Tab Dump

Would somebody please explain the PPIP to me? The government puts in 75 percent and private firms put in 25 percent to purchase toxic assets--correct? If so, does that mean that taxpayers get 75 percent of any upside and/or 75 percent of any downside? And with such reduced risk to the private investors, doesn't this increase the chance that the purchase prices of these assets will be artificially high, resulting in increased risk to the taxpayer? And isn't there a moral hazard here? Management runs their banks into insolvent positions, taxpayers purchase their toxic assets at inflated prices to save them, and then management goes on their merry way with impunity.

If I'm reading this right, PPIP feels like hocus-pocus to me. The thing to do, it seems, is to go back to mark-to-market such that banks value these assets at their true worth. Then if necessary, have the feds infuse capital into these banks in the form of stockholder equity (with the understanding that such equity will be sold as soon as practicable). Of course, like any major stockholder, the government would have corresponding oversight in how the recipients of such capital are operated (i.e. management does not get to go on its merry way with impunity). With this approach, the toxic asset mess is behind us, and the potential upside to taxpayers is significantly greater .

Under the PPIP approach, balance sheets that look good might actually be crap while with the latter approach, we can actually go back to world of transparency in the financial reporting coming out of these banks.

Congratulations to the #5 most important, hmm, reporter (?), according to Mediaite!
http://www.mediaite.com/power-grid/category/?c=Print+%2F+Online+Reporters
(via the Krugman)

I have to say, well deserved...NOT. Sry, Ezra, but I guess you have to admit, too, that you do only very little real reporting. There seems to be something seriously wrong with the algorithm used by that new site to determine the importance rank. And the category "Print/online pundits", where you really deserve a prominent place, is totally missing. Strange.

Well, I hope this ranking won't make you the target of mobbing by totally unimportant Post reporters like Dana Priest, Elizabeth Bumiller and the like...

Oops, sry, I got confused - not enough caffeine this morning. Of course, Bumiller is working for the grey lady. Make that Steve Fainaru instead. Actually a much better example for fine reporting than Bumiller, who once won the "Worst Campaign Journalist award"...

Well, of course it's not your fault that Mediaite seems to think irrelvant awards like the Pulitzer should play no role in determining the importance of journalists. Maybe Priest or Fainaru should do some reporting about that new online publication. Who knows, there may be some corpses in the cellar...

I found the Lewis AIG piece to be rather a disappointment--all wind up and no pitch, as it were. Did I miss something where he added a whole lot to our knowledge of the etiology of the meltdown? At best there was a little tidying up around the edges, especially for those who might have missed the Op-Ed resignation later episode...