Tim Geithner talked to Congress today about regulating derivities. His most recent PPIP plan to have private equity firms buy up toxic assets with US money completely fell apart because the firms had no idea what is was they were being asked to do.
This current idea of creating standardized Credit Default Swap Contracts with a central clearing and counter party guarantee shows he does not understand the CDS concept at all. The whole point of CDS is you’re charging people to assume risk – if you take the risk out of the contract, the contract has no purpose.
I’ve been undecided if Geithner is a brilliant genius motivated by wrong-headed ideas or an incompetent inexperienced boob who is way over his head. I’m starting to lean strongly to the second notion lately, which is not good for the country. At least when President Obama asks for his resignation, he can blame it on George Bush…. then replace him with someone competent like Maxine Waters.
