The Geithner-Summers Plan: Let the games begin

In economics, “games” are not about recreation and fun.  Instead, “gaming” a system is figuring out how to get around the intent and profit by out-smarting the rules.  It looks like the Geithner-Summers plan to bailout the banks and get rid of their “toxic assets” is ripe for gaming. From Jeff Sachs of Columbia Univ via Huffingtion Post and the Calculated Risk:

Two weeks ago, I posted an article showing how the Geithner-Summers banking plan could potentially and unnecessarily transfer hundreds of billions of dollars of wealth from taxpayers to banks. The same basic arithmetic was later described by Joseph Stiglitz in the New York Times (April 1) and by Peyton Young in the Financial Times (April 1). In fact, the situation is even potentially more disastrous than we wrote. Insiders can easily game the system created by Geithner and Summers to cost up to a trillion dollars or more to the taxpayers.

via Jeffrey Sachs: The Geithner-Summers Plan is Even Worse Than We Thought.