[IWE] Galbraith's OpEd on what should be done about the Bailout.

[Ben Tilly]

On 9/25/08, williamoxley@aim.com <williamoxley@aim.com> wrote:
>  My purpose of an artificial floor for  buyout purposes would allow those
> who are afraid to buy these securities put a hard bottom price, the free
> market should be willing to buy these things at above the floor price
> knowing that the risk is measurable, and that they can be sold  at least the
> floor value to the feds. May promote some trading in these things. May be
> well wrong tho

Ah, I see your reasoning.

What I think would happen is that once you name a number, that sets
the effective price.  So Wall St would start trading the securities
for the floor, and then only to the government.  By contrast the
current plan has the advantage that the promise of government
intervention, even when not backed by particularly large purchases,
could drive the prices of currently misvalued securities up
considerably.

Cheers,
Ben