FSP: FOOLISH STEADY PAUPERIZATION

GEITHNER KEEPING ON THROWING PUBLIC MONEY AT THE BIG BAD PLUTOCRACY.

Geithner talked, and said nothing. His main innovation was to move away from the tarnished acronym TARP (Transferring Assets to Rich People). Geithner replaced TARP with "FSP".

Geithner's main idea is to go on as before, using public money to allow the failed financial system to operate as before. No change of system. Geithner talks "transparency", but he wants to use the Federal Reserve bank, which operates in secrecy, escaping scrutiny. He attacks the preceding administration, he forgets that he was part of it (destroying the bank Lehman Brothers, nearly brought down the world financial system, because it was a major US bond market maker, besides being a major bank; two people were in the room, taking the decision of destruction: paulson and Geithner). Lehman should have been saved, and nationalized. But the general metaprinciple of the flawed preceding (and current) administration is that DESTRUCTION IS BETTER THAN NATIONALIZATION.

So Geithner wants to use public money to buy "toxic assets" (mostly an euphemism for financial and real estate derivatives). Problem? He still has no way to evaluate how much those are worth. His plan, as usual is to make a plan to value that "toxic waste". Imagine some guy in a toxic dump, desperately trying to value the toxic waste, instead of trying to get rid of it. That's Geithner for you.

On the positively fluffy side, we are apparently we are switching from TARP (Transferring Assets to rich People) to FSP. FSP is not for Financial Stability Plan as the administration wishes it, in its colossal naivety. Instead reality will reveal it to be, in the fullness of time, the Foolish Steady Pauperization.

The Foolish Steady Pauperization will keep on being caused by the inability to get rid of the derivatives of the real estate market that weigh on the banks’ books. (Instead of getting rid of them, Geithner wants to “get these markets (of derivatives) working again”.) So, as far as the eye can see, instead of getting credit flowing again, good public money will be thrown after bad.

To start afresh, the derivatives of the real estate should be declared null and void. Moreover, because incompetent managers have not be thrown out, they will keep on profiting from the flows of cash, managing them to allow further the expression of their powers. Instead the first thing that should have been done is getting these people out and away.

Let’s imagine the financial system is a plane. Well, the plane has crashed, it went down the Hudson. OK, it still floats. What Geithner proposes now, is to fly it again. That is his radical solution, and his simplicity, he believes, it’s just a matter of time. Well, sorry, but it won’t fly. That plane is all broken up inside.

Patrice Ayme
http://patriceayme.wordpress.com/