Bankrupt Bailout (Editorial in The Nation)

[Apollo11]

Bankrupt Bailout

Editorial
By The Editors

This article appeared in the March 2, 2009 edition of The Nation.

February 11, 2009

Let us hope President Obama has asked his economic advisers if they have a Plan B--because Plan A failed as soon as Treasury Secretary Tim Geithner announced the details. Geithner's speech was supposed to be a fresh start for restoring investor confidence and directing capital to deeply injured banks. Instead, it was a rhetorical catastrophe for the Obama administration. As Geithner spoke, financial markets plummeted; the Dow Jones slid nearly 400 points. Markets aren't always a trustworthy measure of policy, but in this case the skepticism was justified. (...)

What are they hiding? If Geithner had spoken with any clarity, he would have revealed that his "new" plan is basically a continuation of the one that failed spectacularly in the closing months of the Bush administration: Washington intends to deliver vast additional sums of public money to the very largest banks while demanding little in return for the public interest. The Obama administration is adding new wrinkles to a doomed effort, attempting to put Humpty Dumpty back together again. (...)

The predicament is now deeply threatening to our new president; very swiftly he will own the disaster he inherited. We urge Obama to launch an entirely different approach. The fundamental, terrifying fact of this crisis, widely understood among experts and cautious investors, is that many of our largest financial institutions are insolvent. It is not in the public interest to exhaust the Treasury trying to keep them alive. (...)

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http://www.thenation.com/doc/20090302/editors/print?rel=nofollow