The normally reserved Tyler Durden’s outburst of contempt for miscreant Tim Geithner echoes my own determination that the useless ass-weed be condemned to a LIFE SENTENCE of community service in Afghanistan. But then, our socio-economic policy here in the U.S. is such a bizarre mutation of socialized corporatism … it escapes my vocabulary, if not the current lexicon, to describe it.

The proposed policy is essentially a subsidy of the TBTF banks to the disadvantage of the smaller, regional ones, as the cost of capital for a bailout bank will approach $ZERO$ due to an implicit, perpetual US government guaranty. An analysis by the Center For Economic and Policy Research has quantified the funding differential as one of 49 basis points, which translates into:

 –a bank subsidy of $34.1 billion per year for all banks with more than $100 billion in assets. Therefore, a substantial portion of profits is essentially a redistribution from taxpayers to the banks, rather than the outcome of market transactions.

Why don’t we just move the White House to Vegas where it belongs and install Wall Street into Capitol Hill, where it already is? What this essentially translates to is that the American public is mandated to provide TBTF bankruptcy insurance for the largest banks in America. Regardless of how such bankruptcy might come about, and regardless of the degree of fraud, collusion, corruption or malfeasance. The center has simply monetized the value of the public’s guarantee, so that we can better undertsand the cost of TBTF.

I think we already knew this, it’s just another way to look at it. The only way to collect your premium for this insurance protection service, which you are mandated to provide, is to take your chances investing in their stock. Either way, we pay the bancruptcy insurance claim when they fail. So therefore … their biggest incentive … is to fail.

We’ve already abdicated national sovereignty to the banks, and now we’re setting them up to finish off the job of sovereign default. TBTF – a secret embedded message to ”Thank Barack This Fall” from Barack to the new owners of the World.

But there is no design here, this type of thing simply occurs naturally, by coincidence. There’s no conspiracy here. These aren’t the criminals you’re looking for. Move along … move along …

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