Good article. You're saying out loud what so many of us are thinking, that we'll never get out of this without a major shift in culture. Which is probably coming one way or another.

Would you have let GW Bush get away with saying "I don't know"?

Yet another example of Pro-Obama bias. Now that your guy is in office we have to suddenly be so understanding of the difficulties?

The main goals for the Treasury, the President and the Federal Reserve should be (not in order):

1) Restore non-bank lending. It is larger than the traditional bank held loan on their balance sheet. This market has shrunk dramatically since the subprime securitization meltdown. Investors wrongly associated all securitized debt as being toxic. The government can restore this program by creating an insurance program for this debt. They could provide a guarantee of the principal and not the interest. It could be funded by a charge of a few basis points on each security.

2) The government fears an uncontrolled shutdown of the largest banks would lead to a meltdown in the financial system (i.e. Lehman Brothers). This is absolutely true, but not for the reasons most people think. All these large institutions have enormous off-balance sheet items like derivatives, SIVs and other contigent liabilities that have not only market price risks (i.e. FX rates going up or down), but they face a more deadly risk of counterparty risk. In the case of a bankruptcy, only it might turn out the shuttered firm would honor the contracts they held that were "in-the-money". The holders of "out-of-the-money" derivatives would be left with a potential loss. The government needs to have ALL over-the-counter derivatives trade through an exchange setup where counterparty risk is eliminated because of continuos margining.

3) These banks still have a strong earnings capability, so the government must capture that energy and spirit. It should dilute existing common shareholders and eliminate issing perferred shares which are causing many of these banks to struggle to meet dividend payments. As a shareholder it will have the rights as any shareholder to elect the board and propose ammendments. This removes the constant bickering and name calling and non-productive legislation our uninformed grand standing legislators have. The government will have an interest in reform and fixing the firm rather than chastising the CEOs to appeal to the little guy.

4) Some of the big banks must be allowed to fail if there is limited hope of survival. Their existence costs too much and the benefits of reducing capacity in an already overbanked economy helps the remaining institutions become stronger. The deposits and loans and securities can be sold in the marketplace. Those that are deemed toxic must be handled by the FDIC or some other government agency. The costs for this can be paid for by increasing the FDIC insurance premiums banks pay and by putting a Federal surcharge on each new loan.

So these people need to 1) stabilize and restore confidence in the securitization market, 2) eliminate the spread of contagion from over-the-counter derivatives, 3) stop supporting banks with preferred shares and start with common shares so the government is treated just like the shareholder, and 4) let the banks fail, but provide a strong safety net to limit the fallout.

Why can't our government follow these simple steps? Why does it have to propose spending more and more money on solutions that may not work, that are too complex and that do not restore the confidence of investors and shareholders? President Obama needs to take the charge on this issue and cast aside his hired help (i.e. Tim Geithner) and tell Congress and the American people what we need.

You have hit the nail on the head.
Practically everything that we do as a society has no real value,
We pile on environmental damage, unmitigated human cost, and massive inequity (hundreds of billions for worthless endeavors like sports) all in the effort to redistribute wealth,
The system is complete nonsense. We value junk and pay nothing for true value.
It may unravel now, or once Greenland and/or Antarctica falls into the ocean, but we certainly are headed for the end of our completely misguided mess.

Er, it's Congresswoman Maxine Waters, not Walters.

And thanks for the thoughtful comments from hammer.

"You forget all about human nature and how even the best among us can be corrupted by access to big fast money. "

Whoops, you're getting pretty close to the pope in diagnosing the real problem, Tina. Arrest this trend toward human nature (the secular way of saying original sin) as an explanation for the disorder in the world. Otherwise, we can look forward to scriptural citations from you about greed, covetousness and the other drives that put us in this pickle. There is nothing under the sun about man and woman that the great religions haven't been mulling over the ages.. Perhaps you have been chosen to carry the word to the smart Manhattan salons where news of man's fallen nature will come as a disagreeable surprise . Atheists, start your engines.

Remember the Great Boxing Day Tsunami of 2004 ? The puzzled people in semi-dazes walking along the flushed out beach before the water returned ? I feel we are on that newly-swept beach.There is Obama working at the appearance of cool while his propellar heads scan the beach with him and wait. We all wait.You are right, trust no one now and recognize the waste and zero value in simply being fearful.

opedanderson, you have grossly misread your audience for that message. Most of us would have LOVED to hear GWB say "I don't know" or "I was wrong" once in a while. Only an idiot thinks he's always right or never makes a mistake which is why it was so concerning that someone who thought that way was in the most powerful office in the world.

Tina, a good column for thought.
For a view along similar, yet more radical lines, see http://fentrosphere.blogspot.com/ A Coming Storm.

Comments like Banjo1 and opelanderson are understandable, but they miss they point. Partisanship is a dish turned sour, and while Athiests may be 'right' about the Religious God, they take the intellectually lazy way out. Faith doesn't require religion (nor does God, depending on how it's defined). We have to stop fighting amongst ourselves and recognize we're on this ship together. We can agree to disagree on philosophy, but when it comes to this basic ideology (that we should try to help one another), Barack is a Uniter where Bush was a Divider (NOT a very good Decider!).

Let us find the crooks and punish them, fix the regulations in the Legislature, and bail like hell to keep the boat afloat (which is the conventional approach). Or, we could always revolt and start anew, but who really wants another Civil War? That is why I advocate an approach of a radical shift in energy and transportation policy to mandate 90% renewable energy in 10 years. That's the 'Apollo Energy Program' Obama should be touting. Maybe you'll tout that at the Beast. Complaining is easy - finding solutions means trying and failing sometimes. We all need to agree to let that approach resolve itself, and the necessary change will come.

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Americans keep looking to the government, to the CEOs and corporations, to any snake oil salesman that promises a quick fix to the problem and a lollipop to make us feel better. While waiting for the quick fix and that delicious lolli, we blame presidents, past and current, Congress, committees, CEOs, regs, lack of regs, and anyone at hand just so that we do not have to look in the mirror and realize that this is our fault.

We created this mess. We spent too much and saved not at all. We bought things we did not need with money that we did not have. We threw personal budgets and common sense out the window, and we did it for decades.

We, Americans, are the number one reason for the pain that we are in. There are no answers and certainly no easy, quick fixes. It took over a decade for us to get here - it will take time for us to recover. And there will be more pain.

Wow. Big surprise that nobody in Washington or on Wall Street really know the answers to this mess.
However, your notion that this should happen, ought to happen, may be a little off. If Junior climbs up on the garage roof to test his theories regarding human flight and breaks his leg, what does a responsible parent do? Leave him there? Of course not. A responsible parent takes him to the doctor, gets the leg casted, then lectures him about it all the way home.
We are, in America, our own parents. Just because stupidity and greed contributed greatly to this mess doesn't mean that remedial attention isn't desperately needed. I have no doubt that the brilliant talking heads spark off solutions like a St Catharine wheel, but remedies must be found lest the whole country, and with us, the entire world, goes down. Altering one's lifestyle, altering one's priorities are necessary sacrifices to pay for Junior's stupidity and stubborness, but for the United States to distintigrate into a bunch of petty little city-states fighting amongst themselves for 'pride of place' is not a solution.

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Tina has it exactly right, though it's no cause for cheer, I suppose: but basically, the pendulum has to swing. It does, in time, swing back.

It is all about "noblesse oblige". A society that worships the $ as its god is doomed to failure. The end justifies the means and the hell with everyone else!

As long as wealth is equated to class, and no one thinks that class and privilege bring with it duty and responsibility (noblesse oblige) these disasters will keep on happening over and over again; it is human nature without any class!

Obama is absolutely right in going on and on about moral responsibility of the American citizenry. The more fortunate should look after the needy and not each to his own. That is the true definition of class; noblesse oblige.

Once that happens in every aspect of American society you'll be surprised how quickly things will start to get better.

It's all about human nature, Banjo 1. When deregulation and trickle-down economics became popular, it all sounded good on paper. But, it completely disregarded human nature.

As much as I like to have faith in people, too many are greedy, sadly. It is the reason why neither of those concepts work. Interesting ideas. Not realistic. Big problem.

I gather Ms. Brown's solution to our current dilemma is for the nation to assume the fetal position and simply fade away. I think that was the spirit of Valley Forge.

I don't know about all of us being corrupted by "easy" money. I have a small business I've worked at for 18 years. I'm not rich and I'm not poor. But I may very well be as a result of all this "easy" money.
I never asked for nor was offered any of it. I'm an American who would really like for the government to stay the hell out of our lives as much as possible. For you seem to capture the essense of company employees greed. You fail to elaborate on the unabated greed of the (un)regulators which is just about every politician in Washington.

What ever happened to "choose hope over fear" and "yes we can"? Now that he has responsibility for the first time in his life, Obama preaches fear, pessimism, panic, lowered expectations.
"Don't expect me to turn things around, even in my first term" has replaced the super-optimism of the campaign.

This glib opportunist has just been hit over the head by reality.

Tina is offering the solution here. Let it all go, people! "Getting and spending we lay waste our power."

None of our "leaders" can compromise their power by giving us this one and only answer.

Where are you Magicman?

Love your snappy writing, Tina, it always resonates with me.
You're right, there is a tectonic shift going on under our feet that will realign everything, can't you sense it?
I recommend Pulitzer Prize winning author Jared Diamond's brilliant book "Collapse" for a study of how societies around the globe have suceeded or failed based on their choices. Diamond cautions that when elites feel shielded from the consequences of bad decisions (gated communities, private schools, great wealth protecting them from common suffering) they continue to make poor decisions that drag the entire society down into collapse. I advocate we shut down the rotten banks, and let Wall Street suffer the consequences. If a bank is too big to fail, trust but it up, like we did with Standard Oil.
I certainly don't have all the answers, but I think Obama is correct on one thing.....it's time to grow up and face some facts; one is that the age of oil is nearly over and we don't have any good alternatives yet. Another is that our standard of living for the past few decades is probably not sustainable for us, much less the rest of the world. A third is that the earth is groaning under the strain of supporting 6 and a half billion people; 90% of the ocean's table fish are gone, we're cutting down the earth's lungs (rainforest), and climate change is proceeding even faster than predicted. We're over populating the planet. and I fear great suffering will ensue if we don't reduce it. On that cheery note, I'll sign off.

I remember is 2001 before 911 my Internet co. was flying, which investors came from Wall Street and one who was on the board of the Bank of NY. At a board meeting these masters of the universe basically told me to commit fraud so we could go public. I refused - we all had a big fight - I resigned and left for the beach while the boyz stole all the assets. It was that day that i jumped out of the system realizing that the biggest fat cats were involved in a high stakes game of fraud using young people who were clueless and ambitious to do the dirty work. I called it the fraud economy, dropped out and nver looked back. My point is people like Tina have been hanging with these faudsters for years without notice until now - i must ask what were you all smoking? Me thinks we are certainly screwed b/c the "adults" are greedy slimeballs who having lived on wall st. for so long really have no idea how to EARN honest money - they can only steal it - which in my case would have been through an IPObased on fraudulent revenue - nice system. lol!

End the Federal reserve, and put all the greedy bankers in jail under a RICO suit. It is no wonder the DAs are so quick to bring RICo suits against "mafioso" but use the kid gloves on harvard b-school grads. The system cannot recover b/c idiots like me see them all naked and cannot stand banks that charge usurious interest rates while taking tax dollars. businessmen my ahole - captains of industry - ha. Just call them slimeballs without shame, ethics, or a mother.

Frento,

Obama is not a uniter. He showed that in his campaign against Clinton, in his crawl up the political ladder in Chicago, going after his critics with over kill and threats of law suits, in offering positions to contentious hacks, e.g., Summer, Geithner, Emanuel and in his abetting the media to spread lies about his opponents. Obama is a fraud and in the pockets of the power elite. Let's not forget the ones that had to resign, Daschle, Richardson, Lance, etc.

Positively pathetic how slobbering liberals give this poseur a pass on everything. What happened to "inquiring minds?" It appears as if playing it safe and not being called a racist is more important than the very constitution of this country and the ideals that were created by people who gave no one a pass. After all the truth is t he only thing that will set you free, from your own fears and doubts.

Well said. Lots of pretty small people wind up, in disguise, at the top--including our last president. I believe we have an actual true statesman in charge now, and they're rare indeed.

Let us not forget the first rule from The Guide to the Universe: DON'T PANIC. This means you, Tina. You are assuming that we've heard everything from the new administration...and concluding that it doesn't know what it's doing. Geithner cannot be second-guessed right now...who among us knows as much about the economic meltdown as he? a week ago the buzz was that he didn't have any details so therefore he didn't know what he was doing. Then in a closed session with world financial leaders he laid out six hours of details...and they left saying he does know what he is doing. I expected the Republicans, Rush, Fox News and even The Huff Post to find something to fear in Obama's every move as he fixes Bush's mess, but panic-button-pushing in TDB?