Uncle to the Rescue

Today's Times indicates that the Treasury plan will include taxpayer-backed guarantees designed to induce private-sector purchases of toxic assets. This "inducement" must be fairly priced. Already, there are billions in vulture funds circling this area. The only equitable arrangement must include a fee for guarantees that gives the vultures a choice between buying a CDO at 60 for a 15% current yield or buying the same paper, government-guaranteed, at 90 for a 10% yield. Uncle Sam has to be mindful that the private market could gang up and offer low prices. $78 billion of our money has already been blown away by Paulson. Time to stop!