Time for the USA to change its national bird.

US Treasury Secretary Timothy (doggone, I forgot to file my taxes!!!) Geithner announced a plan to set up a government and private investor partnership to buy up to $1 trillion+ (that's 12 zeroes and 4 commas) worth of troubled assets from the nation's financial firms. In Wall Street jargon this is known as a vulture fund. Since the distressed securities involved are close to dead, this moniker is very fitting, even explicit. Vulture fund investors take the risks involved with deeply discounted securities in hopes that the investments will eventually recover and then be sold at a profit. The biggest risk for VF investors is the market is right about the securities and they are wrong. Most VF investors minimize this risk by researching the companies in the VF to find out what the odds are of a recovery. They also make certain the fund is well diversified so that one failed security will not wipe out any hopes for future profits.
I just do not see how this $trillion+ vulture fund will work. The hope being that trading out these bad debt instruments with money or better debt instruments will encourage the firms to start lending to consumers and businesses again. First, where are the private investors going to come from? How many people will buy into the notion that a portfolio of mortgages issued to people who were not expected to afford them when they were issued has the potential for profit? Not many, that's for sure. Most investors would not touch these portfolios unless they were buying them at pennies on the dollar or if the government were to guarantee the investments in some way. (remember Bear Sterns, AIG, Citigroup, GM, Chrysler, Fannie Mae,Freddie Mac?)
Secretary Geithner's announcement was given a thumbs down response on Wall Street as investors voted with their wallets and sold off a lot of stocks. This in turn led to declines in world stock markets as well.