Publicprivate investment program launched by the U

It too fast consoled of failure that shake last Thursday 25 March the British Treasury in London. But with an argument that, to have easily convinced the international financial community, is not next to the plate. That day, therefore, the Debt Management Office of the United Kingdom found no licensee for the entire loan in adjudication of securities. The new made shiver Finance Ministers from around the world. And if the stimulus funding became problematic turn And if the almost general distrust turned to flee before the currencies The alert did not last long, because the failure has been attributed to the unique character of these securities offered for sale at forty years of maturity. However it did worry about the poor welcome given to this type of loan. As long as a State is able to consolidate the debt by borrowing the money in the long term, the risk of a major skid is virtually non-existent.

For the same reasons a financial ideology irrational, taught at Harvard, Cambridge or Dauphine , ruling circles had been taken in July 2007 when the case of "sub-prime" turned abruptly to the vinegar. "Public-private investment program" launched by the U.S. Secretary of the Treasury, Tim Geithner, still bears the trace of this initial mistake. They saw it as a marginal phenomenon. What was going on then on the markets was a reversal. Suddenly, the most sophisticated investors including investment banks, which had yet invented the formula ceased to trust an entire class of credit derivatives ("collateralized debt obligations" or CDO). These instruments are considered the most "innovative" financial technology.

However, these so-called "innovations" held to one thing: the belief in the indefinite increase in prices of real estate. The bubble was deflating, it appeared they clog the CDOS and other ABS ("asset-backed security") still the balance sheets of banks which had been trade between them were based on a tour of sleight to the limit of the fraud. This is a Bank, for sale by "securitizing them" credits real estate or other it has made to its customers, the cut in three instalments. Only the third instalment, "senior", which promises a relatively reasonable "return" (say 6 per year) enjoys a very favourable rating: a triple A. The risk-taking from the portfolio of assets are priority assigned to pay the instalment 3 investors. To sponsor the debtors. But, to encourage investors to focus on the second instalment ("mezzanine") and the first ("equity") promise (was) another yields, for example respectively 10 and 30. When underlying cash (to borrowers from base) began to slow, and then decrease, the trick was cutting in turn the second instalment in three subslices which the third has been characterized as of... "senior". There remained more than to convince, what was the General case! the rating to assign to this third agency sous-tranche the coveted AAA label. The quality of the two other "sous-tranches" was automatically enhanced. Since then, other credit derivatives are developed: the CDS (credit default swap"): a casino where you bet on bankruptcy or the non-faillite of such big business. Expanding the single market.

How to assign a value to such assets "toxic" To achieve this where his predecessor, Hank Paulson, had necessarily failed, the Treasury Secretary has devised a parody of market. While the State will provide 90 of the funds for the redemption of the false claims by the public-private partnership, the public power will be in concert with five private professionals.

Thanks very low interest rates, partly artificial growth grew again in the United States since 2003. The investments were poorly oriented: oversized distribution apparatus, more remote dwellings of the place of work. To maintain high profits, it compressed the payroll but encouraged employees to borrow. The banks who have funded this junk capitalism emerge ruined the experience. Geithner sees the problem. The solution, he just summarize: "9 capital, capital, capital." But the capital nine, it is also a renewal of the leaders. Where the incredible penchant bled banks for the status quo. As in France.