Skip to main content

View Diary: A Message from History: Democrats, Attack! (258 comments)

Comment Preferences

  •  How to Measure Geithner's proposal this week (21+ / 0-)

    Measure Geithner's proposal this against this: Bury the dead.

    Treasury Secretary Geithner was scheduled to unveil his proposals for dealing with the financial crises tomorrow. But a Bloomberg wire reported that Summers said the announcement by Geithner has been postponed until later in the week. Another sign that Summers is the economics czar in the Obama administration.

    When it is announced, I will be measuring the proposals against the solution outlined by Ian Walsh on Friday: How to Perform Triage on the Banks and Stop the Bleeding

    Not only is the financial situation  getting worse, but a lot of securities either really have no market (they're hardly ever sold) or the market price is actually below their probable long term value.  If the government is going to take over banks, or insure the securities, or set up a bad bank, they need to know whether they're solvent and how risky the securities they hold are—how likely they are to go bad in the future.  Once they know that, they know how much to pay, which banks to take over and which banks can be saved.

    How to value securities to allow proper bank triage and surgery

    SNIP

    This process probably isn't much like what Geithner's going to propose Monday, but it should be. It's based on three principles.

      1. Find out How Deep the Hole Is


      2. Perform Triage: Bury the dead, help the injured, let those only mildly wounded fend for themselves

      3. Make sure the damage to the financial sector doesn't spread any further beyond the financial sector

    We can only hope Geithner's plan will do all three of these things.

    A conservative is a scab for the oligarchy.

    by NBBooks on Sun Feb 08, 2009 at 08:35:33 PM PST

    [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site