And so do I.
This is the age of the moral hazard. There is no absolutely incentive to do the right thing.
From Stiglitz in the NY Times:
Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That’s 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest — $12 in “equity” plus $126 in the form of a guaranteed loan.
If, in a year’s time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that’s left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37.
Ya got that? 1-to-4 odds for that wager. Stiglitz continues:
What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses.
When the high costs of the administration’s plan become apparent, confidence will be eroded further. At that point the task of recreating a vibrant financial sector, and resuscitating the economy, will be even harder.
With no good options, Obama, while staving off desperation, is courting true, epic disaster. You spell it with four letters and it got us into this mess in the first place.
Where, I ask, are the criminal prosecutions for AIG, Bear, Lehman, Citi, WaMu, Merrill, etc?
And why is Chris Dodd still in office?
I am not placated by congressional hearings. I want blood.