No. I don’t think so.
To be sure, his speech was short on details. But in my opinion, Geithner’s got it right. Especially the expansion of the TALF program. For those of you not up on it, Geithner is essentially proposing to bring the securitization process back into the fold, allowing private hedge funds and other financial intermediaries to invest in troubled assets … get 100% of the upside … while potential losses will be guaranteed by the government.
In other words, the Treasury will effectively create a call option for investors to buy on the underlying toxic assets — with unlimited upside, and strictly limited risk on the downside.
This IS going to kick start the credit markets where it counts – by bringing private investors back in.
The decline in the markets, their disappointment, is merely disappointment at the lack of details and a knee-jerk reaction. I have been expecting one more final sell-off, and this should be it. I would look for a bottom to occur soon. We’re on the verge of a multi-month rally.
Also, keep your eye on gold. If it closes above that $929 level I’ve been warning you about, new record highs are forthcoming.
Related Posts
- Bank bailout delayed (02/09/09)
