On Tuesday, February 10th, Treasury Secretary Timothy Geithner outlined a comprehensive plan to restore stability to our financial system. In the address,Secretary Geithner discussed the Obama Administration’s strategy to strengthen our economy by getting credit flowing again to families and businesses, while imposing new measures and conditions to strengthen accountability, oversight and transparency in how taxpayer dollars are spent.

Financial Stability Plan is the second moronic idea in the last 12 months. The first one being TARP. Both of these plans will fail with a 100% certainty. At best, they’ll delay whatever would happen anyway.

An what would happen without these stupid plans is not necessarily bad. You do not strengthen the economy by providing cheap credit to families and businesses at the expense of future generations. You strengthen the economy by eliminating inefficient businesses. If you let the insolvent banks fail, the survivors will be very strong. The new banks will open up taking over a normally very profitable lending business especially if there is a huge demand for loans and people willing to pay high interest rates.

And housing? Everyone is complaining about high price of gasoline and healthcare while the 2 largest expenditures in a typical family budget are taxes and housing. And, we are willing to pay more taxes to pay more for housing. If this is not stupid, I don’t know what is. In fact, the biggest stimulus package would be to let house prices fall 80%. This way, people who have 20% down payment wouldn’t need a mortgage at all. Imagine the amount of money available to spend on other things! And, a mortgage on a house bought after an 80% price drop would be virtually riskless by definition and could be a lot more profitable for the banks.