eBay or Zombies?

So Tim Geithner’s latest awful idea works like this: put up $1. The Treasury will double it. Then give you $6 dollars. The only catch: you need to bid on securitized debt, such as subrprime mortgage derivatives.

And you need to be a zombie “primary dealer” like Citi, and you can’t hire foreigners, and…

Still, the idea of an eBay for subprimes operating at a perpetual 85% discount is pretty attractive.

If Tim Geithner is serious about upping the market price of these subprime assets, and Obama is serious about “transparency,” and eBay approach should be used. Any investor who registers should be able to get the same terms as any of the zombie companies Geithner has set up, such as Citi and AIG.

Alternatively, the goal is not to inflate the price of these subprime assets, but merely to enrich the zombie institutions. This would be a raid on the Treasury, and should be dealt with accordingly. If the goal is simply to help zombie firms like AIG and Citi avoid bankruptcy, they should be turned into de facto utilities. This should include a 90% marginal tax on all income of the firms involved in the purchase of the securities, as well as on the income of employees and officers of the companies.

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