One should question the once again failure of the government plan to buy troubled assets…

With the government announcement this week that once again (twice now) they are pulling the plan to buy troubled assets one has to ponder their real ability to pull this off in the first place! Last week banks were seeking the ability to buy these assets and I think this spooked the government. Much of the media focus on this implied that the banks were trying to play both sides of the fence. I ran across many headlines like: banks want government subsidies to buy their own troubled assets backs, etc. I don’t agree with this position as I think that many banks who aren’t even sellers of troubled assets may be very interested in purchasing assets, particularly AAA-rated securities, that simply don’t fall into the FNMA conforming limit size etc. These can be excellent investments, prime mortgages that are not only credit worthy but also hold undervalued real estate. At some point, we have to let the free markets determine the ultimate success or failure and more importantly we have to take steps to invigorate the non-conforming real estate markets which are widely made up of prime mortgages not sub-prime as so many wrongfully believe. (Last week’s news on banks: http://online.wsj.com/article/SB124338836675757049.html)