America's toxic-asset plan: Dr Geithner's bank rehab

There should be no shortage of buyers for American banks’ rotten assets, thanks to generous subsidies. Sellers will be harder to entice ONE way to treat a recovering drug addict is to force him to go through cold turkey. Another is to prescribe him a substitute for the original poison, such as methadone. America’s long-awaited effort to relieve banks of troubled assets leans towards the second approach, aiming to entice private buyers by offering the same supercharged leverage that coursed through the veins of the financial system during the credit boom. Paradoxically, at a time when the private sector is furiously cutting back on debt, the government sees the copious provision of cheap financing as the best way to loosen up the market for illiquid debt. The public-private partnership announced on March 23rd marks a revival of sorts for the asset-buying component of the Troubled Asset Relief Program (TARP), a $700 billion rescue fund created last October which was quickly refashioned ... (link)