To: Smiling Bob who wrote (194247 ) 3/31/2009 12:34:21 PM From: MulhollandDrive Read Replies (1) | Respond to listen to the interview on geithner's oligarchs... there are actually banks that are solvent....ENGDAHL: Well, there are two systems. There's a normal banking system, where most banks in the United States are fairly soberly run and conservatively run. They may have some excesses in bad real estate loans and so forth, but for the most part they're healthy banks. They are impaired from lending to normal commercial and industrial and consumers because of the overall jam-up in the banking system caused at the top of the pyramid. The top of the pyramid is where the problem lies. And what Geithner doesn't see in this plan—well, he does see; he says, "We don't go down that road"—is these five or six institutions should be put into immediate government receivership; the management should be eradicated, fired immediately; the toxic assets be booked by the government in these government-owned institutions, in receivership, booked down to zero in net worth. And perhaps in four or five years, when they're sold off in a healthier climate, they'll bring net positive returns from zero, but right now they have to be booked at zero in order to get out of this mess. We have to break the logjam of the credit system. What you're doing with the Geithner plan is essentially what I call throwing fertilizer on a dead tree. These banks are brain-dead banks—Citigroup, Bank of America, etcetera. JPMorgan Chase looks better simply because they have the action on the creation of credit default swaps, and they're doing quite lovely, thank you, by the terms of the previous bailouts of Paulson and company. So this is the heart of the problem; this is what has to be addressed.
