Nobel Economist Stiglitz: Geithner Plan Will Rob Taxpayers, Won’t Work

Nobel economist Joseph Stiglitz said that Geithner’s toxic asset plan “amounts to robbery of the American people”, is badly flawed and probably won’t work, offers “perverse incentives” to banks.

He joins Paul Krugman, Dean Baker and many others in slamming the plan.

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  • “Robbing the Taxpayer”!! Isn’t that the whole point of all these ridiculous bailouts. If they really wanted to fix the economy they’d do the following;1) Drastically cut spending. Not diddle around with bonuses and taxes but cut entire federal programs, BLM, FEMA etc and put those responsibilities back on the states where the constitution puts them. And of course end the wars, NOW.2) Abolish the FED so the treasury can spend money without “borrowing” it. refer to the constitution on that too.3) Force weak banks or any company for that matter into Chapter 11, pull out the non-performing assets and write them off. If the entity is still insolvent then proceed to Chapter 7 and sell off the performing assets. When that is done you can use public funds to recapitalize if necessary but I doubt it would be. You’ll wind up with more jobs in a smaller and more disciplined banking system. That’s how you clean the mess up if you really want to. But of course they don’t do they? This is really all about the biggest robbery in history. Nothing more.

  • they’re purposefully destroying the economy so they can put a new one in its place. the london summit is next week, expect the much touted world currency to be announced, and the ensuing new international order emerge shortly thereafter.everything is going according to plan… our jobs are just to hold on to what we got and help each other stay afloat… that or engage in revolution… and as history has shown, americans are too fat, dull, stupid, and in terrible denial to do ANYTHING to stop this.

  • How the banks could arbitrage the Toxic asset plan.I am still not 100% sure of its structure but it would appear to be like this….1) Private entity bids for toxic asset held by bank.2) Private entity takes risk on 7.5%3) FDIC takes 85% and Treasury takes 7.5% So to arbitrage the scheme; 1) Bank sets up Private entity2) Private entity bids $100 for an asset that is only worth $503) Bank therefore has a windfall of $504) Asset returns to its real value of $50 after being transferred, a 50% fall.5) Private entity looses 50% of its $7.50. Namely $3.756) Net the combined Private entity and Bank make $46.25 ($50-$3.75). And obviously the tax payer looses the same And the “funny” thing will be. When the banks are seen to be setting up these private entities they will be applauded as being part of the solution when the may be doing the above.Isn’t BlackRock, a vocal supporter of the plan, 49% owned by Bank of America?