Cenk is wrong on the policy and the politics of this crisis.

First the policy:

My understanding of the situation is this:  We have a bunch of debt out there owned by a bunch of financial institutions.  It turns out that a lot of the people who borrowed it can't pay it back.  This occurred both because of lax borrowing rules and partly because of the housing crisis and falling home prices.  People aren't sure what this debt is now worth.  Basically it has fallen in price to so much that it isn't worth anything, and nobody can get rid of it.  So it is sitting out there and people can't trade it.  The government's plan is to buy up these "toxic assets" from everybody instead of rescuing one bank at a time.  Cenk is correct that Paulson is saying this could cost up to a trillion dollars. 

But what are the alternatives?  The bailout of AIG alone cost $85 billion.  How many more institutions would we have to bail out if we didn't get right to the heart of the problem?  Just 12 more bail-outs and we'd be spending the same amount anyone playing defense instead of offense.  This doesn't even count the amount of money the Fed has been shoving into the system around the last 72 hours or so--at least $100 billion. 

What we can't do it let more and more banks fail.  That is going to eventually result in a run on the banks and a total financial collapse similar to the Great Depression.

Also, on the policy side, I wanted to take note of Cenk's characterization of Bernanke as a part of the Bush administration.  Ben Bernanke is not a partisan Republican.  He is an accomplished and impressive academic economist.  Do you know what subject he studied throughout his career?  He studied financial crisis.  He wrote journal articles about the mistakes made during the Great Depression.  This is a guy who knows what he is doing probably better than any other person in the world right now. He's not going to play defense any longer.  He is going right at the heart of the problem, and the positive, almost jubulant reaction from Wall Street and markets around the world is a good thing.  It means they believe this will work.  It means they are no longer thinking everything is going to collapse. 

Finally, do the bankers get off scott-free under this plan?  No.  The US government is going to be buying these "toxic assets" from them at much lower prices than they were worth before this crisis.  And remember, not everybody is going to default on these loans and mortgages.  We will be the owners of this debt and collecting what we can, and eventually we will sell this debt back to the financial sector--probably at a very high profit after everybody has calmed down, and knows how to value these assets.

The politics:

Cenk's plan is for Obama to sound like a raving manic right now:  He should be an angry, fist pounding populist.  Instead Obama talking about substance, and looking like a leader.  People like Cenk don't need to understand what he is saying the the stump.  Obama just needs to look like he knows what he is saying.