Nine points of logic & reason from Jim Sinclair

Nine points of logic and reason:

1. This article is totally correct in saying nothing whatsoever has been done about the basic problem which is the failure of the OTC derivative. As long as the basic problem is not addressed by true valuation and bankruptcy of the friends of Washington all attempts to whitewash the disaster will in a short time wash away.
2. The problem is how to value the failed OTC derivative properly because we can't use the "zero" word.
3. Because of #2 the US Treasury will guarantee a false value.
4. Since the majority of SIVs will never perform due to bankruptcy in the asset chain, the US government will have to guarantee these at 100% of whatever value they intend to raise money on.
5. Next, the US treasury will have to guarantee and/or provide 100% of the funds borrowed or raised to make this worthless unless guaranteed investment in a pile of miss-valued worthless SIV paper.
6. Yielding the plan as it is now conceived is a useless camouflage of bankruptcy to be paid in via guarantee by the US taxpayer.
7. We need no Bad Bank as we already have a really BAD one called the Federal Reserve. It is stuffed to its own bankruptcy level with all their financial pal's OTC derivatives, also called toxic paper.
8. The majority of dopes and all the financial media will praise this outstanding job of window dressing and whitewash painting as solid accomplishment at last.
9. The media will have done a solid job instructing you that Toxic Paper is the villain, not those that manufactured the toxic paper OTC derivatives and distributed them, now having been bailed out 100% at your personal expense
This is all a Devil's financial brew being moiled and boiled daily in hopes of keeping you all firmly intoxicated.

Geithner to Draw Private Funds to Address Toxic Debt

Feb. 9 (Bloomberg) -- Treasury Secretary Timothy Geithner is seeking to draw investors into the U.S. financial-rescue program, aiming to add private funding as a new component of proposals to address the toxic debt clogging banks' balance sheets.

Aides worked through the weekend to complete the package that Geithner will announce tomorrow in Washington, which was delayed by a day. Aspects of the plan that have been settled include a new round of injections of taxpayer funds into banks, targeted at those identified by regulators as most in need of new capital, people briefed on the matter said.

The toughest issue has been the one Geithner's predecessor failed to address: the illiquid assets that caused the credit crunch. A leading proposal is a so-called aggregator bank, featuring investors such as hedge funds and private equity, that may issue Federal Deposit Insurance Corp.-backed debt, the people said. It's unclear how big a role there'll be for guarantees of securities that stay on banks' balance sheets.

"We have to reach a point where investors and consumers have greater confidence in our financial system," Philadelphia Federal Reserve Bank President Charles Plosser said in an interview. "Without that, these institutions will not be able to attract new capital or be able to fully resume their important role in providing credit."

Stocks flucuated, with the Standard & Poor's 500 Stock Index rising 0.5 percent to 873.20 at 1:03 p.m. in New York. Treasuries slid, pushing 10-year note yields up to 3.05 percent from 2.99 percent.