Why the Geithner Plan is Bad

Bailout, Economic Policy, Economy


Nobel Prize winning economist Joseph Stiglitz provides a solid and down to earth description of what will take place with the Geithner Plan in his NY Times editorial.

Its a worthwhile read and should help bring some clarity to the situation that will unfold.

I thought about running through the scenario for myself, but decided a comparison to a mortgage would be ridiculous. $12,000 on a $138,000 mortgage is a lot stronger than banks were accepting a couple of years ago. So I want to stay away from that comparison. Instead, lets say I am in Vegas and there is a heavyweight fight with 50/50 (never would happen, but lets imagine). Sure, I’ll put money down and see if I can double my money. But, what if there was a way for me to triple my money? Well, yeah of course I’ll take that. Even better, I can triple my money without taking on more risk. I just have to take a huge no risk loan out.

So, I take the loan, put up my 8% share along with the 92% loan and bet. If I win I can pay back the loan and take my tripled winnings.  If I lose, I lose the money I put up and forget about that l ever took out that loan.

Tough break on the guy who loaned me that money. Now, enough with betting on boxing, I’m off to the black jack table where the odds are REALLY in my favor…

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1 Comment

  1. Parmod  •  Dec 20, 2015 @8:08 am

    Jack, your view on human progress is one of the dtaeils on which I probably disagree with you more often than not. Progress is often more of an effect of increased energy flows enabling greater complexity, not the other way around. There is a reason that many of the advances discovered by Roman civilization were lost until up into the 18th century in some instances (complex gear trains) and never recovered in others (their methods for making concrete). When the centralization made possible by the increased energy flows achieved by plundering the rest of the Mediterranean basin and beyond was no longer possible, the ability of society to maintain much of the progress collapsed into a dark age. The same kind of cycle can be demonstrated in countless empires throughout history (see Tainter for more discussion on this).My views here aren’t about drinking any kind of green kool-aid . Rather they’re more from exploring sources like E.F. Schumacher and John Michael Greer. If you check those out (specific sources cited in my reply to Insidious, below) you might gain a better understanding of this perspective and that it’s not just some kind of irrational reaction against industrialism.Current score: 0 (Please enable JavaScript to vote.)

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