Not to start a food-fight with Duncan (I’ll probably see him later tonight and I don’t want to wrestle), but he didn’t address my points. I really made two points.
1. The Geithner Plan is going to buy up AAA (or formerly AAA) rated assets. So, that’s a subset of the total shitpile. While I acknowledged that the AAA-rating wasn’t worth a damn, it also means that we’re not auctioning off BBB-rated subprime crap that probably is truly worthless.
2. That one of the savviest investors in the mortgage-products business is already buying AAA-crap without all the government sweeteners because he thinks it is severely underpriced. (Of course, as SFHawkguy speculated, it could also be because he’s anticipating this government intervention that will jack up prices at least temporarily).
In response to these two points, Duncan insists:
…the issue is that they aren’t worth nearly as much as the financial institutions are pretending they’re worth.
In philosophy, that’s called begging the question. I’d like to see Duncan at least address the meat of my argument here.