That sparkle is fading:
Bridgewater Associates, the $71 billion money-management firm, has come out against participating in Treasury Secretary Tim Geithner’s plan to get private investors to buy banks’ toxic assets — a week after saying it was interested in it.
In an investor note obtained by The Post, Bridgewater founder Ray Dalio gave Geithner’s plan two thumbs-down, arguing that the hopes of would-be buyers probably won’t be met by what the government is offering, especially when it comes to the sale of so-called legacy securities.
In the note, which is entitled, “Why We Decided Against Buying in the PPIP and Why We Doubt That It Will be Broadly Subscribed,” Dalio cited economic and political concerns with Geithner’s Public-Private Investment Program, dubbed PPIP, saying the numbers just don’t add up — at least when it comes to PIPP’s legacy-securities program.
Dalio had problems with the plan because there is very little leverage and the fact that there is to be five managers who have to make the government happy and the investors…all the while they still get their fees.
He also questioned the political risks that the program’s design could create, saying the limited number of managers “raises possibilities (or at least perceived possibilities) of them colluding because they all know each other.”
And so regardless of whether the investments make or lose money, “there will be reasons for politicians to complain and to focus on the five winners to see how they ‘abused’ the system,” he wrote.
And you know that is exactly what Obama and friends would do. “The greedy capitalists” and all that crapola…..and all the while he has Lawrence Summers as his top economic adviser. A man who earned over five million bucks over the past year as a director of a hedge fund.
Now if Summers had been a Republican in a Republican administration this news would be a scandal. But today? It’s *shrug* ho-hum. I don’t have a real big problem with getting input from all sectors of the industry….none at all. But come on. For eight years all we heard about was Bush’s ties to this and that. Big oil, Haliburton, Saudi Arabia….and on and on and on. The left cried and wailed about it constantly.
But now?
Crickets.
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Funny that the earlier reaction from conservative critics was that Geithner’s plan was a sweetheart deal for the hedge funds and a bad deal for taxpayers. And now the hedge funds are saying the opposite. Seems as if Geithner hit the sweet spot with the terms of his proposed deal. Proof of the pudding is whether Treasury can make the sale.
– Larry Weisenthal/Huntington Beach, CA
Larry,
Read Michael Hudson’s article on counterpunch, March 27-29 weeked edition: “The Free Market, Financial Style –
How the Scam Works,” and then see if you still think think the taxpayers aren’t getting screwed. This is nothing but a chance for the banks to get the bad assets off their books without paying for the losses they incurred. It amounts to just another way to transfer wealth from the taxpayers to the elite. What do the taxpayers get out of this? Another credit market bubble! That’s a solution?
Read the complete article here:
http://www.counterpunch.org/hudson03272009.html
Jeff V
P.S. I love the name change from “toxic” assets to “legacy” assets. If the economy continues to crash and burn despite the trillions already dumped in and with what’s being pledged, it will be clear what we mean when – in later years – we speak of Obama’s “legacy.”