Wednesday 27th of November 2024
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when the worm turns .....

when the worm turns .....

Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution.

Administration officials said the plan, to be announced Tuesday, was likely to depend in part on the willingness of private investors other than banks - like hedge funds, private equity funds and perhaps even insurance companies - to buy the contaminating assets that wiped out the capital of many banks.

The officials say they are counting on the profit motive to create a market for those assets. The government would guarantee a floor value, officials say, as a way to overcome investors’ reluctance to buy them.

http://www.nytimes.com/2009/02/09/business/09bailout.html?hp=&pagewanted=print

invest in bad eggs?...

‘Vulture’ Investors Eye Bad Assets, but Warily

By MICHAEL J. de la MERCED and ZACHERY KOUWE

Howard S. Marks is the sort of financier who Washington hopes will help fix the nation’s tumbledown banks. Trouble is, he is not quite sure he wants the job.

Mr. Marks is a former banker who became a pioneer in the graveyard of Wall Street. He is one of the biggest players in distressed investing — putting money into risky investments that few others will touch.

But he and other potential investors are wary of the risk in this case.

With its plan to shore up banks that was announced on Tuesday, the Obama administration hopes to entice investors like Mr. Marks, who has $55 billion at his command, to buy troubled assets from the nation’s banks and enable them to make the loans needed to jump-start the economy.

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Would one trust cheap gaffer-tape to fix a half-filled leaky gas drum, with a lit-up matchtick between one's teeth to see what one's doing...? That would jump start the economy with a large KABOOM!... It might make a bigger hole too....