You may have noticed over the weekend how many "reports'' there were about the latest piece of the US rescue plan in the media. Say the FT:

"Mr Geithner will unveil two separate schemes: one targeting toxic credit securities, the other portfolios of more traditional loans deteriorating due to the recession." (link)

A private-public partnership! Sounds triffic.

I do note, though, a proxy parallel: where sovereign wealth funds (SWFs) have been involved in recapitalising banks over the course of this crisis the investments have not panned out quite as anticipated.

Even the Qatari SWF, shown on that October 2008 list enjoying a lovely profit on its Barclays stake, is now nursing a circa 60%, $2.6bn loss on its investment. And that is after Barclays 20% jump this very morning on the Geithner news.

Course, when policy makers take the "long term valuations" (emphasis on long) position pretty much all options can be sold to the public until they go pear-shaped with time along with one's credibility.

A separate, related FT article led off with a pithy Volker quote focused on this:

"There’s no point in trying to rebuild a burning house"

There is an arrogance in imagining we are smarter than battled-proven (though still fallible) policy makers from prior generations. But it's probably different this time.

Bookmark and Share

0 comments

Related Posts with Thumbnails