Geithner's bank plan

Its 12:37 am in Singapore but here I am blogging about the markets - I think I need self control.

The stock market is crashing as I write. EUR, GBP and AUD are selling off.

I think the market hates his plan.

And, this look like classic buy on the rumor and sell on the news move which never fails to surprise me.

Anyway Geithner just gave a speech, and in short, he is planning to put tons and tons of public money to buy up CPs, ABS to improve consumer and business credit flow. I think a trillion bucks was mentioned?!

Another more important part of Geithner's credit plan is the the Fed is planning a fund to mix private capital with public capital to buy up bad assets from banks. TARP 301.

Now I really do not know if there would be private demand for that at this time... and pricing of the bad assets? I think its going to be very hard to do and troublesome.

The market was probably expecting the government to just aggregate all bad assets and keeping in the Fed's attic until better times. Geithner's plan looks like its gonna delay economic recovery because as long as bad assets are lying around, banks (and businesses) will still suffer.

He left off with the impression that the program still has questions marks all over it, pending negotiations with private investors, pricing issues etc etc.

The market will remain confused for the next few days I feel.

We'll see if Geithner will recognised as a maverick at the end of it all.