Geithner's Plan Is Like an Oil Spill

Twenty years ago this week, the Exxon Valdez ran aground, spilling ten million gallons of filthy oil over 10,000 square miles of Prince William Sound. The Exxon corporation spent the next two decades fighting paying punitive damages to the victims. Announced, by coincidence, on the anniversary of that disaster, the Obama administration bank rescue plan is about as comforting as Exxon's clean up.

The economy's drowning in bad assets; trillions of dollars worth. The Treasury proposes renaming that bad stuff "legacy assets" and hopes to drive up the price by paying private investors to buy them. Go ahead and buy -- the Treasury says -- the taxpayer will take the hit if those toxic assets turn out to be, well, toxic.

Like Exxon, which has gone in for a major publicity make-over, pushing renewable energy in advertising even as it funds global warming denial, Geithner's hoping to persuade investors to engage in a whole new round of protected gambling, the very phenomenon that got us into this mess in the first place. Those "complex derivatives" aren't bad, just undervalued, he claims, victims of public panic. Treasury's willing to push a few cheap hits in the hope that a little free dope will get the hedge funders addicted again.

There's just one catch: those derivatives are bad: bad bets upon bad bets, based on cost-free betting. Traders gambled, reaped the profits in transaction fees and walked away. Kind of like Exxon: profiteering off the good days and reaping the private gain from public resources, and throwing back the cost of environmental clean up on public tax payers.