Geithner Plan IV

[spicydragonz]

Wow. Wow. Wow. I have never heard such a clear explanation on why this is a bad deal for the american tax payer.

[shakaama]

@CaronteEmpire woah woah woah, why the cursing and name calling? you'll only make people call you an idiot and slime ball. anything after your cursing and name calling is completely ignored.

idiot.

[AUTubeN22]

how can the banks show a lagitimate cash flow statement if they are to run like other businesses how can they keep buying worthless assets & payout dividends at some point down the line they have to produce real visible solid cash!

[grassflying]

Great videos on asset allocation! Another way to view the plan is that it enables you to invest $4.5 and get the same upside as a $30 direct investment in these toxic assets. The downside of both methods are the same: almost wiped out. People investing in this area should have a very good understanding of what they are investing in. It may take a lot of efforts to discriminate the profitable assets from the bad ones.

[mdadnan]

Is there a Geithner plan 3 ?

[bossman068410]

LET THEM FAIL.. Then the banks that didn't get caught up with the derivatives will buy the true assets of what is left and life goes on. Nothing of true value will be lost.

[shakaama]

what's funny is alan greenspan in the 90's told japan to let its banks fail. and japan didn't listen, and propped up zombie banks for an entire decade, and in the end, they failed anyway and corrected itself when they stopped paying money.

America told another country to do what we are unwilling to do. [irony?]

[KastenEvans]

Thanks for your great explanations Sal. Where can we get more information about the solution you mentioned in Geithner Plan II and read your paper about the new bank plan?

[khanacademy]

The government is giving free put options to private investors in the hope that it will cause them to overpay for asset (Pay $50 for a $30 toxic asset + a $20 put option)

[wmacorlando]

the private investors are the banks that are holding the toxic assets - just like you predicted!

[hyperguy61]

So , basically , the govt. is using my tax dollars to fund the selling of (crappy and risky) put options to private investors ... who , in the end , may not even be private ...

[shakaama]

none of these bailouts or stimulus packages come from taxes. All of the taxes collected go to pay off the interest, that the federal reserve has lent the u.s. government. The bailouts and stimulus packages come from money the feds create out of thin air.

that's a good news bad news scenario. the good news is it doesn't come from taxes. the bad news is all future taxes for the next 50 years will again go to pay off the interest on these current loans.

[hyperguy61]

by "taxes" i meant either the traditional taxes or taxing through inflation , which is worse , imo.

[shakaama]

I don't know if you've been paying attetion but we're actually in a deflationary situation.

[i suspect, and yes this is conspiracy theory, the dollar LIKE GOLD is being manipulated and these aren't true market indicators] Can the dollar maintain its current rally?

Well can the American government coerce foreign countries to keep devalueing their own currency vs the dollar? actually it's worked for over 30 years so far.

So it could be no inflation. which goes to my first answer.

[hyperguy61]

hi. i respect and appreciate the conversation we are having. but i respectfully disagree that we are in a deflationary situation. we are in a deleveraging situation. asset prices are falling , this is not deflation. the fact that we havnt felt or seen the effects of our governments inflationary monetary policies yet , doesnt fool me. inflation is coming and it will be rampant imo. peace

[shakaama]

Well that just goes to my point about the manipulation of the dollar. Hmm as to deleveraging, that doesn't quite fit. Although deflation doesn't either. I think the proper term is stagnation or a downward stagnation to be completely precise.

as to doesn't fool you. with the introduction of ... now $10 trillion, prices should have been skyrocketing. however America is changing its buying habits [stagnation] so that there isn't rampant consumerism.

[hyperguy61]

the demand for the dollar due to deleveraging creates temporary demand for the dollar . temporary is the key. skyrocketing coming ..... just give it some time come come back home .....

[shakaama]

so you think the dollar rally is not artificial?

Why are all us Austrian school guys scratching our heads. All market indicators say the dollar should have already had skyrocketing inflation in 2007.

Instead of scratching my head, and viewing how gold is being supressed, I see no other indicator than it's being manipulated. If so, then that manipulation can continue indefinitely.

See i'm quite logical. [you can come back in 6 months when the dollar is still rallying and tell me i'm right]]

[hyperguy61]

not sure what you mean by "artificial". all i am saying is that whether it is in 6 months or a year , or 2 years , eventually all this money printing will come home to roost. i dont think it can be manipulated indefinitely. it's just easier for the US because the dollar is the reserve currency.

[shakaama]

@hyperguy61 now that we have 10 months behind your "i don't believe we're in a deflationary period" comment, let's see if you can now see what i saw, see, will be seeing.

The federal reserve has infused over $7 trillion into the economy. that is by definition inflation. However prices have not sky rocketed. why? the inflation is fighting the deflation. One area where that influx has had little impact is in the housing market, which is falling precipitously.