Lex Luz

Bush's Speech: Surprisingly Coherent

Under the current plan as I understand it, Treasury will purchase distressed assets at a "held to maturity" price largely established by the banks' "mark-to-myth" model. The claim that we will purchase these securities at a discount to market value is a bald-faced, shameless lie. Rather, we are giving the very people who have profited from theft the opportunity to steal again by passing off the worst of their worst-performing bonds at prices that are likely to be 4 to 5 times their likely market value (assuming one uses the Lone Pine - Merrill deal as a benchmark).

The better solution here is for Treasury to make an "all-or-nothing" deal for the securities in question at somewhere between 9 and 12 cents on the dollar. Banks can choose to participate or not, but they do NOT get the option of simply passing the trash to the taxpayer.

Thinking that this plan will be designed in any way to "protect" taxpayers is utterly ridiculous. At best, this is extortion on the grandest scale in human history, and every government official involved in it thus far has proven him or herself either a liar or a dupe.