Nice thorough explanation of the Geithner plan here in the FT. Well, not really, but that’s basically what we’re banking on. I still don’t see how this plan is going to succeed. We either need to force the banks to sell these assets at steep discounts (which they won’t) or we need to convince the private market to purchase the assets at elevated prices (which they won’t).
The main problem (as with TARP 1.0) remains pricing. Will these banks actually shed these assets and will they shed enough of the assets to make the banks technically solvent?
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.