CASH FOR TRASH BANK BAILOUT

I have been following the bank and economic imbroglio closely. Unfortunately, I was busy today, March 23, 2009 and missed some of the better commentators. I did learn that the stock market had a fine day. The marketers like the Obama Bank Plan. I guess that must be a good reason for the rest of us, regular tax payers to worry. If they and the bankers like it, it is probable that we won’t.

Here is how I envision what President Obama’s bank plan seems to be to me.

Think of a busy Manhattan intersection. It’s St. Patrick’s Day and everyone is wearing the green! Drivers have been unwisely spending too much at parties, and high priced drinking holes. They have been swilling too much cheap green beer. Some are driving with revoked driver’s licenses. But throwing common sense to the winds, they have nevertheless taken to the streets in their over sized gas guzzler Cadillac SUVs and Mercedes station wagons.

As we approach the intersection we hear horns blaring and wheels screeching, then a great, loud thump and thunderous crash. Then silence. The eerie stillness is broken only by the sound of steam exiting from smashed automobile radiators, and the tinkling sound of a hubcap rolling unevenly across the hard pavement. As the sirens go off, the vehicle’s drivers exit from their totally wrecked vehicles, unhurt but boozy and dazed. They stumble about the streets near their wrecks in drunken oblivion. From inside the wrecks we can hear the wail of hurt passengers calling out in fear and pain.

In a matter of minutes, a police car screeches to a halt at the accident scene. Sargent O’ Bama steps out of his patrol car wielding his ticket book and his nightstick. But he uses neither. Instead of corralling the miscreant scoff-law boozers and taking their keys away, he helps each one back into their battered vehicles. He kicks back into place a loose hub cap, then closes the gaping doors on the passenger compartments, so we can no longer hear the passenger's moans.

Then resting his arms on each of the driver’s open windows in turn he passes out not summonses, but refreshments and a "free gas" coupon to each driver. With a pat on the shoulder, he blithely sends the culprits off on their boozy dangerous way.

Well that’s how I saw it.

But now read what Nobel Prize winning economics Professor and NY Times columnist Paul Krugman has to say!

See “Financial Policy Despair”Paul Krugman, NYT Opinion, March 23, 2009

Partial quote:
"And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.
It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Let’s talk for a moment about the economics of the situation.
Right now, our economy is being dragged down by our dysfunctional financial system, which has been crippled by huge losses on mortgage-backed securities and other assets.
As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books."

Real all of Professor Krugman's column by clicking on below:

http://www.nytimes.com/2009/03/23/opinion/23krugman.html?_r=1