RockefellerJ.P. Morgan in action
Obama’s budget is smart as well as far-sighted.  I wish I could say the same about the bank bailout.  We are certainly not out of the woods on this one.
On April 1st, the New York Times ran an Op-Ed piece by the noble winning economist, Joseph Stiglitz.  (There is an excerpt and  link below.)  It’s about as clear a presentation of the issues involved as I have seen (in a short piece). And it lays out why we should be concerned about the plan, which is no doubt the work of Geitner as well as Summers.  I worry, as numerous do, that the red-herring rhetoric of “nationalizing” the banks shall prevent us from properly addressing the situation.  I worry that Geitner as well as co., on behalf of all of their good intentions, are too adjacent to Wall Street not to be sucked into the myth that “nationalizing” must mean socialism or the appearance of socialism.  (The irony here's that this is precisely the rhetoric that the right has used so successfully in the past to prevent such needed programs as universal medical insurance.)   I worry that this plan is viewed as a shrewd transfer to get the Wall Street/banking crowd on board by Geitner as well as co., but shall end up providing the banks only a temporary boost in liquidity, yielding “profits” that shall once again permit them to laugh all of the way to their posses banks.
J.P Morgan headquarters
My hope is that if the plan doesn’t work, the Administration shall promptly turn around as well as say, we tried, as well as transfer on to a solution more appropriate to the problem.  I am confident that Obama the pragmatist would manufacture such a move.  The question at hand: how hard shall his posses soft ideologues fight to avoid the appearance of “nationalizing” the banks?
Obama’s Ersatz Capitalism (excerpt)
by JOSEPH E. STIGLITZ
THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — as well as taxpayers lose.
Treasury hopes to get us out of the mess by replicating the flawed system that the private sector used to take the world crashing down, with a proposal marked by overleveraging in the public sector, excessive complexity, poor incentives as well as a lack of transparency. . . .
What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains as well as the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess.
So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex as well as nontransparent, allowing huge transfers of wealth to the financial markets. It has permitted the administration to avoid going back to Congress to request on behalf of the money needed to fix our banks, as well as it provided a way to avoid nationalization. 
Posted in 1930s, banking plan, banks, capitalism, Economy, Obama, politics, Pragmatism, Recession, Wall Street Tagged: banking plan, banks, capitalism, Depression, Economy, Geitner, Obama, politics, Recession, Summers, Wall Street