The excursion into philosophy deflects readers from the real issue. Mr. Geithner wants to use taxpayer dollars to keep bankrupt banks in business. In effect, he wants to tax teachers, fire fighters, and Joe the Plumber to protect the wealth of the banks' shareholders and to pay high salaries to their top executives. No readers of this piece would understand that this is the process being described.

Don't you know by now that it is not their job to speculate...no matter how much common sense demands

I know how to increase tax revenues from teacher and fire fighters.

Pay them better.

Joe the Plumber however, he's had plenty of wingnut welfare already this last year.

" Mr. Geithner wants to use taxpayer dollars to keep bankrupt banks in business. " --Dean Baker

Wich ones could be those bankrupt banks ?

Here is 8 banks that receive 59% of the CCP, the remaining going to 309 other U.S. banks. There is about 8 000 banks in the US.

CPP Transactions as of January 23, 2009

Bank of America Corporation
$15,000,000,000

Bank of New York Mellon Corporation NY
3,000,000,000

Citigroup Inc. NY
25,000,000,000

JPMorgan Chase & Co. NY
25,000,000,000

Morgan Stanley NY
10,000,000,000

State Street Corporation MA
2,000,000,000

The Goldman Sachs Group,Inc. NY
10,000,000,000

Wells Fargo & Company CA
25,000,000,000

Subtotal
115,000,000,000

Grand total
$194,177,001,000

Source: page 92 http://www.gao.gov/new.items/d09296.pdf

BTW, the $500K pay cap should apply to all employees, not just 10 or 20 head-office types.

ML just paid out $4B in bonuses. Let's say $1B of that went to people making $2M bonus per year. That would be 500 people. Obviously, capping salaries on ten well-connected people (who can rest assured that after a few years as CFO or whatever, a lucrative trading job awaits) accomplishes NOTHING.

I don't think the useless media has done jack to make the public aware of how small an impact this measure will have on "capping Wall Street payouts."

It would be nice if the Post and the rest of the media would report honestly...

It would be nice to have a small population, plenty of fertile soil, healthy oceans and lots of snow at the top of Mt. Kilimanjaro, but that's not the world as we find it. We, the intelligentsia, are forced to find ways to disseminate information despite the overwhelming power of the corporate news hawkers. That is our most important challenge now, and is far more difficult than electing a President. It's more akin to a genuine political revolution. Our rules of government now come not from some puny constitution but from the existing media structure and control apparatus, which, as we saw during the B*sh administration, can effortlessly override any law, convention or agreement, simply by accepting the new behavior with the pasted-on smile of a news anchor.

"An editorial on saving the banks dismissed nationalization because it would involve the government in running the banks. "

Lehman bros. execs and employees and shareholders probably wish they had a deal that good!

the post should spend more time wondering why the banks need the gov't to run them in the first place.

I guess 700 billion just ain't enough for some people. There's a civil court system in place, let the file bankruptcy.

Geithner and company seem to have convinced themselves that if the government takes over the banks and wipes out private shareholders (i.e. faces up to economic reality) then private capitalists will never ever risk investing in banks again.

Of course, this completely ignores the experience following every previous financial crisis in history -- including, most recently, the 1997-98 Asian one -- which is that there is ALWAYS a fresh line of bloodsuckers, er, I mean, capitalists, eager to take back what the government has decided to reprivatize -- for the simple reason that owning a major money center bank that has been liberated from all bad debt burdens by the benevolent hand of the state is quite literally a license to print money.

Then again, maybe Geithner and company are simply lying, and have basically decided that they would rather bail out existing shareholders, who are their friends, rather than create exciting opportunities for future investors, who may be Republicans.

The larger point is that taxpayers and consumers are going to get fucked in this deal sooner or later. Geithner and company have simply chosen "sooner".

How is a redistribution of wealth if they are giving money back to the rich. They are already rich

To Kyle Clearwod:

It is important to understand that when money goes to the rich, it is called a distribution. It is only when the money goes to the poor that it is called a redistribution !! :D

Heck, why don't we just privatize the Treasury and be done with it?

It has always been my belief that the reason so many people are so stupid is because of the crap they are told by the mainstream media.

Christmas 2008 was memorable for me. My brother, a double major in math and physics, was visiting with his wife and kids. I'm was an art major in college and, at the dinner table, I spanked my brother's ass on global warning, in front of his wife and kid. I printed, from the internet, the 400,000 yr. ice-core data chart and the chart showing how CO2 started going up as the industrial revolution and de-forestation really got under way...and my brother is the Head Master of a high school! Ah, you can imagine my satisfaction as I showed him and his that the facts DO MATTER and that I will spank his ignorant ass if he advertises otherwise. The bad news is that this event had to occur in the first place.

Speaking with my brother, I got served up focus-group-tested double-speak concepts, one after another. He is not the exception, but the rule, in America.

No, Dean Baker, we all are completely screwed if our future depends, at all, on the intelligent input of the mind-controlled, American people

For an alternative to the Washington Post, I suggest daily checking out Calculated Risk and some of the blogs on its side bar. Today, Yves Smith of Naked Capitalism has an excellent and long post about why Helicopter Ben and Bob Rubin's boy toy Tim Geithner are about to buried in the incoming deflationary tsunami that is coming there way. http://www.nakedcapitalism.com/2009/02/steve-keen-roving-cavaliers-of-credit.html

You are right about Calculated Risk. I have a new, pet theory:
the internet is small. The reasons being that a handful of sites are managing this economic downturn very well: Calculated Risk, Naked Capitalism, Mish's GlobalEconomicAnaylsis, Noriel Roubini's "Monitor." In fact, if you go to Mish's site, most are in his "links" section. Of course, we have Stiglitz, Galbraith, Kurtnr, Dean Baker and just a few more economist preaching the word, very few, given the 100's of thousands that are out there. Yes, the internet is small.

Mish has it 100% correct.

"Government cannot really "create" any jobs per se. It can raise taxes and shift private sector jobs creation to government jobs creation (typically a malinvestment), and it can bring production and consumption forward for those jobs that are genuinely needed (filling potholes), but once the potholes are filled, one has to ask the question, "What will we do for an encore?"

So far Congress has thrown over $1 trillion dollars at the problem to no avail. Another $800 billion is not going to do anything but waste another $800 billion."

http://globaleconomicanalysis.blogspot.com/2009/02/employment-cycles-during-recessions.html

I'm sure that someone could show me that I a wrong, but my take on Mish is that he is his own man. He is not an Austrian ideologue, like Schiff, and his "conservativeness" appears to stem from being a shut-in brainiac and, perhaps paranoia-lite, more than from right-wing, group affiliation. Does anyone know this guy?

Of course, his loyalties are to the investors that pay him. I come to Dean to hear from a humanitarian, ie, a person who will not knife you in the heart for your cardboard on a cold, winter night. I'm sure Mish has already done that two or three times.

We should use eminent domain to seize all the banks and convert them to credit unions.

I would snark, but this idiocy with handing hundreds of billions unaccountably to banks with no explanation of how it's supposed to help us mortals, all in great fear of anything which is a real correction of their bankrupt failures, frankly right now it's frightening me.

I got a little snarky about Secretary Geithner in my earlier post, as my emotions got the better of me. Nevertheless, I have to believe his and Summers personal relationship with Bob Rubin, who essentially made both of their careers, has to influence what they consider the acceptable, and that a sine qua non of any plan is the preservation of CITIBANK. By the way, this is the third time in a generation CITIBANK has been saved (first by Volker during the 1982-83 Latin American debt crisis when Brazil defaulted on its sovereign debt; second when Greenspan helped CITIBANK through its bad loans in the savings and loan fiasco; and now). Again, although Dean mentions shareholders, who I guess are getting some value above zero on their investment, as being saved, the primary beneficiary of these programs are the senior management at the big banks (the shareholders, at least those foolish enough to invest long term, being already very much fleeced by management before the taxpayer fleecing began). There is still a lot of denial about the bad loans, especially in places like Florida, Arizona, and California's Inland Empire where the housing bubble was the economy.

There was a decent article in the Washington Outlook section on CEO pay (how it got in, I don't know - the normal crew must have had the week off). One thing not mentioned is that the business leaders of the last 30 years, who have run their enterprises chiefly with the goal of enriching themselves at the expense of the shareholders, employees, and society, all came of age when Ayn Rand and John Galt were the all the rage in the 1960s and 1970s on various campuses, particularly those planning for a business career. As Dick Cheney, who went to college and grad school in the 60s while dodging the Vietnam War, allegedly told Paul O'Neil when O'Neil questioned extent of the upper class tax cuts and the effect on the deficit, "Its our turn now." I speculate that he meant: "We are the creative ones, we are the ones who make things run, its our right to keep all the loot, and we owe nothing to society."

Mish is a Hayek follower and a Randite, but at least he understands that the with the debt-credit engine now going into reverse by 10s of trillion of dollars, that the creation of even 1 trillion in the money supply is swamped.

By the way, there are of course many problems with Randism, as there is with all religion when view from the outside (I am currently suffering through the current Papacy with the hope that it will mean time off in Purgatory.) As an observation, I have always found that adherents to Rand come from upper middle class and upper class backgrounds with very little experience with the deprivations and misfortune (a bad thing happening out of the blue, like being stricken with stomach cancer and 40 and then losing your job, or being hit by drunk driver (no insurance) at an intersection, or being in the infantry near a road side bomb. It always occurs to me, but not to them, that Dabney Taggert is herself a moocher since as the daughter of her father, at least for the first 18 years of her life, she merely inherited his fortune and lived in any comfort and received a education purely through her father's misplaced generosity since should consider himself free of any obligations accept what she merited, and what could an infant, child, or teenager merit? They also state that force is abhorent, but of course, John Galt uses force to kidnap the creative ones of society who deserve all of its fortune so he can persuade them of the correctness of his views. Further, property itself cannot be preserved without force. The police have to be willing to shoot to kill if the bank robber does not surrender. But the true believer does not see this or a thousand other flaws.

Stanley wrote, The reasons being that a handful of sites are managing this economic downturn very well: Calculated Risk, Naked Capitalism, Mish's GlobalEconomicAnaylsis, Noriel Roubini's "Monitor."

I'd add Ritholtz's "Big Picture".

Rick Kane wrote, As an observation, I have always found that adherents to Rand come from upper middle class and upper class backgrounds ...

That's an ad hominem argument. Stick to the fundamentals: to wit, that Objectivism is a joke.

Furthermore, like most (but not all) versions of "libertarianism," it's a form of crypto-feudalism.

As reported on CNBC this morning, the US may force the auto makers into bankrupcy to insure repayment of the government loans.

Hundreds of billions for banks out the window, but we're worried about $25 billion for auto makers? What kind of pension liabilities will be forced onto the taxpayer if these firms go into bankrupcy?

No, Rand and her admirers are far worst than jokes. They demean emotion when recent studies have shown that emotions are how we assign meaning and relative value to our world and things in it. Let that sink in! It has been said that reason alone is the very definition of criminality.

We need to stop buying into the viewpoint that this is an issue of taxpayers vs shareholders. The shareholders of most of the big banks have already lost most of their investment; Geitner's plan as leaked would further erode current equity values. The real fight is bondholders vs taxpayers. It is not enough to talk about nationalization; it needs to be defined. If nationalization means wipe out the shareholders, but cover the bondholders at par, that is a massive, economy crippling burden on the taxpayer and the US dollar. In my opinion, the only possible solution that might eventually lead to growth and preserve some of the dollar's value is to place the taxpayer above the bondholders in the capital structure; no taxpayer cost until all bondholders have taken significant losses.

@Buysider, true the $500K pay cap should apply to all employees but the pay cap has many other loop holes. Any corp. that receives any bailout money at all should have to keep total compensation 500K for all employees and 1099ed consultants. I can still see them getting around that by starting consultant companies. This would have to extend to employees of consulting companies who do more that 80% of their business with bailed out companies.

The real issue is that if the banks assembled all of their "toxic assets" in a single bank vault and if the federal government bought the vault and all of its contents, what would Treasury
Secretary Geitner and President Obama find in that vault when they opened it?

When we find someone who can give a reasonably coherent answer to that question we can conduct a reasonable discussion of merits of the proposals to purchase toxic assets or to bailout the banks.

Until that time, everyone, including myself, journalists, economists, members of Congress and the Treasury, is merely reasoning from a strong point of ignorance. Until then journalists, economists and others should admit candidly that they have no sound basis for any comparison of bailout plans.

Let them(bankers) eat cake! NO BAILOUT! Let them go bankrupt like my business is going through! The Federal Reserve, the SEC and Madoff should all be bankrupted, dissolved, and tried for treason respectively!

"once the potholes are filled, one has to ask the question, "What will we do for an encore?"

The money which is paid to the pothole-fillers creates demand - they now have money to spend on new goods, which have to be manufactured by the private sector. In a recession the pothole-fillers are not hired away from private industry, they are unemployed.

This is not a theoretical matter - it happened during and after WW II. The economy was taken over by the government to make things which literally went up in smoke, but private industry bounced right back after the war - the country was not converted to socialism.

Those who have going businesses like to see unemployment high in the short term because it keeps labor costs down. As Dean often says, it is usually a mistake to attribute philosophical motives to economic players. Of course in the long term unemployment hurts everyone because it drops demand - but if the captains of industry really were far-sighted we wouldn't be in the current situation (or the Depression, or the one before that, etc.).

"The real fight is bondholders vs taxpayers. It is not enough to talk about nationalization; it needs to be defined. If nationalization means wipe out the shareholders, but cover the bondholders at par, that is a massive, economy crippling burden on the taxpayer and the US dollar. In my opinion, the only possible solution that might eventually lead to growth and preserve some of the dollar's value is to place the taxpayer above the bondholders in the capital structure; no taxpayer cost until all bondholders have taken significant losses."

First, I would suggest all readers of this blog to plug Dean Baker as our next Treasury Secretary. Wouldn't it be a breath of fresh air to have someone who is not only qualified to do the job, but is also someone who actually knows the difference between right and wrong?

Having said that, Dr Baker, we the American people, have been getting screwed ever since Ronald Reagan was president. Real interest rates on savings have been negligible to negative under successive Administrations and especially under George W Bush. The Milton Friedman monetarist policy has been disastrous because it justified these negative interest rates for savers while encouraging ever more fraudulent lending practices by the institutions receiving our savings. As the late Dr Paul Nadler, Rutgers professor of finance falsely claimed, "A Few National Big Banks are better than a lot of Small Local Banks." Isn't it nice to know that most of the members (if not all) of the Federal Reserve Bank have drunk the Friedman Kool-Aid?

A few more articles spell it out.

People like Obama, Dean Baker and Krugman make it sound like we've never had a recovery w/o a trillion plus dollar stimulus package.

"Instead of stimulus, do nothing – seriously"

http://news.yahoo.com/s/csm/yhiggs;_ylt=AtyWcwIyPM4oUqxvxbZv1u8DW7oF

"the United States managed to navigate the first century and a half of its past – a time of phenomenal growth – without any substantial federal intervention to moderate economic booms and busts. Indeed, when the government did intervene actively, under Herbert Hoover and Franklin D. Roosevelt, the result was the Great Depression."

Obama's Wealth Destruction

http://mises.org/story/3331

Anonymous,

You are kidding? It was the lack of action by Hoover and the Federal Reserve that resulting in so many people losing their life's savings in banks that collapsed. This time, the American People didn't revolt despite the theft of TARP $Billions by the bankers who caused this mess in the first place.

You are a revisionist creep who is so cowardly that you won't even leave your name.

"You are kidding? It was the lack of action by Hoover and the Federal Reserve that resulting in so many people losing their life's savings in banks that collapsed."

You are putting the cart before the horse. it was the actions of the Fed that helped fuel the Great Depression. then FDR came in with his meddling. the Great Depression was one of the first times the the government acted on a large scale. is it any coincidence that it lasted so long? I think not. the government can't do anything but take from the private sector and give money to the public sector.

why was the banking system so unsound that a reccesion or depression so hurt the sector? why was the simple act of taking money out so hurtful?

the answer is the banking system was unsound.
hoover did try to interfer with the recession/depression.

again, the answer to the problem of inflation is NOT more inflation. that's why we are here. why people don't understand that is beyond me.

when the stimulus fails people like Krugman will say, of course, that the program was too small. really.

from wikipedia.

"These policies pale beside the more drastic steps taken later as part of the New Deal. Hoover's opponents charge that his policies came too little, and too late, and did not work. Even as he asked Congress for legislation, he reiterated his view that while people must not suffer from hunger and cold, caring for them must be primarily a local and voluntary responsibility.
Even so, New Dealer Rexford Tugwell[34] later remarked that although no one would say so at the time, "practically the whole New Deal was extrapolated from programs that Hoover started."

http://en.wikipedia.org/wiki/Herbert_Hoover#Economy

"Key passage from Obama's answer to question one. Nice dig at the FDR revisionists ..."

apparently TPM doesn't understand economics as well as mr. obama.

http://www.talkingpointsmemo.com/archives/2009/02/econocalamity_presser_liveblog.php

alan greenspan did something to thwart the necessary recession and now we are living with the failout. apparently 2001, 2002 and 2003 were too long ago to learn those lessons.

greenspan stoked a housing, auto and credit bubble with his actions, what new and larger bubble will we create now?

my hunch is double-digit inflation.

the faster the economy hits bottom the faster we can recover. interfering with this process will only extend matters.

would housing recover quicker if we did something? no, it would just take longer for homes to reach affordable levels as dictating by the market.

The "toxic" bonds that the government has bought are badly undervalued in the market, and the government will in the fullness of time make money on them.

You write of "value" as though the nonexistent market has meaning. You should look at the projected cash flow on one of these extremely complicated mortgage-backed securities, using whatever fevered, catastrophic economic assumptions with respect to underlying mortage loan default frequency and loss severity that fit your agenda in doing so, run that cash flow through the distribution waterfall, and then discount it to present value based on a risk free return (your default frequency and severity assumptions having been catastrophic, to use a higher discount rate would be double counting risk -- but then again, maybe you would like to, in the spirit of this piece you've written.)

I am sick of the oh-so-wise pontificating on the subject of the financial crisis. This is a crisis not of baanking, but of the seconcary markets' collapse, of the breaking of the link that securitization provided between the capital markets and everyday commercial and consumer finance.

It's plenty of fun to rail at the evil bankers, and they have undoubtedly got it coming, but they really are not the problem, and helping them will only get at the real issue indirectly. At best.

The real problem is how to restore trust in the secondary market. Geithner, on that at least, seems to be more or less on the right track.

A smaller measure that makes lots of sense is to get rid of mark to market, because there is no market to which to mark, no "true value" against which to compare the government's purchases that are exercising you so much, and go to a "mark-to-model" system, at least with securities that are going to be held to maturity.

So nationalize the bankers, blow up Greenwich and the Hamptons, and lynch them all at the corner of Wall and Broad. It won't make any difference. The problem is not a conspiracy, but global fear trumping global greed.

I do not understand how people can be so ignorant, and so willing to show it.

David wrote, I do not understand how people can be so ignorant, and so willing to show it.

LOL! Look in the mirror pal.

How much of your own capital are you dumping into those securities, based on your clever mark-to-fantasy scheme?

> wrote, the Great Depression was one of the first times the the government acted on a large scale. is it any coincidence that it lasted so long? I think not.

Apparently you've never heard of the post-hoc fallacy.

And if you think the "panics" that came before the Great Depression weren't that big a deal, you don't know much economic history.

Well, liberal, since you ask, let me tell you a little story.

In December, there were pools of prime mortgage loans, seasoned, with credit worth borrowers, plenty of equity behind them in home value, and non-existent defaults being sold by regional banks frantic to raise cash in the event of a bank run for 65 cents on the dollar of principal.

Would you buy any?

There is a panic on among sellers, and that is an excellent time to be a buyer. As you will someday look back and see.

Here's the fact sheet the Treasury just released:

http://financialstability.gov/docs/fact-sheet.pdf

"How is a redistribution of wealth if they are giving money back to the rich. They are already rich"

It most certainly is a for mof redistribution, but it should more aptly be called Class War. Geithner is preparing to sacrifice the Treasury for the next great Class War battle. I'm not sure whether *they* can win (since they are sinking so badly) but *we* will definitely end up on the losing side.

David wrote, In December, there were pools of prime mortgage loans, seasoned, with credit worth borrowers, plenty of equity behind them in home value, and non-existent defaults being sold by regional banks frantic to raise cash in the event of a bank run for 65 cents on the dollar of principal.

LOL!

That's one datapoint, and the default rate for prime mortgages is rising.

And if they have "plenty" of equity behind them, they're not typical, because a huge fraction of homes sold during the bubble are now underwater.

What part of "trillions of dollars of nominal wealth have vanished since the height of the bubble" don't you understand? What part of "banks were highly leveraged" can you not comprehend?

"Apparently you've never heard of the post-hoc fallacy.

And if you think the "panics" that came before the Great Depression weren't that big a deal, you don't know much economic history."

are we to ignore the Fed created credit bubble of the because of the post-hoc fallacy? no. we know austrian economics. we know that interfering with the economy adjusting just delays the adjusting.

the only thing really close to the the Great Depression was the hungry 40s. the 1840s. however, it's no coincidence that the depression is seared in our memory and that was the first one the government really meddled with.

they did nothing but prevent the economy from reaching a sound footing. that's why it's seared in our memory.

US economic policy, especially when compared to the trillions of dollars we supposedly "need" to fix this problem, was decidedly hand-offs compared to the period before the depression. why didn't every downturn turn into a depression then? the answer is our hands-off approach.

Dean, I'm a faithful reader and big DB/CEPR supporter, but one of the things that we learn from Dean Baker is that claims like "Mr. Geithner wants to use taxpayer dollars to keep bankrupt banks in business" cannot be defended because we don't know what he wants. An alternative interpretation would be that he wants to be famous or rich or something and he sees a stupid bailout as a means to those ends.

" You should look at the projected cash flow"

ha! prime borrowers? probably in name only. remember when alt-a borrowers weren't subprime and we found out otherwise? projected cash flows mean nothing in this type of housing and job loss environment.

The default rate on prime mortgage remain in the low single digits. And even those that default won't suffer 100% losses, because the underlying property is always going to worth that, but if you want to assume that it won't be, go ahead.

A 65 price is reality, not a single data point. That is an incredibly low price, and is where the banks are being required to mark their assets.

Liberal, you really have no idea what you are talking about just repeating things writen by, or that you have heard from, the equally ill-informed, but don't let that get in the way. It's a free country.

"The default rate on prime mortgage remain in the low single digits"

for now they do. this will hit prime borrowers too. the housing bust is not over.

someday these bonds will be a good buy but for now they are suspect. MER got burned in this area just last quarter.

A lot has been said about the bank bailout...who made it necessary, who benefits from it, why it's needed or not needed, etc. However, the key issue on which to focus now is not this kind of tinkering with a demonstrably faulty monetary system, but with our monetary system itself. That is, as long as we continue to allow banking to be ruled by private banks in America, we will continue to be at risk for bailing out their mistakes and/or greed. How many people realize that the Federal Reserve System is neither Federal or reserved ? Rather, it is a cabal of private banks, the playground of the wealthy, which makes decisions separate and apart from our Federal Government. And, THAT is the genesis of the lack of oversight which nurtured the current crisis. The Constitution clearly states that monetary policy is the purview of the federal government. Why, then, has it moved to this PRIVATE group? Check your history and you will find that the giveaway began in 1913, and solidified in the 30's, during the Other Depression. Did you know that a prime cornerstone of John Kennedy's administration was to correct this? That he had issued an Executive Order to restore monetary policy to the control of your Federal Government? That that Order has never been rescinded...merely "overlooked" in the wake of his tragic death ? Conspiracy theorists take note. Think about how our economy would look if only the Federal government ruled the flow of money, credit. For one thing, they wouldn't have to pay crippling INTEREST to the Federal Reserve Bank ( a private institution) on loans they made to pay government's obligations. The middle man would be cut out...and along with him, the dangerous games these folks play with YOUR money. Check Utube to see what Dennis Kucinich has to say about this. If there is any good news in the current depression, it is that now we have an opportunity to correct this unConstitutional giveaway. If we don't act, it's only a matter of time until Private Untempered Greed puts us back in the same place we find ourselves today. And, with trillions of dollars of debt, this could be the straw which breaks the back of this great nation. This is a brand of Capitalism which just doesn't work. The Federal Reserve System is the quintessential foundation for this now defrocked brand of Capitalism. That is why it must go in order for us to build a system--Capitalism or otherwise--which is Constitutional and accountable. Your vote will never throw out a Federal Reserve banker, but it could oust a Representative who doesn't take care of your money. If there are any banks to be bailed out, they should be OUR banks!

"he wants to tax teachers, fire fighters, and Joe the Plumber to protect the wealth of the banks' shareholders and to pay high salaries to their top executives."

That COULD be true IF Obama plans to keep the tax burden as it is now.

However it is also possible he wants to save taxpayer's saving and then pay for it later with a huge boost in taxes on the wealthy in which case the wealthy would be paying for the saving of the banks.

Honestly I don't know which it is but the later is certainly possible. who pays for it will be determined by the future tax burden policy not today's.

Good post. The part of the "bailout" that has me most angry is the level of deception used to sell it, especially trying to hide the fact that everything that Paulson, and now Geithner, have tried to do is to hide the fact that they're trying to overpay for bank assets.

However, it is worth pointing out that there are some real complexities in nationalizing a bank. Specifically, a bank like Citibank has a lot of liabilities on its balance sheets. Some, like insured accounts, will need to be repaid. Others, like normal corporate bonds, probably make sense to repay with a small to moderate haircut, just to minimize the hit to bond funds (like the ones I own that I thought were probably relatively safe). And others, things like synthetic CDOs based on selling credit default swaps, should be so obviously risky that they get mostly wiped out.

I'm only partly kidding about the unsecured creditors. Realistically, I'm sure that an argument could be made that they should be wiped out as well -- people should do more diligence on the organizations they loan money to. But a lot of relatively unsophisticated investors probably thought that being a regulated entity, buying a bank's bonds was a relatively safe bet, and it would be nice if they weren't completely wiped out.

بنت">http://www.sa-girl.com/city/1.html">بنت جده

Thanks for making this interview available.
http://blog.cicurug.com/stop-dreaming-start-action/

So... meh. this blog post is the first I've heard about the issue, and based on it and reading the Politico article I'd say it's the kind of thing to ask questions about (if Calderone didn't already know that there are a lot of off-the-record list servs around DC like you say, which come to think of it would be a big thing to be ignorant of), but the answers aren't newsworthy. Smoke but no fire.
I just hate seeing "leftists" act like William F Buckley and the National fucking Review. This is why the left has gone to shit, too many damn rich kids and their summer-camp habits brought into the political arena, instead of actual organizing.

Honestly I don't know which it is but the later is certainly possible. who pays for it will be determined by the future tax burden policy not today's.