Market Buoyed By Twin Mediocrities
Hey, 4% is 4%, so I won't quibble.
The mixed housing news (existing home sales up, but prices down) was a significant upside surprise to the market, as were (apparently) the newly released details of the latest iteration of the Treasury's banking stabilization plan. The trillion dollar initiative plans to use both public and private money to scrape the remaining toxic assets from banks' balance sheets - laudable in theory, but one has to wonder what private investors in their right minds would invest their money alongside the federal government's at this point.
Retroactive bonus confiscation, contract nullification, threats of system-wide pay caps, and other unprecedented (at least in this country) interventionism argues rather fiercely against throwing in with Uncle Sam.
If the terms are sufficiently favorable to the investors, then sure, the risk of spending the rest of your life under Nancy Pelosi's thumb may be justifiable. But that incremental required favorability will necessarily make the deals worse for the banks on the other side, making the plan less likely to succeed. Either that, or the "public partner" (i.e. the taxpayers) eat the difference. Bottom line - the federal government has proven itself an unpredictably toxic business business partner, a condition under which any plan that relies on a public-private capital partnership would seem suboptimal.
Okay, I quibbled.
Handcrafted by Flip on March 23, 2009 |
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