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Martin Wolf On America’s Attempt At Banking Rescue
Daily Markets —
... used to shape policy, as opposed to taking a logical approach that actually solves the problem. You could almost argue that the government is choosing solutions based on their fantasy view of the financial crisis, in addition to what makes people feel better, as opposed to the solutions that will actually help things improve. The question offered is: when will the government (and the populace for that matter) wake-up and confront reality? You can read the article in its entirety here. Source: Financial Times: “Successful bank rescue still far away” — Martin Wolf, March 24, ...
Martin Wolf on the Geithner Plan: Compensation Kerfuffle, Part II?
Paul Kedrosky's Infectious Greed —
Martin Wolf in the FT on the Geithner Plan: Why might this scheme get in the way of the necessary [bank] recapitalisation? There are two reasons: first, Congress may decide this scheme makes recapitalisation less important; second and more important, this scheme is likely to make recapitalisation by government even more unpopular. If this scheme works, a number of the fund managers are going to make vast returns. I fear this is going to convince ordinary Americans that their government is a racket run for the benefit of Wall Street. Now ...
Links 3/25/09
naked capitalism —
Chimps use geometry to navigate the jungle New Scientist Anti-Dollar Contagion Gains Pace Huffington Post Successful bank rescue still far away Martin Wolf, Financial Times The new toxic and bad legacy assets programs of the US Treasury: surreptitiously squeezing the tax payer and the Fed until the PPIPs squeak Willem Buiter 10 Headlines You Won't Read After Obama's Press Conference Clusterstock The Ridiculous Marks Of Toxic Assets Tyler Durden Why a second best bailout may not be ...
Pink picks
FT Alphaville —
... The crash has forced professional investors and academics to question the theoretical underpinnings of modern finance. The most basic assumptions of the investment industry, and the products they offer to the public, must be reconsidered from scratch. Martin Wolf: Successful bank rescue still far away The crisis has broken the American social contract: people were free to succeed and to fail, unassisted. Now, in the name of systemic risk, bail-outs have poured staggering sums into the failed institutions that brought the economy down. ...
Martin Wolf: "Successful bank rescue still far away"
Calculated Risk —
Martin Wolf writes in the Financial Times: Successful bank rescue still far away. (ht Bierca) An except on the Geithner Toxic Plan: [W]ill it work? That depends on what one means by “work”. This is not a true market mechanism, because the government is subsidising the risk-bearing. Prices may not prove low enough to entice buyers or high enough to satisfy sellers. Yet the scheme may improve the dire state of banks’ trading books. This cannot be a bad thing, can it? Well, yes, it can, if it gets in the way of more fundamental solutions, because almost nobody – ...
Lunchtime Links 3-25
Rolfe Winkler —
... Successful Bank Rescue Still Far Away (Martin Wolf) “the government has ruled out the only way of restructuring the banks’ finances that would not cost any extra government money: debt for equity swaps, or a true bankruptcy.” Good article, though Wolf doesn’t go far enough in his criticism of the plan; he doesn’t note the perverse incentive that those who stand to lose from debt-to-equity swaps—i.e. existing bank creditors—have a perverse incentive to game Geithner’s plan, to put up a sliver of equity to move assets ...
