this isn't going to work

the fed's plan seems simple enough. according to the US treasury, the plan works like this:

A Sample Investment In Toxic Assets
Step 1: A bank has a pool of residential mortgages with $100 million face value that it's seeking to divest. The bank would approach the Federal Deposit Insurance Corp.

Step 2: After conducting an analysis, the FDIC would determine that it would be willing to leverage the pool at a 6-to-1 debt-to-equity ratio.

Step 3: The pool would then be auctioned by the FDIC, with several private sector bidders submitting bids. The highest private bid — in this example, $84 million — would be the winner and would form a Public-Private Investment Fund to purchase the pool of mortgages.

Step 4: Of this $84 million purchase price, the FDIC would provide guarantees for $72 million of financing, leaving $12 million of equity.

Step 5: The Treasury would then provide half of the equity funding, or $6 million, and the private investor would contribute $6 million.

Step 6: The private investor would then manage the servicing of the asset pool and the timing of its disposition using asset managers approved by and subject to FDIC oversight Source: U.S. Treasury

this isn't going to work for a whole host of reasons. basically it's a shell game where you take assets from one group, have the US taxpayers take on most of the risk, and give it to another group. you've done nothing to solve the problem. further, while banks may carry the value of the assets on their balance sheet at 100 million, this exercise will force them to mark the assets to something more reasonable (but not the actual cost since only a truly free market mechanism would achieve that).

ultimately, no shell game solves this problem. this problem is jobs. until the job situation is fixed or at least there's a path to fixing it, our economy will continue to decline. it's nice the stock market rallied on the news, but i think when earnings come out in april, we will set new lows.