Wednesday, Feb 11th, 2009
Treasury Secretary Timothy Geithner’s so called economic rescue plan, announced yesterday, has a three pronged approach to the financial crisis – more debt, more devaluation of the dollar and more government.
In addition to making several blatantly contradictory statements, Geithner revealed that the Treasury intends to stay routed to the same course of action that caused the crisis in the first instance and has since perpetuated and worsened it.
“I want to make clear that I am not here today to ask for more money,” Geithner told Senators during congressional testimony. But, later added, “this is going to be an expensive problem.”
The first prong of the “plan”, if it can be called that, will see the financial system flooded with $1.5 trillion, a vast portion of which will come from the Federal Reserve printing more money out of thin air. The inevitable devaluation of the Dollar that will follow this may be enough to force a complete collapse and spell the end of its reserve currency status.
Second, Geithner intends to spend between $250 and $500 billion of taxpayer money to buy up so called “bad assets” and putting them into a “bad bank”. Essentially this constitutes transferring vast amounts of spiraling debt from the books of the negligent and criminal bankers to those of the taxpayer. Does that sound like a good idea or a “bad” idea?
The third part of the “solution” involves a huge expansion of financing for consumer loans and bank lending programs through the Federal Reserve and the Treasury. Essentially offering more debt to the consumer in the shape of student loans, cars and credit cards to the tune of up to $1 trillion.
All of this, of course, facilitates a massive expansion of the role of the federal government in the financial system.
Geithner left consumers, investors and traders alike asking ‘what part of that plan constitutes a rescue?’
The stock market, propped up for weeks on the expectation that Washington would finally deliver a comprehensive rescue plan, dipped almost as soon as Mr. Geithner began speaking in the morning. The Dow Jones industrial average fell 382 points, or 4.6 percent, by the time the market closed, the New York Times reported.
Geithner chastised the Bush administration and his predecessor, Henry M. Paulson Jr. stating “Policy was always behind the curve, always chasing the escalating crisis… The emergency actions meant to provide confidence and reassurance too often added to public anxiety and to investor uncertainty.”
However, Geithner has critics struggling to find any significant difference between his “sweeping overhaul” rescue plan and the previous Treasury Secretary’s now much maligned TARP program, as he gave no specific details as to how the plan would work, offering only the same muddy generalizations that Paulson did three months ago.
“Many of us were looking forward to a plan that could be presented in a straightforward, clear and detailed way. Unfortunately, that is not what we received yesterday.” Republican Jeff Sessions of Alabama commented.
Geithner is very good at critiquing what went wrong in the last year, but just seems to be perpetuating it.” said Desmond Lachman, a resident fellow at the American Enterprise Institute.
“If the problem America found itself in was too much debt, then how can adding more debt be helpful?” asked political analyst James Pinkerton from the New America Foundation in a Russia Today report.
“The idea of solving it by taking the same pirates who stole the first trillion dollars and saying here’s more money. You look up the word ‘corrupt’ in the dictionary and that’s what you see,” Pinkerton added.
Democratic Congressman Dennis Kucinich commented that “the government has become an engine for taking money from the people, from their pocketbooks and purses and accelerating it to the top.”