private investors will lose all their money. True. However their risk is half of what it should be, because the other half is being put forth on the taxpayers. So while some of these private investors can CHOOSE to invest in this scheme, taxpayers like you and I are forced to put up our future as collateral. So once again, if this system fails then 50% of the private moneys will be gone and the rest will be paid for by our tax dollars. So what happens if this plan succeeds?

If this plan succeeds, then the private investors walk away with a ton of profit given that they only put up half of the required moneys. Taxpayers will get nothing, although I suppose some will claim that we will all benefit if the banks can finally start lending again. Of course that is all hogwash, because banks are lending right now – they are just lending with stringent requirements and not to deadbeats who can’t pay the money bank, just like they should have been doing in the first place.

So ultimately, there is one last question to answer. Perhaps you are interested in investing and think that putting down some money with a 50% government match sounds like a good risk. Where do you go? Answer, nowhere. This plan is not for the public and therefore not for you – these private funds will be chosen at the Treasury’s discretion and I assume it will be big investors on Wall St. Therefore if this plan works the big money/government wins and small money remains neural and if this plan fails, big money loses and small money loses.

What a clever plan Mr. Geithner. Looking out for the small guy eh?

Republicans have another golden opportunity with Daschle.

UPDATE: Tom Daschle bowed out, a lot of pressure has been generated and he has saved himself from the confirmation hearings. 2/3/2009

The GOP has been very hot or cold recently and it seems they are being handed opportunities to finally asset themselves as being different from the big government nanny-state liberals that are currently running the show.

- They dropped the ball with Geithner who should have been rejected.
- They unified and stood up against the 819 billion all-you-can-eat pork buffet. (Great whip job Eric Cantor!)
- Even though this is the RNC, but Michael Steele was a demonstration of something new and fresh.

Now, they need to flat out reject Daschle the tax cheat. This particular incident is even more egregious than Geithner and a formal apology is not going to cut it, nor should it. GOP needs to show America that they are not only the party of small government, fiscal responsibility, but also of ethics! Please demonstrate to the people that those elected to higher office are public servants and compromising the public trust should be the number one offense. Instead politicians use their immense clout to get away with crimes that normal citizens would be paying hefty prices for. Imagine for a second, if you somehow forgot to pay 146,000 to the IRS!? Your ass would be grass and the IRS would be smoking it. They will lien on your house so hard the mice will scatter.

There needs to be continued pressure from those that still have an ounce of faith that we can restore the correct path in this nation and this pressure should be put forth on all Senators involved in admitting tax cheats and criminals. A previous post of mine highlighted the 10 or so Republicans that allowed Geithner to waltz in as Secretary of Treasury and these very same people better be getting some serious hate mail. These are the same folks that should be pressured to filibuster this stimulass package.

But, it is all not all doom and gloom. One major advantage of having a liberal president is the welcomed side effect is filling the coffers with outstanding tax payments He should appoint more people, we might get out of this financial crisis sooner than we think.

Why the GOP needs to be shredded.

Michelle Malkin has a post pointing out all the RINOS (Republican In Name Only) who voted to confirm Tim Geithner for Secretary of Treasury.

The list is as follows:

Corker (R-TN)
Cornyn (R-TX)
Crapo (R-ID) – Fitting name.
Ensign (R-NV)
Graham (R-SC)
Gregg (R-NH)
Hatch (R-UT)
Shelby (R-AL) – This one surprised me.
Snowe (R-ME)
Voinovich (R-OH) – Worse than McCain.

The post also includes an excellent video from Jim Inhofe and he succinctly explains that not only is confirming TG an abomination, but discusses the bailout nation that we have become.

What this also suggests unfortunately is that Obama will probably have a small number of traitors that he can rely on to pass his socialist agenda, specifically the upcoming 825 billion bailout bill. More discussion on that proposal coming later tonight.