The markets for toxic assets are frozen because they’re waiting for their bailout. The commercial banks couldn’t afford to mark their toxic assets down or sell them. Now the feds are going to provide for the banks to get somewhat higher than “market value” prices with their non-recourse leverage, but as Rolfe Winkler points out, who else without access to the funny money will be able to afford to pay the same prices? This newly liquid market could calcify quickly. Thus, the feds will have to pump up all the markets for the next several years to help the hedge funds find suckers to sell this stuff to. Lots of luck. The current market prices are probably entirely rational, looking ahead to the tsunami of rate resets and probable defaults over the next twenty-four months.
This is financial fascism, perpetrated by the New York and Washington financial oligarchy centered on Goldman Sachs. If history rhymes, as these folks bankrupt the country and send the vast majority of Americans into heavily taxed wage-slave immiseration, with no sense of control whatsoever over their country’s government, the oligarchs will be looking for a war to send the youth of America off to fight and die in. Look for that in about ten years. But they may get themselves a revolution instead.
We now know that Barack Obama is no Franklin Roosevelt.
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