1. To stabilize the system and restore confidence in our markets

The first point is that to stabilise banks only stops the bleeding of credit that is visible.

It doesn't stop the internal bleeding of the shadow banking system of Investors which was in fact largely responsible for inflating the Bubbles in property (deflation well under way) and private equity (just beginning, and with a knock on effect on employment and hence on property....)

European Tribune - MLECTARPPPIF, Same Story

And banks will be given - yet again - capital that they should lend out again. Except that they have every reason to hang on to whatever capital they can and avoid lending.

Second point is that in fact, they don't lend out capital. They create credit on the basis of it.

They are avoiding lending because they see very few credit-worthy prospects due to falling asset prices, and borrowers with increasingly rocky prospects.

This reluctance will continue until asset prices and employment stabilises, and we have  along way to go on that IMHO.

European Tribune - Comments - MLECTARPPPIF, Same Story

3. To get financial markets working again, we will create a new Public-Private Investment Fund which provide government capital and financing to leverage private capital to buy up the "toxic assets" that are dragging down lending

Thirdly, I've been advocating a PPIF for a while -but not exactly what they have in mind.

1. Create First Toxic Bank LLC

2. Transfer all assets and liabilities to a Custodian member of the LLC (the local Fed?)

3. Put all the shares in First Toxic Bank Inc into trust on behalf of the management and staff. This is the Manager member of the LLC

4. Finally, existing shareholders and government money as necessary become the Investor member of the LLC, in return for transferring assets and liabilities to the Custodian.

Defaults are shared proportionally between the Investors

So that if private investors had (say) $5bn nominal share capital, and the government puts in (say) $15bn, then losses would be shared 25%/75%.

If new capital is needed, it then simply dilutes existing capital proportionally.

European Tribune - Comments - MLECTARPPPIF, Same Story

4. To keep people in their homes and curb the housing crisis, Treasury will work with the Federal Reserve to commit $50 billion to reduce monthly payments and establish loan modification guidelines for government and private programs.

Finally, people get to stay in their homes through the use of "Unitisation", not debt forgiveness or refinancing. We must change the quality of the financial obligations, not the quantity.

ie transfer distressed properties to the Custodian; set affordable index-linked rentals; divide the resulting pool into Units, and simply sell them to pension funds.

For Occupiers it's a new form of "rent to buy"; for Investors it's an index-linked, property-based, low risk (because "affordability" = "certainty", by definition) investment.

Right! That's sorted out the US property market, what about energy? ;-)

"Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky