The Geithner Plan makes multiple half-moves in various directions, wriggling around the sharp points of the current crisis, artfully accomplishing nothing except buying time for trillions of dollars in 'dirty assets' to stay off-book where they can desiccate and decompose until one fine day their hallucinatory value shall be paid for in full with genuine taxpayer dollars.
The Geithner Plan spares the people who lost big on these assets from actually losing anything at all. Losing would make them unhappy, and since these losers are the wealthiest 10% of the nation, who own 70% of the nation and its assets outright, and who own and operate the national government as a private fiefdom, well -- these folks are not going to be made unhappy.
Gentle Reader, only two things are happening in all this hoopla.
One, paying back every penny of the investment losses Wall Street's fraudulent ways have caused to our wealthiest 10%.
Over the past two decades, these people got their government to cut Wall Street free of its several New Deal leashes, in hopes of reaping runaway profits, and lo, those profits came pouring in. The Dow hit 14,000, productivity went up, wages stagnated, overseas war profiteering took off, permanent tax cuts, oh my how the profits came rolling in.
The only problem is that these profits were hallucinatory, being based on fraud, waste, theft, double-dealing, destruction of the manufacturing base, and mindless government borrowing.
Thirty million supremely wealthy persons trusted Wall Street gamblers to double their wealth in a decade, and Wall Street did. And then the whole house of cards turned out to be a house of cards.
Nonetheless, these thirty million people who own and operate both the country and the government WILL HAVE THEIR MONEY BACK -- every hallucinated dollar, every paper profit, before they will permit any real concern or care for the other 270 million Americans camping out between the shining seas.
Two, the other thing that's happening, is the stimulus, the attempt to get credit moving again out among the 270 million Americans. Credit not just for the average shopper, but for the companies they work for, so that they can buy factory materials in bulk, so they can ship overseas, so they can import and export, so they can build a new factory and pay it off over ten years, so they can buy new tools, so they can grow by leaps and bounds instead of saving for years to be able to afford incremental progress. Credit is a magic wand that can raise up a hospital or factory or wind farm or any other means of production as if overnight, and then let the profits from the new thing pay for it over a few years of credit.
Without credit, we all get to live like the Amish, and buy only what we've saved and scrimped for.
But -- there will be no flow of credit until the bailout is accomplished, or until it is so double-dog guaranteed written into law in blood oaths that the wealthy 10% are not going to lose a penny of their paper profits from the Bush years that they will feel safe enough to be kind enough to permit credit to flow again.
This is the single biggest heist of national wealth and productivity in the history of our species. It is all going to a vanishingly small percentage of our species.
What should be happening right now?
Nationalize the banking system.
Open up the books of every financial institution in the country to public scrutiny, and mark to market every financial instrument in existence, private or not. Give everything its honest market value, and draw up a balance sheet for each financial institution. They will either be busted or not. This should be made public as well.
Whomsoever is an investor in the busted institutions is busted to the degree that they invested. Just like it said in the prospectus they read before they invested. That prospectus did not say, "Don't worry, the taxpayers will cover any losses, to any amount you can imagine. Seriously -- you just can't lose!" It never said that.
Timothy Geithner and Barack Obama are now saying that, and they are wrong, wrong, wrong.
Any senior management or Board members at busted institutions are out of the industry for life, with no exceptions. They are subject to fines and prosecution if their conduct of the business was criminal or fraudulent or financially irresponsible. There are 20-year old community college graduates who can manage the art of banking without fraud. Let them do so. To those financial wizards who object to this banishment, and wish to continue their careers, they may freely do so as soon as they have paid back the money they lost. It's a job for honest men and women, not whiz kids, not masters of the universe.
Having nationalized the banking system in this manner, it will be a simple matter to move on to nationalizing health care, water, air, food and other things that a nation whose first duty is to its people would consider inalienable rights.
Alas, America's first duty is to war upon other nations for their resources in whatever form is needed. America's second duty is to war upon its own populace, who now need to live more like a Chinese farmer freshly arrived in Shanghai for a good factory job.
Or, as IBM recently offered, like an American laid off from an IBM job in America freshly arrived in Bangalore to do the same damn job for one quarter the pay, 12,000 miles from home.
In previous centuries, this economic state of affairs is what caused pilgrims to board ships and go start their own country. Where that proved impossible, there was a revolution right in the streets.
We are there.
If the investors who lost big in this Wall Street fraud were to accept their losses, they would still be fabulously rich people. The prospectus they signed said they might lose their entire principal investment. They knew it.
If the investors who lost big in this Wall Street fraud were to accept their losses, their would be no need for a bailout, and there would be no credit crunch. There would be bank failures on all sides, and there would be new banks going up on all sides, banks with clean books and new management.
The money isn't gone, it is being hoarded and stolen.
Take it back from the people who are hoarding and stealing it, and let's get to work on reworking America for the people who live here, not for the people who stole damn near everything.