Twenty years ago this week, the Exxon Valdez ran aground, spilling ten millions 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.
The same commanders are at the helm. As Frank Rich and others have reported, Larry Summers can't admit fault: he helped torpedo the regulation of derivatives while he was in the Clinton administration.
It's kind of like Alaska. Years after the Exxon Valdez belched guck all over the Alaska coast, ruining a fishing industry and bankcrupting a people, the financial industry's flooded our economy with garbage, and we're going to let the ships captains control the clean up?
Ask the Alaskans how well that worked. Not so bad for Exxon, less well for the people and the planet.