The good news for ordinary American taxpayers just keeps coming. Monday's formal announcement of Treasury Secretary Geithner's oft floated It-Ain't-Really-a-Bailout Plan thrilled Wall Street.
Why wouldn't it? Not only will it turn the losers into winners at the rest of the country's expense. It will create a brand new game for the fine folks that gave us those other great games, like Credit Default Swap.
If you don't have the time to figure out how they got in our pocket again, here's a short explanation.
At the heart of Geithner's plan is the so called "partnership" between private and public investors. If you don't have a program, fat cats are the private, and the taxpayers are the public part. And what a partnership it is.
The fat cats put up thirteen percent, (who in the world came up with that lucky number!) and then we loan 'em the rest. Then they buy toxic assets from banks that want to sell at an auction of some kind. If the mortgages that underly the securities they buy pay off, the fat cats win.
If they don't the fat cats lose their little piece. But then we lose the big part because these are no recourse loans we've made. That means we can't go after the fat cats to repay us.
So there you have it, the upside for them, the downside for us. What a deal. The boys at Enron couldn't have thought up a better off the books scheme. And we're their partners! But it ain't a bailout.
Think about it a little more. Who's bidding at this auction? Well you can bet a lot of the folks that are holding these toxic assets, or their agents.
Why? Because if they bid the price of their toxic junk up to what they're carrying 'em on their books for (or more), bingo, the most they can ever lose is the thirteen percent. They're looking at losing a lot more if they don't bid 'em up.
And as a bonus, they get the cash we put up now. Makes coming up with their little piece pretty easy, huh?
So there you have the Geithner Plan in a nutshell.
Bail the fat cats out of 87% of their problems and kick the can way down the road, and hope the taxpayers won't remember they bailed these guys out and gave 'em a big shot in the arm at the same time so they can buy new planes, redecorate their offices and pay themselves some more bonuses.
Oh right; they're going to use the money for new loans to folks who can't make their car payments, pay the mortgage and cover the minimum on their credit cards.
This is nothing more than an elaborate "Hail Mary" play. Maybe, just maybe the economy will miraculously recover. Joe the plumber and all his pals will be going back to work right a way.
And hopefully inflation and deficits won't swamp the sinking ship of state while they're frantically bailing.
Don't you just wish there was a program like this for you in this Obamanation?
