Buying a Toxic Asset as a Pet

The NPR Planet Money team chipped in their own money and bought a toxic asset, those financial bonds full of mortgages that people might not be able to pay, those creatures that nearly brought down the global financial industry. There are actually people who are trying to put a value on toxic assets--and a song title--so that they can sell them. This is an excellent show if you want to know exactly what a toxic asset is.

Most people are still shaking their fists at the banks, but until folks own up to irresponsible borrowing, we're going to be in the same mess, no matter what regulations are slapped on the financial industry. Follow the toxic asset (who will soon be named) here.

An update on their toxic asset:

Geithner On CNBC

What's a Toxic Asset?

Toxic assets are the unpaid mortgage securities that the banks need to get rid of before they can start lending to each other (that's how they get money to lend to us). Banks are looking at each other, wondering how toxic are your assets? This is a good explainer:

They Really Like Him - Geithner That Is

Tim Geithner has a buyer.
Bond investor PIMCO plans to participate in Geithner's plan that's offering cheap financing to buy up some of the bad assets. I don't know all the upsides, downsides--it's all so complex--but our 401ks are puffier today.
Even Judd Gregg is pleased:

In a news conference with Senate Minority Leader Mitch McConnell Monday afternoon, Sen. Judd Gregg, the senior Republican on the Senate Budget Committee, called the plan “a genuine and sincere effort to free up the credit markets and to try to get some balance into the real estate markets.”

While Gregg said he was unsure if the plan would work, he said the Dow’s nearly 500 point jump today was a promising sign. politico

Gibbs tries to put it in layman's terms:

The Banking Fix: Left, Right and Obama

This is how I understand the banking fix:

The left, led by Paul Krugman, believe all the bank assets are bad because of the tainted mortgage-backed securities, and that the government should just take over the banks and get on with it. Nationalization.

The right, led by who knows who, thinks that banks should be allowed to fail without any intervention.

The Obama administration, led by Timothy Geithner, believes that the mortgage-backed securities didn't corrode all of the banks' assets and that after getting rid of the bad assets, banks can run like they're supposed to. A hybrid fix.

Does anyone really know what fix will work? I don't think so.