Quote from Mvic:
They just don't get it. Credit is not flowing for a very good reason, not because there isn't a market for securitized products, but because the securitized products are toxic (which is why there is no market for them). They are toxic because there is a massive default overhang that will hit if job losses are not stemmed. The stimulus will not stop the job losses and it will create very few new jobs and very expensive ones at that.
This is a disaster because what G is proposing is that the US tax payer be the bag holder, the one who bids for everything that no one wants. Credit will still not flow because the default overhang will still taint everything even new loans unless they are very strict in which case no one will qualify anyway. So the taxpayer will be stuck holding assets that will be rapidly diminishing in value and here's the kicker, we borrowed the money to buy this steam pile of shit and will be paying interest on it!
A targeted jobs creation program would have cured much of this without the need for a trillion bank bailout(again this will not be the cap, we will be having stimulus 2 before the end of a year and another trillion will be seconded to this bailout program).
Perhaps they are hoping that in the short term lending standards will be relaxed if TALF buy anything, any crap that is offered up? In which case we will see an uptick, by my goodness at what a steep cost and as soon as the TALF is pulled (as it will be in the public can actually see the crap they are buying on thier web site) we fall off a cliff again.
