Bombshell: Major Player Disses Geithner Plan

Ray Dalio of Bridgewater Associates has written a letter to his investors telling them that Bridgewater will not be participating in Treasury Secretary Geithner's recently announced Private-Public-Partnership for toxic assets.

Maybe its because Dalio managed to build his $71 billion in assets management firm the old fashioned way, one investor at a time, rather than through crony deals with D.C. insiders, that he has chosen to speak freely about Geithner's plan.

In his letter,titled, Why We Decided Against Buying in the PPIP and Why We Doubt That It Will be Broadly Subscribed, he wrote:

The managers are clearly in a conflict-of-interest position because they have both the government and the investors to please and because they will get their fees regardless of how these investments turn out.

Get that? Any who participate, like say the Carlyle Group, who then become one of the managers, will make money even if the funds don't. That's what the huge $10 billion to play hurdle that Treasury set up is all about. It is to limit the inside players and force anyone else who wants to invest to go through the insiders, who will collect management fees from day one.

Here's NyPo reporting more on what Dalio wrote:

"The managers are clearly in a conflict-of-interest position because they have both the government and the investors to please and because they will get their fees regardless of how these investments turn out," Dalio wrote...He also questioned the political risks that the program's design could create, saying the limited number of managers "raises possibilities (or at least perceived possibilities) of them colluding because they all know each other."

And so regardless of whether the investments make or lose money, "there will be reasons for politicians to complain and to focus on the five winners to see how they 'abused' the system," he wrote.

Dalio's criticism of the program is sure to raise eyebrows, as his firm is one of just a handful that would have likely met Treasury's requirements for participation. What's more, Dalio is widely regarded as an influential expert, and recently was named by Alpha Magazine as the fifth-best money maker in the hedge-fund world, behind George Soros.

Bottom line, as Carlyle Group's David Rubenstein told me, "The devil is in the details." Dalio has dug through the details and found the devil--which, if they are named a manager, may be Rubenstein's Carlyle Group.