Wednesday, 15 July 2009

The New York Times Figures It Out Too

This NYT editorial pretty well sums up what I've been saying for a while about the dying quail that is Geithner's plan to buy up toxic banking assets:
The Obama administration has largely shelved, for now, its plan to finance the purchase of banks’ toxic assets, ostensibly because of the banks’ recent success in raising capital. An alternative explanation is that the banks won’t sell. Recent accounting changes make it less painful for them to keep bad assets on their books. Why admit to losses if you don’t have to?
Exactly. What I love about this bit of succinct truth-telling in the NYT is that it's not muddied by a lot of other pseudo-reasons, such as "investors don't want to partner with the government, fearful of being demonized or having the rules changed on them in midstream." Let's face it: that's just a smokescreen. If there's a big fat pile of money up for grabs in the middle of the floor, Wall Street will jump on it, damn the bad P.R. But if the banks don't offer up any assets, there is no big fat pile of money and Geithner's plan just ... dies.