New Toxic Assets: Government Money Slushing Around

[Annie]

Hyperinflation or stagnation is coming, can't be prevented:

washingtonpost.com

May 17, 2009
Government Money Is a Toxic Asset

By David Ignatius
WASHINGTON -- Remember those "toxic assets" that were clogging the financial system a few months ago? Well, despite all the billions in government bailout programs, they're mostly still there. And in trying to clean up the system, the Obama administration has actually created a new category of toxic assets that banks desperately want to get off their books -- namely the U.S. Treasury's forced infusions of capital.

We'll look at these unintended consequences of the bailout, but let's start by reminding ourselves how the toxic assets mess began. These were bundles of loans that were packaged into securities and then sold off in different slices that supposedly carried tailor-made risks and rewards. But it turned out the credit ratings on the bundles were unreliable, and investors began to fear that they couldn't trust what was inside the wrappers.

The panic began with "subprime" mortgage-backed securities, but it spread to other securities that were backed by student loans, auto loans and the like. These asset-backed securities, as they were known, couldn't be sold -- or even valued reliably -- and the big banks that held them began taking huge write-downs that pushed them toward insolvency.

The Obama administration has struggled to revive the market for asset-backed securities. The problem isn't with securitization, they argue, but with restoring investor confidence. So they have launched a variety of schemes aimed at detoxifying the credit system that developed during the 1990s. Not coincidentally, the U.S. Treasury team during that financial boom included Lawrence Summers and Timothy Geithner, who are now Obama's top financial advisers....

 

[driveby]

If you get in bed with these bozo's, be prepared to accept 29 cents on the dollar and like it ........

 

[DiveCon]

If you get in bed with these bozo's, be prepared to accept 29 cents on the dollar and like it ........

i'ma make you an offer you canna refuse

 

[PubliusInfinitum]

Hyperinflation or stagnation is coming, can't be prevented:

washingtonpost.com

May 17, 2009
Government Money Is a Toxic Asset

By David Ignatius
WASHINGTON -- Remember those "toxic assets" that were clogging the financial system a few months ago? Well, despite all the billions in government bailout programs, they're mostly still there. And in trying to clean up the system, the Obama administration has actually created a new category of toxic assets that banks desperately want to get off their books -- namely the U.S. Treasury's forced infusions of capital.

We'll look at these unintended consequences of the bailout, but let's start by reminding ourselves how the toxic assets mess began. These were bundles of loans that were packaged into securities and then sold off in different slices that supposedly carried tailor-made risks and rewards. But it turned out the credit ratings on the bundles were unreliable, and investors began to fear that they couldn't trust what was inside the wrappers.

The panic began with "subprime" mortgage-backed securities, but it spread to other securities that were backed by student loans, auto loans and the like. These asset-backed securities, as they were known, couldn't be sold -- or even valued reliably -- and the big banks that held them began taking huge write-downs that pushed them toward insolvency.

The Obama administration has struggled to revive the market for asset-backed securities. The problem isn't with securitization, they argue, but with restoring investor confidence. So they have launched a variety of schemes aimed at detoxifying the credit system that developed during the 1990s. Not coincidentally, the U.S. Treasury team during that financial boom included Lawrence Summers and Timothy Geithner, who are now Obama's top financial advisers....

Shocking... SHOCKING I SAY!

A leftist policy failure from a gaggle of Marxist, which will cause VASTLY MORE PAIN than the pain it was designed to spare?

Say it ain't so...

 

[Old Rocks]

It ain't so.