Thunder we could have done without

During his press conference last night, President Obama was asked about the next phase of the bank bailout program. Obama deferred the question, noting that Treasury Secretary Geithner would be unveiling the program on Tuesday (today). “I don’t want to steal his thunder,” the president explained.

There was, indeed, thunder today. Unfortunately, it consisted of the stock market losing roughly 5 percent of its value in reaction to Geithner’s announcement of the new bank bailout plan. Financial stocks lost much more.

UPDATE: John has more on the Obama/Geithner plan in the post immediately below. My friend Bill Otis takes, if possible, an even dimmer view:

Obama’s superficial and dishonest treatment of serious problems might work at press conferences, but it works much less well among those we know are paying attention, e.g., people who have their savings on the line.

Today his Treasury Secretary, having presumably by now paid his past taxes, announced the next phase of the bank bailout plan. It turns out that this will involve a largely undefined “public-private partnership” to raise a trillion or so to buy off these “troubled assets” (i.e., the crooked sub-prime loans Fannie and Freddie did so much to push).

The stock market promptly tanked. . . .The MSM is saying that this is because Secretary Geithner’s plan is short on specifics. The truth is that the market tanked because it knows exactly what the muzzed-over specifics will be: The few remaining relatively healthy banks will be forced to buy billions in poisonous assets. In other words, as ever in the nicey-sounding world of “public-private partnerships,” the private parties will get hammered. In this instance, the remaining relatively healthy banks will be dragged under by being loaded down with toxic waste. (This is already happening with Bank of America, which ex-Secretary Paulson pressured into buying the black hole of debt formerly called Merrill Lynch). At that point, Obama/Geithner will declare — guess what! — a bank emergency requiring outright nationalization, as opposed to the sub rosa nationalization that’s going on now.

It’s not that investors don’t understand what Geithner’s plan will entail. It’s that they DO understand. Those who own stock in relatively healthy banks will head for the hills, knowing that what the “public-private partnership” really means is that the private money they have invested will be effectively appropriated to bail out the dying banks.

This would be the moral equivalent of theft in any event, but it’s a foolish theft to boot, since, as they have spent the last year and a-half proving, the dying banks are beyond rescue.

Of course it would NOT be foolish if the point were to pave the way for nationalization, with the added bonus of wiping out relatively prudent stock holders (i.e., Republicans) along the way.

So maybe it’s not foolish. Just criminal.

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