3/22 A good explaination of the toxic waste plan:
http://tinyurl.com/cpsemy (Economist's View)
\- it is not clear to me there isnt some possibility of
the treasury buying a "lemon" portfolio. to put in in
terms of the EV article, say the govt comes in to buy
half the cars on the lot, but the lot owner has some small
ability to guess which are the "lemon" cars and disproportionately
dumps those on the govt. the scenario reasonable points out the
purpoe of the intervention is to prop up the community with
the car dealership, rather than the car dealership itself,
but as we know the car dealership may have an abiliy to tilt the
govt to make other decision in it's own favor. what was good
for <company X> might be been OK for america, but they arent
the same ... and in some short run cases, when taking about
certain decionsmakers it's not clear their objective function and
social welfare outcomes would even ahve the same sign.
\- We have now learned the words LIBOR, MORAL HAZARD and CLAWBACK.
Here is the next word: ADVERSE SELECTION.
\- oh, in addition to the LEMON PROBLEM, i could also see
a BARBARIAN AT THE GATE type scenario ... remember where
the people seeking to LBO a firm could hire current management
to advise them [how is this even legal? james suroweiki
has a good discussion of this, some time in the last two
years, i believe]. i could see a cabal of bank executives
put together a special purpose hedgefund to cherry-pick+
asset strip their firms ... sure this would have some
upside to the tax payers while they would massively
benefitting from their leveraged play, but then when the
companies are left with post cherry-picking LEMONS, the
govt will have to go out and bail them out again
... at which point these executives will no doubt get
golden parachutes and leave. as we can see from AIG
... Libby and Greenberg earlier, being a 7/8/9-digit
CEO doesnt mean you cant do some mean you cant do
some moonlighting: http://tinyurl.com/cma28w --psb |
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