Kinsley: Obfuscation is the Point of the Geithner Plan

Finally, someone from the establishment media (aside from Paul Krugman) speaks the obvious truth about the Geithner giveaway-to-banks-and-hedge-funds-and-private-equity-at-taxpayers'-expense-orgy: it is deliberately opaque, so as to mask how large a subsidy it is to the financial sector. Just as our erstwhile wizards on Wall Street seem to create intentionally abstruse financial instruments in order to keep the masses from questioning their financial hanky panky, Kinsely argues that the difficulty in deciphering the exact workings of the Geithner public-private plan seems similary motivated: to keep the public out. Indeed, Geithner has merely recycled Paulson's TARP idea of buying up toxic assets, which was rejected for being too transparent a giveaway to bankers, and added an extra step - launder the money through hedge funds and private equity firms. Perhaps the success of keeping the identity of AIG's counterparties secret for six months inspired this new scheme. Geithner has explained that partnering with these financiers will tap into the "expertise of the market" in pricing these so-called toxic assets, when in fact, this amounts to passing out lottery tickets to hedge funds and private equity firms, as they siphon off a percentage of any potential gains from the bailout. And, of course, public money will continue to flow into the banks, except this time via hedge funds and private equity firms instead of through AIG. This is the coup de grace of our kleptocratic system: everyone on Wall Street wins, and everyone on Main Street loses.

Of course, once it becomes clear that already rich financiers are becoming even richer thanks to the largesse of the Treasury, there will be public outrage that could potentially dwarf the AIG bonus flap. Maybe then our political class will pay more than lip service to the righteous anger spewing over the transfer of wealth from the masses to the politically connected who have brought the system down.