George Soro's weighs in on the bailout.

Terry O'Keefe · Oct 1, 2008

I don't really understand what he's talking about.

Since Tarp [Troubled Asset Relief Program] was ill-conceived, it is liable to arouse a negative response from America’s creditors. They would see it as an attempt to inflate away the debt. The dollar is liable to come under renewed pressure and the government will have to pay more for its debt, especially at the long end. These adverse consequences could be mitigated by using taxpayers’ funds more effectively.

Instead of just purchasing troubled assets the bulk of the funds ought to be used to recapitalise the banking system. Funds injected at the equity level are more high-powered than funds used at the balance sheet level by a minimal factor of twelve - effectively giving the government $8,400bn to re-ignite the flow of credit. In practice, the effect would be even greater because the injection of government funds would also attract private capital. The result would be more economic recovery and the chance for taxpayers to profit from the recovery.

This is how it would work. The Treasury secretary would rely on bank examiners rather than delegate implementation of Tarp to Wall Street firms. The bank examiners would establish how much additional equity capital each bank needs in order to be properly capitalised according to existing capital requirements. If managements could not raise equity from the private sector they could turn to Tarp.

Tarp would invest in preference shares with warrants attached. The preference shares would carry a low coupon (say 5 per cent) so that banks would find it profitable to continue lending, but shareholders would pay a heavy price because they would be diluted by the warrants; they would be given the right, however, to subscribe on Tarp’s terms. The rights would be tradeable and the secretary of the Treasury would be instructed to set the terms so that the rights would have a positive value.

Private investors, including me, are likely to jump at the opportunity. The recapitalised banks would be allowed to increase their leverage, so they would resume lending. Limits on bank leverage could be imposed later, after the economy has recovered. If the funds were used in this way, the recapitalisation of the banking system could be achieved with less than $500bn of public funds.
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Soros

IrishCorey · Oct 1, 2008

he's done well with inside trading, and betting on economic collapse in the past. whenever that guy is around, check your wallet.

oh here's a neat read.. i can't believe the french did something right. i have no idea how i missed this at the time.

http://www.iht.com/articles/2006/06/14/business/soros.php

vicm · Oct 2, 2008

When Soros said this would be pertinent. Obviously before WAMU and Wachovia were sold. He wanted you and me as taxpayers to pay for all their toxic waste so he could then by in on the cheap. Or did I miss something here?

IrishCorey · Oct 3, 2008

No Vic,

You nailed it.

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George Soro's weighs in on the bailout.

Terry O'Keefe Well-Known Member Administrator

IrishCorey Well-Known Member

vicm New Member

IrishCorey Well-Known Member

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George Soro's weighs in on the bailout.

Terry O'Keefe Well-Known Member Administrator

IrishCorey Well-Known Member

vicm New Member

IrishCorey Well-Known Member

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