Geithner Plan IV

Quantifying the value of the put option

Category:

Education

Tags:

• geithner
• timothy
• obama
• plan
• bailout
• put
• option
• TALF
• TARP

[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)

[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]

@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.

[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.

[wmacorlando]

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

[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]

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]

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]

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.