Mr Geithner presenting the details - and the markets like it. I am not sure I do.

*The new plan to bring relief to "toxic assets" - will it work?
It depends on the purpose.

-If the purpose is to get "toxic assets" off the US banks balance sheets, it seems it could run into difficulties as only the banks truly "desperate" for capital might come forward. The bidding process for the private sector seems to be structured in such a way that the private investor will pay for a little bit over 7% of the initial investment no matter what they bid. With yield levels already very low, this would be an additional reason for private investors to be cautious in bidding for assets on offer. I doubt whether this will then help US banks to get recapitalised. However, it will establish a market price level. I would guess this would be the primary purpose.

-If the purpose is to force US banks to mark to market their balance sheet assets, it might be quite efficient as market prices will get established. However, the risk is high that this will trigger further¨recapitalisation needs, adding further supply to the market. With many influencal heavyweights in favour of no mark to market whatsoever, I would guess this is just a spinoff, although this would be a real way of getting to grips with the banks problems.

There is also the question of how these assets will be valued once they have been bought. So far I havent seen any detail on this. It is quite important and a question that need to be answered. Will be interesting to see whether this is also in place or not.



So far the stock markets have rallied and riskaversion continues to fall. This might very well continue. However I am wary of setbacks to this plan. Mr Geithner is hanging by a loose thread and if this latest plan would somehow not be deemed sufficient in detail or workability.,he is likely to have to go, creating turbulence and uncertainty in the process.

Positions;
I have closed my short Sek vs Eur, short Try, Pln and Huf.
Long basket of US banks stocks.
Long gamma in Eur/Usd, Eur/Jpy.
Long Nok/Sek.
Long Gbp/Usd, Gbp/Chf.
Long Oil, Short Gold.
Long Gold miner stock IVN.





As always, good luck




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