Geithner’s Treasury Plan & its Impact on the Housing Markets

Here is what the Treasury Plan as proposed today by Treasury Secretary Tim Geithner can optimally do:

1. The Treasury Plan provides financing and essentially subsidizes private investment of toxic assets. Investment banks like Goldman Sachs and Morgan Stanley now have the opportunity to package their investors into purchasing these asset pools under an auction system.
2. Once Goldman et al have their investor ducks in a row, they will hold power to purchase real estate en masse.
3. When Goldman and other investor groups start gobbling up large groups of properties, the public will see the markets turning and will realize the buying opportunities that now exist in today’s market (with low interest rates and depressed prices) will soon disappear. Buyers will finally get off the fence and act.

That is one reason why the Dow is up almost 500 today.