"[T]he Geithner plan is not an alternative to nationalization: insolvent banks should be nationalized and the Geithner plan should not apply to them. But solvent banks still need to have their toxic assets disposed of; and for [these] banks the Geithner plan provides a solution that - all in all - is better than the alternative. Those who don't like the Geithner plan on the basis that they prefer nationalization are right - as I agree - that the insolvent banks should be nationalized. But they usually don't give an explanation of how they would dispose of the toxic assets of solvent banks. They seem not to like the Geithner plan because it would provide a subsidy to the investors. But ensuring participation of private investors in the risk and in the price revelation is worth that subsidy."
My take on this is that there is no perfect solution. No matter what, the taxpayers are getting hosed on this, some banks are going to make a lot of money on it and the key to the whole thing will be how well (and how fast) the plan is executed and what is done to make sure this can't happen again.
A man can dream, can't he?
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