The Arizona Sentinel

February 10, 2009

Sec of Treasury, First Time at Bat.

Filed under: My Posts — thearizonasentinel @ 7:21 pm

The Arizona Sentinel

This morning Treasury Sec Geitner laid out his rescue plan. In my view the economy will not react favorable to his plan as presented.  Let me point out the 4 points of the plan.

First ; They are gong to create a web site that will allow for the public to see where the dollars are going. for full disclosure.  Banks will have to go thru a massive internal stress test, balance sheet review, to determine if they are viable and qualified for the influx of taxpayer, borrowed, funds to be used for lending to small business, credit worthy borrowers and so on. With a emphasis on private capital.  My suspicion is that they the Sec of Treasury, will provide guarantees, to those private investors.

Second : They are going to form Public Private Partnerships.  The problem here is that no one knows how toprice these bad loans or toxic assets as they are referred to . The sub prime,no doc,stated loans or liar loans must be tended to. The justice department has a lot of work todo,. These millions of bad loans and the 19 million unoccupied homes must be tended to by getting rid of them. Period.  This particular part of the Geitner plan is fails to do this. All he is attempting to do is soften or slow down the eventually bottom.  He is attempting to address the problems that these loans have caused economies around the world.  My suspicion is that the Treasury will provide guarantees for those private dollars used to buy up these toxic assets . No way I would go near any of these overvalued assets.  They are dead weight on the economy.

Third: Expanding the working relationship with the Federal Reserve and the FDIC. Providing up to a trillion dollars , of borrowed money, “From WHO?”.  To go into the secondary market to buy asset backed consumer and small business scrutinized loans. Which is where most of the congestion is in the system.  ,,, These loans should be made by private capital,,,, CD,s Savings , etc or from SBA loans.

Forth :  He is proposing a relief plan for the housing and mortgage foreclosure problem.  BAD<BAD plan,. Meddling with the principal of these toxic loans by forbearance or forgiving amounts would lower the confidence of Americans even further than it is today.  There is no way the government can price these notes, there is no market for them,no one wants to buy them.  They must go thru the auction process or simply be destroyed.

As I have written before , just like in the 80’s when farmers were told to borrow to buy more land than they needed , which resulted in foreclosures and the corporate farms took over.  These mortgages will have to go thru the auction process.  Wall Street today poo pooed the plan. The market dropped 300 points since the speech. Reality has set in. The Federal Government is frantic over what is coming. The affect world wide by American fraud has put all Americans at risk.

Bottom line , they are going to ultimately cut,slash and burn. Until these 19 million unocupied homes are dealt with, the economy will continue to decline. They will ultimately force the banks  to absorb those assets thru the tax code. If that makes the banks insolvent , so be it. And move on.

Last night President Obama , indicated that Sec Geitner’s plan would hit it out of the park.  Not quite , he hit the ball , but its slowly rolling back toward the pitcher.




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A Lawman Speaks for Liberty

Border and National Security, Private Property rights, Removing Federal agencies from the states,American Energy Policy, Constitutional Conservative

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