Toxic (Mortgage Backed Securities) Assets

Wall Street was full of smiles today with a near 500 point, 7.5% rally! Most of the rally was because of Treasury Secretary Tim Geithner's release of "bad bank" details. Some was due to the 5% increase in existing home sales .... but 50% of the homes sold were short sale or foreclosed homes. And some was due to short covering of stocks.

Paul Krugman, 2008 Nobel Prize winner in Economics thinks Geithner's plan is a recipe that can fail as it emulates the same path paved by his predecessor Henry Paulson. But when quizzed more he admitted that his thinking may prove wrong if the spending increases as a product of credit flow. Some of my bank related stocks of Indian companies rallied as high as 18%. They are however down by 50% from a year ago.

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