and artificially inflates values of toxic assets. There are two potential problems and neither is any good:

1) Toxic asset prices are inflated to point that financial conglomerates keep them on their books - ala Japan; or

2) Toxic assets are priced too high for private investors and the Private Public Investment Fund which may make the bailout more costly.

Here is the thing: financial conglomerates can dress up these pigs all they want but it won't change the fundamentals any or even restore confidence and trust.

Cashflow is king and if these toxic assets are not producing cashflow because of loan defaults these securities are worthless.

What is Mark-to-Market and why should you care about the ability to keep toxic assets on the books, overinflating their value.

But note Bill Isaac's argument in favor of modifying mark-to-market. It's to keep the U.S. taxpayer's money in their pockets. Since Isaac's has also heavily recommended RTC from the S&L crisis in the 1980's and had a host of recommendations in order to take over these insolvent banks that didn't cost but around $200 or $300 billion, I think his views should be checked out. He also has "been there, done that" in that he managed the S&L crisis in the 1980's and any idea that beats dumping $1 trillion of U.S. taxpayer money down the throats of Zombie banks is worth investigating.

Of course he and many of the other experts testifying before the first TARP was passed were completely ignored (except to testify) by Congressional leadership.

IBM is now trying to patent their offshoring system that maximizes government subsidies while sending jobs overseas!

http://www.recordonline.com/apps/pbcs.dll/article?AID=/20090330/BIZ/9033...

Cerberus Capital Management has plenty of cash it could use to try to rehabilitate Chrysler if it chose to do so. Instead, it was using the US taxpayer as a chump.

GM is another matter. Although it has been horribly mismanaged (just in the last couple of years have many of its cars become worthy of comparison with Japanese models), you couldn't ask for a bigger example of the disconnect between the treatment of Wall Street and Main Street.

and ya know about the only thing I can think about is how I want Geithner fired immediately. I'm reading the GM debacle and it just terrifies me this guy has his fingers not only in the financial ripoff crises but also the auto industry.

Wagoner, no love lost there, although I am almost positive no one will analyze the constant focus on labor arbitrage, offshore outsourcing and now they destroyed GM and those two are connected .....

but what kind of disaster is going to be introduced tomorrow.

I do know on the financial sector the White House just throws up it's hands and says "oh we can't break contracts, that's illegal" yet when it comes to the auto industry suddenly they can do a few things, especially when it comes to labor contracts.

Like I said, all I can think of is to fire Geithner, Summers, I wish Hillary had won I think she would have been a much better administrator at least and the I don't like Ben Bernanke here either.

BTW, great post, and the amazement that somehow when the U.S. acts the same way so many other countries did which led to massive inflation at minimum, somehow we're just "exempt" is beyond denial to me at this point.

Today Geithner warned S. America (particularly Brazil) against "protectionism".

So, frankly, I'm sorry but I believe Obama has always been part of the problem. I'm not surprised at all by what is going on.

What is surprising is how quickly I see other bloggers, Americans catching on, very quickly.

But how to get non-corrupt politicians is another story.

Look, I think America needs to say "no way in hell" to this labor squeeze and it's like they have hypnotized the US Populist into a bunch of sheep and cattle.

In Europe, they are in the streets protesting in every country by the hundreds of thousands, each country, at the G20 summit.

Check out the link on the "letter to Obama" and see the "song a day" guy who clearly was an "Obamamaniac" during the election. I'd say that typifies the slow erosion to reality which I placed bets with NDD to break in another month.

I literally am seeing now demands from the left Obama fire both Summers and Geithner immediately.

I take serious issue with this for it's the race to the bottom, 100%. They seriously do not have to. If the United States got trade agreements that encouraged U.S. manufacturing and believe me, every other nation does it, one wouldn't be in this race to the bottom on wages.

RO, trust me I truly wish the situation were different.  The specter facing our workforce is a frightening one of third world wages in our country.  It is something we should fight, given that the cost of living is still high.  Saying this, surveying the economic landscape in regards to manufacturing, I see an unfriendly terrain.  You metioned if the United States got trade agreements that encounraged US manufacturing.  The key word was if, which from what I can tell isn't happening.  The fact remains, our Department of Commerce sold us out decades ago.  You are correct that every other nation tries to protect what manufacturing they can, but that isn't the case here.  You can say "we should" this or that, but until the government does something major, I will be a cynic. 

If anything, one wants to force Japanese car makers to meet the UAW on labor costs and increase those wages.

Sadly that will never happen.  I don't think this Administration has the guts for it, to be honest with you.  The President would have a massive fight on their hands from the various (mainly Southern) governors who have these foreign car operations.  For them, it's really an "us versus them" situation, I truly believe this.  A couple weeks back, on CNBC, they had a fellow from some southern business magazine who also served as a consultant to many of these mayors and governors down there. 

He echoed what many down there were saying, that it was an open competition for jobs.  Maybe this is pure conjecture, but I sometimes think that these governors believe in a two Americas idea where there is a zero sum gain.  If its to Michigan or Ohio's benefit, then it can't be for Tennessee or Alabama's gain, that's the thinking. 

Layer on top of this the fact that most of these states are run by a solidly arch-conservative political ideology, then the so-called competition takes on a new level. For many its a war against the unions which are a seen as a benefactor of the Democratic Party.  Eliminate them and you weaken your political rivals. 

The competition resembles one between two countries, where one is willing to accept a lower standard of living just to land the contract.  It would be as if it wasn't Alabama or Tennessee competing against Ohio but Mexico against Ohio.   For them it comes down to costs or at least the perception of it being more affordable to do business in their respective region.  Do you really believe these people are going to surrendur this percieved comparative advantage?

A key reason how lower wages can be paid elsewhere is the costs of housing are much less in many of these emerging spots. Again, the inflated cost of land and real estate can be traced back to the inflated cost of money, in real terms.

It will be a pleasant surprise if his replacement does a better job. But I suspect that Wagoner was the last holdout in opposing a structured bankruptcy. The Administration won't label it as such, but something tells me that's the route they're going. Now correct me if I'm wrong, but the only people who want the union to take shares was the company not the government or any task force. But I still think, sadly, that what we will see is bankruptcy-lite.

Regardless of who replaces him, management (which now I have to include government) has to realize that they need a company that is not for a 12 or 10 million car market but one that is 7-8 million. What were the last car sale numbers, 10 million? Even if the economy improves, folks who used to spend with credit won't as much. I see it here by me, people are keeping their cars longer. Lastly, and this was somewhat alluded to in that article, like it or not US automakers have to meet or beat Japanese automakers' US-based operations costs.