Geithner’s Plan Will Tax Main Street to Make Wall Street Richer

[billyoc]

by Dean Baker

The new consensus among the experts who missed the housing bubble (EMHB) is that Treasury Secretary Tim Geithner’s plan to subsidize the purchase of junk mortgages and their derivatives will help alleviate the stress on the banking system. That’s good news.

These geniuses have devised a plan that for $1 trillion (approximately equal to 300 million kid-years of SCHIP, the State Child Health Insurance Program) can alleviate the stress on the banking system. Note that no one claims that $1 trillion spent on the Geithner plan will actually clean up the banking system – that would be asking too much. The EHMB only assure us that this $1 trillion (more than enough to have energy-conserving retrofits for every building in the country) will make things better. Isn’t that enough?

Oh, by the way, some people will get very rich off the Geithner plan. Some hedge and equity fund managers could make hundreds of millions or even billions off the Geithner plan. And, under current law, they will pay a lower tax rate on this money than a schoolteacher or firefighter. Are you sold yet?

One other outcome of the Geithner plan is that the folks who bankrupted their banks and wrecked the economy will be able to continue to earn multi-million dollar salaries. Of course this is necessary, because who else has the skills to run these banks, other than the people who drove them into bankruptcy?

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http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/geithners-plan-will-tax-main-street-to-make-wall-street-richer/

[Double T]

1. Absolutely true!!

The grand economic plan is to save and preserve the wealthy at the expense of the American masses. Until the people are willing to pick up their clubs and torches, it will be business as usual regardless of which party thinks they are running the show. Our economic system can NOT be saved by repeating the same insane behavior that got US here.

[virgogal]

2. Whatever happened to "hope" and "change"? The entire

thing is so complicated most people,like me,don't understand it and no one in Washington gives a damn.

[fujiyama]

3. Something seemed wrong

last week when Ben Stein was saying it was a great plan.

That's when I was skeptical. This basically confirms it...

[DireStrike]

4. Nono, it's part of a chess game.

Just wait and watch. You'll see. Santa is coming.

[Fire1]

5. This is all under the assumption that the economy will not

return to 'normal.' These assets are undervalued and will regain their value when the economy stabilizes. Under those conditions, we, the taxpayer, will get our money back. Perhaps not what we would get if we pay 'market value,' but it's better than being left holding the bag. The only problem I foresee is from the banks artificially inflating the prices of the 'risky' loans, which is a subsidy to the bank.

[eridani]

6. The economy is never going to be "normal" again until American workers reverse the downward slide

--of their family incomes.

[Fire1]

7. American workers can't reverse the 'downward slide.'

Financial sustainability is accomplished primarily through governmental and financial policy. The financial system is central in this process and has worked against recovery. Thus, the Obama/Geithner Recovery plan. Restoring the flow of credit is another major component in the financial system needed to restore economic stability. All of which, will be accomplished.

[JackRiddler]

9. You've got to be kidding...

paying off a tiny fraction of derivatives wish-bets to the counterparties who knew they were busting out a house on fire is going to "stabilize the system"? What, for another round of debt to burden the lucky consumer-taxpayer patsies?

The Geithner Plan is the Paulson Plan, Part 2.

[eridani]

10. Credit is absolutely irrelevant to people who cannot afford to take on any more debt

If you are talking about businesses borrowing to meet payroll, we should legally force banks to make those loans.

[JackRiddler]

8. The economy is never going to be "normal" again. But American workers...

can get out into the street in millions and make things better for themselves, first by forcing an end to the plunder.

[eridani]

11. Yep. Why is just about every other country in the world ahead of us here? n/t