Stupid is as Stupid Does
There is no real details as yet on the Resolution Trust Corporation (RTC) plan that maybe, might be in the works as reported by that pillar of integrity, CNBC. While the talking heads ( think Maria Bartiromo) are almost orgasmic with their excitement, think one second about what this means:
The RTC takes on bad debts, thus removing them from the books of banks;.
The bad debts now reside at the US treasury;
Somehow some way this ends the credit crunch
If a reader can make a reasonable case how that works, leave me a comment, I am puzzled.
In addition, the US is now in the works of banning all short selling, just as the British has done. Why not just stop all trading on bad days like Russia? Why not just put a floor under stock prices like Pakistan?
We are quickly going over the deep end here. Here is one comment I lifted from the Yahoo Washington Mutual (WM) message boards tonight:
Title: Government To Take On Bad Bank Debts
Body: WOOOOHOOOO! We are off to the races tomorrow! Up day ahead!
So this moron is excited about the US government (his money) taking the Billions 9Trillions?) of bad debt onto the books to allow insolvent banks to do.......just what exactly? This is the kind of lunacy that can drive a man insane.
I will point you towards two pieces tonight that have the best edge on the situation. Think carefully while you read them.
Mish-Sharp as always
He may be the best out there, and he has a short, but sharp thought:
No excerpt, read the whole thing.
Barry Ritholtz is also brilliant and he covers all the bases tonight:
Again, no excerpt, read the whole thing. Now.
Tomorrow will be interesting to say the least. I wonder if at some point anyone out there is going to wake up and realize how the average person is getting it royally in this deal. No vote, no say, just a bunch of clueless fools grasping at straws pushing the limits of debt possibility at our expense as some kind of crazy experiment. Something must be done. I doubt anything will.
Have a good night.