Toxic Man
By: Navin (March 27th, 2009)
On Monday, the markets across the world reacted positively to the Obama Administrations plan to buy out the toxic assets or debts of the banks. For long it was believed that till the U.S banks were burdened with these toxic assets on their books, it would be difficult to pump in money for fresh consumer lending and hence a prolonged recession due to the lack of liquidity in the economy.
The plan had to be big, 1 trillion dollars worth of toxic assets is being bought out through the launch of a private-public investment vehicle. The plan was two pronged. First, the bad loans on the books of the bank would be auctioned off to private investors with an equal contribution from the government and a chunk of the buy out is to be financed by the Federal Deposit Insurance Corporation (FDIC). Here the plan is that eventually, when the economy would see an upswing and if the loans are recovered, then the government and the private investors stand to gain from this whole transaction. Secondly, the illiquid mortgage backed securities of the banks would be sold of to this investment vehicle, which eventually stands to gain on the sale of these assets when the economy normalizes.
To put it simply, every $100 of bad mortgages bought from the banks, the private investor would put up $7 and an equal amount of $7 from the government. The remaining $86 would in most occasions would be funded by the FDIC. The U.S Treasury Secretary Timothy Geithner said it is necessary for the government to accrue so much of the risk, because the alternative is to let the market rectify itself and risk a prolonged recession.
The U.S government felt that such a move was an urgent requirement and had to be implemented on a war footing as the problems they faced were so huge that if allowed to rectify itself then it would take a long long time. The government had to intervene as the banks were slowly dying and the economy was slipping in to a coma. And only the government could have implemented such a rescue plan, as the economic mess that was created out of years of bad lending by the banks were now leading them to an ‘eternal regress’ as far as their balance sheets were concerned.
Such a rescue act forced me to think of an allegory. For centuries the moral fabric of humanity has been seeing depletion. Even the economic crisis today can be pinned down to bad economic decisions on the part of the banks run by management graduates to make some quick money. Moral values of man in every area of our lives, personal or public, have seen a steady deterioration leading to a prolonged recession in man’s moral values.
Just see the condition of man today and I can’t help but put man in the place of these banks who has lost ground steadily against the expectations of a holy God. There is only one person to whom man is responsible for the condition of his soul and that is to God, who is the moral law giver. And it demands an urgent rescue plan for the toxic moral trash that has accumulated, from God himself. God save America and rest of the World!
Just to give you an option I would like to say, that till today there is only one God who has himself up to pay for the moral degradation that has overtaken humanity. Jesus Christ came 2000 years back with the specific objective of taking up the moral liabilities of man towards God. He understood that unless that kind of a price is paid by Him, then man is bound to go in to an eternal moral regress and there was no way that man could have lifted himself out of it. Every other religion and God men were propagating a way where man had to lift himself up through his works and sacrifices. But Jesus Christ alone said that He was proposing a rescue plan, to save humanity, which it clearly did not deserve. Man did not have to pay anything but just believe on HIM.
This news should bring cheer to the world as there is no other way a man can be profitable, eternally!
Tags: FDIC, Obama, Secretary, Timothy Geithner, toxic assets, U.S Treasury