Toxic Asset Plan...Today's moves

Today was the announcement of Treasury Secretary Geithner's plan to buy some $1 Trillion in toxic mortgages off bank balance sheets. This purchase will come from the $700 billion bailout program, private investment sources, and FDIC insured funds. With the tax payer taking a majority of the risk if the investments go sour which is a possibility. A typical transaction will go like this: private investor puts in $7, another $7 comes from the bailout funds, and the left over $86 would be covered by a government loan. This is one good step in the right direction and could work out how ever some issues still need to be addressed:

1. How do we price the toxic assets? This was one issue with Republican Whip Eric Cantor that raises some questions. Will the toxic assets be market priced or come at the original price when these assets were taken out.

2. What happens if the funds go sour? Well, Armageddon, this will definately bankrupt the US and could lead to a definite depression.

3. Can the move be profitable for the American taxpayer? Yes, and in the end Obama will become a national hero and we can look beyond this horrid time in our economy.

With all this in mind it seems investors liked the move but I myself am still optimistic on what's going on here. It's a scary thought if this doesn't work but if history repeats itself I believe this will be good for the economy. If you take into consideration the Swedish Banking crisis of 1991-92 we saw a "bad bank" established that bought toxic assets at a discounted price and also had government stakes taken into these insolvent institutions. This did wipe out shareholders how ever but in the end the assets were sold at a profit and eventually helped the Swedish banking system. So what stocks or sectors do you put your money in now?

Commodities- Anything in regards to Copper, oil, steel is a good play right now especially if you are in fear of inflation.

Tech- Tech has been leading the way since this whole thing began and I like the big names: Apple, HPQ, Microsoft, Cisco, and Oracle.

Retail-Big pricey retail is where you want to go because it's investors with big consumption that will lead us out of the recession: Tiffany, Nordstrom, Best Buy to name a few.