> http://krugman.blogs.nytimes.com/2009/03/21/despair-over-financial-policy
> /
>
> The Geithner plan has now been leaked in
> detail<http://www.nytimes.com/2009/03/21/business/21bank.html?hp>.
> It’s exactly the plan that was widely analyzed — and found wanting — a
> couple of weeks ago. The zombie
> ideas<http://krugman.blogs.nytimes.com/2009/03/03/zombie-financial-ideas/
> >have won.
>
> are seriously undercapitalized. And I fear that when the plan fails, as
> it almost surely will
It will fail. Here's the deal: Asiazilla, Bearzilla, and Eurozilla are ready and willing to finance a bailout. They have the cash and are willing to buy US Treasury bills. But they are NOT willing to exchange their hard-earned reserves for shady bonds, busted CDOs or dodgy Agencies. That game is done. China and Russia stopped buying Agencies last November, a warning shot across the bow.
The US government must clean up its banking system. No private investor or group of private investors has the resources to do this.
And time is running out. The real world economic crisis is about to touch off another round of financial sector deleveraging, bankruptcies and implosions: think mutual funds.
-- DRR