More from Bill Black criticizing the government’s bank bailout and cover-up…this time in a Barron’s interview:

“The scale of fraud is immense. This whole bank scandal makes Teapot Dome [of the 1920s] look like some kid’s doll set. Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama’s presidency. The Bush administration was even worse. But they are out of town. This will destroy Obama’s administration, both economically and in terms of integrity.

With most of America’s biggest banks insolvent, you have, in essence, a multitrillion dollar cover-up by publicly traded entities, which amounts to felony securities fraud on a massive scale.

These firms will ultimately have to be forced into receivership, the management and boards stripped of office, title, and compensation…

Obama, who is doing so well in so many other arenas, appears to be slipping because he trusts Democrats high in the party structure too much.

These Democrats want to maintain America’s pre-eminence in global financial capitalism at any cost.”

The conspiracy is far reaching: add to the actions of the PPT as documented by Zero Hedge to manipulate the stock market using Goldman Sachs and other loyal-to-the government traders in low volume situations,  the big bank’s clear attempt to manipulate their stock prices by making incomplete yet sensational “announcements” about recent profitaility.  There is indeed amble reason to think this scandal could bring down those now in power.

Nobel Prize winning, self-described liberal economist Paul Krugman said on his blog Saturday:

“…it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.”

Basically, Dr. Krugman says the banks have to be taken over in a way similar to the way the Swedish did and we did with our S&Ls and that Geithner’s plan will not be accepted. Krugman refers to Yves Smith’s blog in Naked Capitalism:

“The New York Times seems to have the inside skinny on the emerging private public partnership abortion program. And it appears to be consistent with (low) expectations: a lot of bells and whistles to finesse the fact that the government will wind up paying well above market for crappy paper….Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone’s eyes to glaze over.”

It appears we will have to look harder for a thoughtful supporter of this new plan.  We expect Obama’s press secretary, Robert Gibbs to be supportive…if he can quit stammering long enough.  Sadly, this extremely complex “set-up” is intended to whitewash the fact that if assets move off the books of banks under this plan, the taxpayer is going to pay virtually the entire difference between their current market value and the amount the banks are currently carrying them on their books. As Krugman says, “the Obama administration has apparently made the judgment that there would be a public outcry if it announced a straightforward plan along these lines”, so they instead wrap it up in this dribble for camouflage.  Remember too –it’s the taxpayer who pays this difference in Geithner’s plan, private investors really are just window dressing and  bank bond holders remain completely unscathed! We think the Obamunists have just begun to here the public outcry..