http://krugman.blogs.nytimes.com/2009/03/21/despair-over-financial-policy/
Remember I said the Fed was trying to force inflation to raise asset prices, and once prices would rise (if it worked at all) everyone would try to get rid of their assets at the same time out of a lack of confidence and out of a need to make back their losses, but the only potential buyers would be the same people that are trying to get rid of the assets, so they would remain stuck with their assets and as a result deflation would kick in back in full force once more.
Well that won't be a problem if the Government buys all the assets.
You're going to be the last ones to hold the hot potato now, there's no one else behind you to pass it to.
Also I think this is quite timely: as soon as we start to see a rally on the stock markets, the Geithner and co. quickly react by speeding up their plan to buy the assets as soon as possible, probably because if the stock markets continue to rally there won't be as much of an incentive for the government to buy all the toxic assets. The banks will want to dump their assets, at above market price, as soon as possible. The value won't go back up anyway in the long run, they can be bought back later on.
Either way, the banks get a lot of money, they get to live, the US government and tax payers do not. What do the banks care? They'll have their money and still have their businesses, they'll just do business elsewhere.
I'd say don't take any long position on anything once the Dow reaches 8500. The US tax payers will not be able to hold this much debt. They already couldn't a year ago, and there is absolutely NOTHING in the US' future that points to a stronger economy with more talented and better educated people. China has an upward potential in that department, but the US can only go down, and you know the talented and educated people will just go overseas.
