Were Geitner to use even $100 billion for creation of new banks and even if a 6% capital reserve were required, he would create $2 trillion of new, unimpaired loan capability.
That's right, over time. After all the jackass did commit $500B ($150B more than the TARP balance) PLUS another $500B ("we are prepared to commit up to a trillion dollars to support a Consumer and Business Lending Initiative" whatever that's suppose to entail) PLUS continued risk exposure created by FRB credit facility operations in order to service bad, bad banks' debt load.
10% of that would make a sweet start-up carburator. Diversity is the key to economic and political evolution.
Wall St runs the world, and if Wall St shows weakness the US is finished as a superpower.
Rescuing the little people from ruin is a nice, but optional, bonus.
This is a pasty over-fed finger stuck into a leaking dam, not an attempt to deal seriously with the imminent threat of flooding.
Any other response is - literally - inconceivable.
And the 2009 Nobel Prize for economic analysis goes to... "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
The goal is to protect the financial monopoly owned by Wall St, at - literally - almost any cost.
Geitner and the Big Six banks should comprise the subjects of the first great auto da fe of the clean-up. Then they need to create a significant investigatory and prosecutorial entity to go after all of the miscreants, down to the level of the office managers of mortgage broker offices and the vice presidents of banks that originated and then sold sub-prime and option ARMs in L.A., Miami, Las Vegas, etc. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
If states are already considering going their own way now, what happens a year from now when there's even less money to go around at street level, unemployment is even higher, and there are no obvious prospects for improvement?
There's a point where the cancerous bloat eats the victim to the point where both die. Wall St is a tick which has just popped. Trying to put the flying body parts back together again doesn't seem like a useful pastime.
I'm more interested in what happens next, and how long it's going to take.
It's all about show trials... Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
