Tuesday, April 21, 2009

On the Wrong Track

The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

Rather than continually buying small stakes in banks, the government should put weaker banks through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said.

The Public-Private Investment Program, PPIP, designed to buy bad assets from banks, "is a really bad program," Stiglitz said. It won’t accomplish the administration’s goal of establishing a price for illiquid assets clogging banks’ balance sheets, and instead will enrich investors while sticking taxpayers with huge losses, he said.

"You’re really bailing out the shareholders and the bondholders."

It's worth reading the entire article.

And now a word or two about those announced bank earnings:
The banksters who have emptied the US Treasury of its money continue the same games of accounting sleight of hand, financial engineering, and other tricks of the trade that helped cause the meltdown in the first place.

Instead of recievership and liquidation, we rewarded these cretins with your grandchildren’s lunch money. It is idiocy on a grand scale, beyond my feeble imagination.

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