TARP’s ‘holding to term’ will please many, but is it just spin?
In my day job I work for a public sector organisation with its own, limited, taxing powers. Our finance guys bought quite a few CDOs flogged by Lehman Bros that, as the world now knows, turned out not to be quite such a good investment. Our finance guys were no match for those from Lehman Bros.
We’ve been defending ourselves since the bad news broke on the basis that we have only suffered paper losses and that, as we planned to hold our investment to full term, it was not possible to estimate what our loss might be. There is, of course, a subliminal message that maybe things will recover and we won’t have any losses at all.
This is the straw Mr Paulson is offering and we are clutching at it. TARP - ‘Troubled Asset Relief Program’ - promises to delay the pain and allow us all to regather during the breathing space. In that way, it is not dissimilar from inflation. After a prolonged period of price rises, even mediocre investments look like they are in the money.
