Will the Treasury’s Plan Work?
March 23, 2009
The effectiveness of the Treasury’s Public Private Investment Program hinges upon whether private investors will take the carrot that the Treasury is offering them. In order to buy into the program, not only do private investors need to be confident that the assets will appreciate in value, but also that the U.S. government will not rescind on their offer or create some surprising rule like the retroactive tax on bonuses. Also, banks have to be willing to part with the assets, which may not make sense if they have already written them off. How Currencies are Reacting to the Treasury’s Toxic Asset Plan
Nonetheless, it is clear that along with the Federal Reserve’s Quantitative Easing program, the U.S. government is throwing everything including the kitchen sink at the U.S. economy and it could finally work. The only catch is that the program will probably not begin until the end of the third quarter because applications are not due until May.
Remember the words of Jean-Baptiste Say (1803), one of the world’s greatest economist: “In times of political confusion, and under an arbitrary government, many will prefer to keep their capital inactive, concealed, and unproductive, either of profit or gratification, rather than run the risk of its display. This latter evil is never felt under a good government.”
Posted in Public Private Investment Program, forex blog, timothy geithner treasury secretary
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March 23rd, 2009 at 11:44 am
You know what Geithner should have done was announce that the auctions would be taking place on eBay. That would have been sweet… Of course they may still announce that as they like springing things after the fact on folk like those taxes you mention in reference to AIG.
It’s like watching some horrible farce.
I’m looking at all this money they are printing up at warp speed and thinking that the dollar bubble can’t take much more of it. I see a lot of people jumping into gold and silver which has remained fairly steady on it’s up tick. I’ve been watching them with the widget ExactPrice and you can see when trail of gloomy forecasts and DC flailing at the crisis in the trends.
Right now gold is trading at $952.70 and silver at $13.30. Both steady while the
stocks are running up. The DOW’s running up today but I think that we may well see a sell off tomorrow or the next day in the DOW as they digest what this new plan means.
Not to mention the President’s comments about capping all executive pay across the private sector.
You notice there’s been no mention of capping or taxing extra our nation biggest sports figures. Would be interesting to see the reaction if they did.
March 23rd, 2009 at 12:50 pm
I’m optimistic about this plan. The current administration enjoy strong ratings, and is considered to be a “good government”. I believe that this trust will bring money into the program, and make it work.
March 23rd, 2009 at 6:02 pm
A government big enough to give you everything you want, is strong enough to take everything you have. — Thomas Jefferson
March 23rd, 2009 at 7:34 pm
A government which robs Peter to pay Paul can always depend on the support of Paul. —George Bernard Shaw