langreiter.com plain, simple: 2009-03-22

LANGREITER.COM plain, simple

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2009-03-22

CREATED BY chris • LAST EDITED BY chris 5753 days AGO

"Q: What is the Geithner Plan? / A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit."

J. Bradford DeLong: The Geithner Plan FAQ

In short: Since the dynamics unleashed by the synergetic combination of rampant speculation and large-scale governmental risk distortion were such a resounding success last time 'round ... let's do more of that!

"Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money? / A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition."

From the comments:

"Maybe we can hire a few hedge fund managers to revive the Dutch tulip futures market, too."

"Excellent intelligent summary. I have obtained the bottled water and sewing needles, the ammo is on order."

And: Paul Krugman's response.

2009-03-22-aPlan