I have sympathy for Treasury Secretary, Timothy Geithner. As I listened to him unveil the latest iteration of the bank rescue plan this morning an image flashed into my head. It was the image of Soviet troops, dropped by helicopter onto the smoking roof of the Chernobyl reactor, furiously dumping ton after ton of sand onto the molten reactor below.

Like those poor Soviet troops, the last guy who held Geithner's job, was so politically radio active by the time he got off that roof he'll probably glow in the dark for the rest of his life.

Now it's Geithner's turn.

Eventually the Soviets got the fire out, but the mother of all toxic waste dumps remained. And, assuming Geithner can get control of the banking meltdown, he too will have even a bigger, and more difficult, job on his hand – dealing with the trillions of dollars in toxic waste those under-regulated banks pumped into the world's fiscal food chain.

Rather than trying to get the old Chernobyl reactor up and running again, the Soviets ended up doing the only thing they could  – encasing the entire toxic mess in a lead-lined concrete sarcophagus – forever and day.

But Geithner thinks he can convince private sector investors to take a lot of his toxic waste off his hands by purchasing it with some government guarantees. Good luck with that, Timothy. After all, much of that stuff is so toxic it qualifies for burial at Yucca Mountain. And who would know that better than the folks in “the private sector” who created most of it themselves? Private investors will cherry-pick assets they figure will perform and leave the worst of the worst for taxpayers. And they'll do it knowing that, even if they do end up with a few bad investments, the government guarantee guarntees they won't feel a thing.

So, what would I do if I had Geithner's job?

The first thing I'd do is announce that “the era of capitalism, is back.” To wit, that from this day forward all forms of private enterprise will again be subject to Capitalism Rule No. 1:

The higher the potential rate of return, the higher the implied risk.

We are in this mess today because everyone, from Wall St to Main Street to homeowners on Elm Street, violated that rule with impunity.

Attracted by the real estate bubble, homebuyers took out loans they could not afford should the slightest thing go wrong. Banks, chasing loan fee income, made non-recourse loans to those under- or un-qualified borrowers. Wall Street bundled all that crap up into securities and sold them to investors seeking a piece of the real estate bubble goodies.

The only missing element in all this was the “risk” part. Homebuyers who got in trouble could just walk away for their loans, since they were “non-recourse.” The banks themselves had passed the burn along to Wall Street investors.

When those Wall Street firms hit that wall, they turned to taxpayers and got rescued. When the bank's house of cards collapsed, they turned to taxpayers and got $350 billion in help, with another $350 billion on the way. Now homebuyers are about to get some form of rescued as well.

The bottom line: In a capitalist system, when no one is allowed to lose, everyone eventually loses.

In other words, if we don't allow those who fail, to fail, they will continue on. When they take risks and win, they get to keep their winnings. Even the individuals who ran these failed banks and investment firms can't seem to fail no matter how big a mess they make of things.  Instead, with straight faces, they argue their salaries and bonus' should not be cut because folks with talents like theirs deserve the big bucks.

So, when they take enormous risks in pursuit of enormous returns, but lose, taxpayers cover their loses. Heads they win, tails we lose. I'd like that kind of deal, wouldn't you? Who wouldn't?

Consumers also need to change their mindset. Over the last three decades credit became a commodity. Credit is NOT a commodity, it's a financial tool. Homebuyers borrow to buy a house in their price range. Then they –  (are you sitting down for this?) – they repay the loan.

And equity in a home is NOT a commodity either.  It's part of a family's estate. You don't eat it as it as fast at it appears, you bank it, and later you live off it in retirement. And, if you're heirs are lucky, you pass on what's left to the next generation as seed money so they can repeat the process. That's not only good personal financial hygiene but forms the basis of a sustainable economy.

Now, don't get me wrong,  there are government guarantees that serve a useful purpose. Deposit insurance, for example, is a good thing as it protects the modest fortunes of average folks. In fact, it should probably be increased from $100,000 to $250,000.

But federal deposit insurance (FDIC) is a risk taxpayers know about as it's an explicit government guarantee financed largely by insurance fees paid by banks themselves. But what we are learning now is that in reality taxpayers underwrite the entire private banking system in the US. Because when it goes sideways in a big way, as it has now, we end up covering their loses.

We did NOT sign up for that. There is not a single piece of legislation that designates institutions “too big to fail.” Not one word. (And by the way, “too big to fail almost also always translates into “too big to jail. I'd change that too. In fact, that would be my very first change.)

Any bank that requires significant federal assistance just to survive, should be put under federal conservatorship until such time it can be repaired and sold to the private sector, or liquidated.

Then, rather than dumping all our sand into the vaults of failed banks, we should use it to create more jobs in the privates sector. Those workers will, in turn, spend some of that money stimulating the economy and save some of that money bolstering the asset base of the remaining banks.

Holy Adam Smith, Bat Man! Is that REALLY so hard to figure out?

www.opednews.com/articles/Geithner-s-Federal-Bank-of-by-Stephen-Pizzo-090210-321.html

Author's Bio: Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a Pulitzer.