Up until now, each one of these precious op-eds has offered only damning criticism of Treasury Secretary Geithner. But today, Roubini, a cheerful person with a few close friends and eclectic group of friends, sounds positively glowing on the subject of Geithner's new bank plan thing that no one understands (besides Nouriel Roubini):
Secretary Timothy Geithner's new toxic asset plan is a serious step in the right direction in that it creates a public-private partnership to buy the troubled assets of financial firms - in other words, to do the necessary cleansing. Up until now, with all the government bailouts, the financial system has been barely treading water. With this plan, it will still be a hard swim, but, at least, there is a path to shore.
We're saved! Crisis over! That's what this means, right?
What happens if removing toxic assets from a bank's balance sheet at near-market prices shows it is effectively insolvent? Then we will have to face the elephant in the room. We may then have to start asking, "Why keep insolvent banks afloat?" And having asked that, we will have to search for ways to manage the ensuing systemic risk.
This plan is marginally better than nothing and perhaps the best that could be hoped for given the current political situation and the rank idiocy of everyone in congress, Nouriel Roubini totally <3's Tim Geithner!