Those might be extreme words, but one well known financial writer is thinking just that in relation to the new proposal that is being seriously discussed right now, aimed at saving the banking industry. You might have thought the proposal was bad, but could it potentially cause serious problems for the US economy down the road? To see just how bad Yves Smith thinks the proposal is, read the blog post below from The Economist's View.
Yves Smith is not very pleased with the administration's bank bailout plan:
The Bad Bank Assets Proposal: Even Worse Than You Imagined, by Yves Smith: Dear God, let's just kiss the US economy goodbye. It may take a few years before the loyalists and permabulls throw in the towel, but the handwriting is on the wall.
The Obama Administration, if the Washington Post's latest report is accurate, is about to embark on a hugely costly "save the banking industry at all costs" experiment that:1. Has nothing substantive in common with any of the "deemed as successful" financial crisis programs
2. Has key elements that studies of financial crises have recommended against
3. Consumes considerable resources, thus competing with other, in many cases better, uses of fiscal firepower.The Obama Administration is as obviously and fully hostage to the interests of the financial services industry as the Bush crowd was. We have no new thinking, no willingness to take measures that are completely defensible (in fact not doing them takes some creative positioning) like wiping out shareholders at obviously dud banks (Citi is top of the list), forcing bondholder haircuts and/or equity swaps, replacing management, writing off and/or restructuring bad loans, and deciding whether and how to reorganize and restructure the company. Instead, the banks are now getting the AIG treatment: every demand is being met, no tough questions asked, no probing of the accounts (or more important, the accounting). [...continue reading...]
This post can also be viewed on economistsview.typepad.com.
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