Geithner Announces Another
Aug. 19, 2010 (EIRNS)Tim Geithner's Aug. 17 conference in the Treasury's ornate Cash Room, on "The Future of Housing Finance," concluded that a consensus had miraculously developed for another U.S. government multi-trillion dollar bailout of the entire mountain of mortgage-backed securities (MBS) financial trash, and other derivatives in the housing sectorexactly as London has been demanding of the Obama Administration. The London Financial Times had issued the editorial orders again that same morning of the conference: Damn the torpedoes, print all the money necessary to drive housing prices (i.e., MBS values) back up into the stratosphere.
Geithner represents an Obama White House which wants desperately to comply, despite political mass-strike opposition and the hyperinflationary futility of the policy itself. Days before, Lyndon LaRouche had commented, "Another round of hyperinflationary swindles around Fannie and Freddie is coming."
The first hyperinflationary round was in 2007-08, when a cowardly Congress refused to adopt LaRouche's Homeowners and Bank Protection Act (HBPA), which would have frozen the bubble and stopped all foreclosures instantly. Instead, the country got millions of layoffs and a full-fledged depression collapse, while the cancerous bubble grew.
At Treasury Secretary Geithner's conference, Bill Gross of the giant PIMCO bond fund issued the call for round 2: "Full nationalization of mortgage finance!" cried Gross. "The economy is approaching a cul-de-sac. We need a positive stimulus. Refinance all current mortgages at lower rates. Guarantee all MBS based on this." (Gross had announced last week that his PIMCO would be going bigger into buying MBS!)
The head of Bank of America's mortgage/securitization operations, Barbara DeSoer, had already called for an "explicit guarantee [by the governmented.] of mortgage-backed securities," the super-toxic crap debt which the banks have refused for three years to write down. The amounts involved range from a cool $3-$5 trillion in additional Monopoly money.
Geithner then announced his discovery that "a consensus seems to be emerging" from his conference panel, for a government guarantee of all MBS values. An hour later, Housing and Urban Development (HUD) Secretary Shawn Donovan, running the second conference panel, saw fit to recall that there had been "something of a consensus on the earlier panel for an explicit, rather than implicit, guarantee of MBS."
The only actual consensus emerging in the country is that Obama and all his minions, including Geithner, should be removed from office immediately, quicker than you can say "MBS."