Geither Organizes Call for Hyperinflationary `Explicit Guarantee' Bailout of All Mortgage Backed Securities

Tim Geithner's conference in the Treasury's ornate Cash Room this morning was on "The Future of Housing Finance," the main dynamite keg for a British-demanded new hyperinflationary bailout of the banking (or, non-banking) system. The London Financial Times had issued the editorial orders again today: Damn the torpedoes, print all the money necessary to drive housing prices (i.e., mortgage-backed securities values) off the depression floor, and UP. 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 ago, Lyndon LaRouche had commented, "Another round of hyperinflationary swindles around Fannie and Freddie is coming."

And it was. Geither and HUD Secretary Shawn Donovan played "democracy," saying nothing new in their own speeches and letting their banker panelists — in particular, Bill Gross of the giant PIMCO bond fund — issue the call. "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 only 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 government—ed.] of mortgage-backed securities," the super-toxic crap debt which the banks have refused for three years to write down.

So 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, Donovan, running the second conference panel, saw fit to remind that there had been "something of a consensus on the earlier panel for an explicit, rather than implicit, guarantee of MBS."

That's only about $3.5 trillion. Once, three and a half years ago, it was claimed to be $6 trillion. Will Obama and Bernanke have the Fed and Treasury print money to guarantee, say, $3 trillion of that (a showy little "haircut") for a bailout? Asked his opinion, one Congressional aide at the conference said he didn't know, but "it's starting to look that way."