Is Obama’s Toxic Asset Plan Another Misplaced Cash Advance?

What's the New Plan About? 

As the government's Toxic Asset Plan rolls out to deal with the present macroeconomic situation, the only question on everyone's mind is whether the stimulus plan will actually work or go down as yet another misplaced cash advance.

The Financial Times has summarized the PPIP toxic asset plan in one line,

"Critics say that would leave the same amount of toxic assets in the system as before, but with the government now liable for most of the losses through its provision of non-recourse loan."

The President's Stand

Mr. President is very sure that this latest attempt to heal the wounded U.S. economy will work. What remains to be seen is how and more importantly, when. American people are tired of the short-term, quick fix solutions thrown at them by the previous Bush government and now this administration. Now, they seek more than just a huge cash advance. There's no headroom for creating any more bubbles to redress the critical problems afflicting the economy.

Stimulating or Averting Plan

A closer look at the Toxic Asset Buyout Plan reveals that matters could get far worse than they are for the world economy at present. The debacle of unbelievable debt pileups for America's leading banks and the crashing housing market still hasn't reached the elusive end.

Obama's $1 trillion Toxic Asset Purchase Plan suggests banks buy the loans that have gone bad or may go bad due to the fall in asset values. This serves as a great opportunity for large banks to clean up their balance sheets but proves to be a risky strategy for smaller, marginally solvent banks. A noble idea, Mr. President, but it might not work. ... click here to read the rest of the article titled "Is Obama's Toxic Asset Plan Another Misplaced Cash Advance?"