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Jim:       What does he have to do to follow thru with this rip-snorter of an Obama is okay rally today… well he has to repute what a lot of what has happened so far… for example, he gave Nancy Pelosi free reign to create a stimulus package full of pork… extended unemployment benefits… but without any stimulus… what is she… the general secretary of the communist party… I mean of the Democratic party… and then he took his Leninist line telling us now… telling us that now is not the time for profits… and instituting salary caps for executives at banks that take more TARP money… and then he just scared the heck out of us… I have got to tell you he scared me… he scared me with his Washington Post bed piece… telling us that catastrophe lurks right around the corner… he even trotted out the Great Depression scenario… we want the hope Obama… not the fear Obama.

So in the interest in getting the hope Obama back… to kick start a second honeymoon after the first one… I am here tonight with a game plan just for our President.. a game plan for winning back our hearts… by fixing our economy… a plan for a Ralph Cramden second honeymoon moment… to the moon Pelosi… alright what does he need to do… first off, early next week you know we are going to hear… we are going to hear the details of the administrations new plan of dealing with banks… forget all this bad bank stuff.. we already have a bad bank… it is called FDIC… it is run by Sheila Bair… which is doing a much better job than our current non paying tax Treasury Secretary Tim Geithner… if Obama wants a second honeymoon… he needs to fall back on a time honored policy that worked so well during the Savings & Loan crisis in the ‘80’s… something that will be a dramatic reversal from Obama’s moralizing about shameful bonuses.

You want to solve the financial crisis… you know what you need to do… you need to look the other way… that is right… you have to give the banks a temporary free pass… you can’t say that out loud of course other than Mad Money because it is too reckless or irresponsible… so what we have to do is use the term that the Resolution Trust Corporation created to deal with the S&L crisis… it is one they used back in the late eighties… we have to hear the administration start talking about showing forbearance… forbearance… if we hear that word next week it is second honeymoon time… what does it mean to look the other way… to show forbearance… well hear in return for a note promising to pay back the government… like a bond… the banks that are worth saving will receive certificates entitling them to as much money as they need… no money actually changes hands… the bank just gets a piece of paper that allows them to stop selling their assets at fire sale prices in order to meet regulatory statutes… that will let them stop hoarding money and start lending money to people who really need it… not just those who don’t… because the banks will no longer have to worry about the regulators punishing them for being too lose with capital… they will get a certificate from the government saying that they will have all the money they need… that will change things… eventually when the banks get their feet back they can pay the government back… does this solution sound completely and totally fraudulent… sure… but it worked before and I think it can work again… it is no panacea, by the way, for the common stock of these banks… it won’t make them necessarily worth more… but it will save the system and give us a reason to believe in our new president again.

Plus, let’s not forget the current team has one banking advantage that the Bush team never had…   It finally has some winners to rally around… under Bush, literally all banks in the end were in such trouble that there was no one to sell a large troubled bank to… now we have not one but two… two healthy banks… remember, they are now banks because they changed the law… they changed, they became banks and I am talking about Goldman Sachs (GS*) and Morgan Stanley (MS*)… if any of the large banks stumble… even banks as large as Bank of America (BAC) or Citigroup (C) the deposits or operations can now be sold to Goldman or Morgan… as their balance sheets get stronger by the day… the nare-do-well get shut… the bad assets journaled to the FDIC… they reopen as Goldman Sachs Bank or Morgan Stanley Bank… or they can be split into pieces with Goldman taking over investment banking and trading, and asset management… and Morgan Stanley taking over deposits and brokerage… it only takes two to make this happen… and unlike 3 months ago we have them… every bank was about to fail 3 months ago… and if JPMorgan Chase (JPM*) could somehow raise more capital… it may not think that it needs it but that Washington Mutual Mortgage portfolio is a huge drag… it too could participate in this bank cannibalism… when you couple this with forbearance you eliminate the two big to fail issues… and you rebuild the system from the ground up… at no expense.

And, of course, it wouldn’t hurt if Obama adopted my plan for a government run trading desk… to buy and sell these toxic illiquid CDO’s… just to match them between buyers and sellers…not to take them in… which was the silly idea from the TARP plan… Obama could convert the current TARP money into equity but that doesn’t do anything… that allegedly caused the rally today… but that is just a canard… it is another canard floating around… and it scared the bank short sellers for a day… that is not what we are talking about… we are talking about something big… our plan saves the banking system… but Obama doesn’t get a second honeymoon unless he does something real to stem unemployment… we lost nearly 600,000 jobs last month alone.. and we have got to juice this economy… how ever much the Senate tinkers with the current stimulus package it is just not going to do the job… I want a new plan altogether… with $300 or $400 billion of infrastructure spending… which will, you know, stimulate the economy… but it looks like the current monstrosity with just $30 billion in infrastructure spending is going to go thru.

So how can Obama win us back if this travesty of a mockery of a sham of a stimulus bill passes… he has to know that the current package isn’t enough… he has to… that it is really just spending $800 odd billion to make thinks a little less bad.. make things largely less brutal… not to mention making Pelosi’s constituents and the lobbyists a whole lot happier… as well as making municipalities less likely to fall on bonds… now, Larry Summers the head of Obama’s national economic counsel, he knows this… Paul Volker, the head of the new economic recovery board, he knows this… here is what I think… as a nation we have the balance sheet to do something this big maybe twice… and there is so little infrastructure spending in the current stimulus bill… that I have got to wonder about whether these new deal idolizing Democrats don’t have something else up their sleeves… if Obama wants a second honeymoon after he passes the current pastiche, but certainly not a mosaic of a stimulus package… he is going to have to pass a second one… that is right, we need stimulus round two already…this time with the stuff that will create long term jobs and jump start the economy… remember this is my message to Obama.. lots of public work projects that will give us a real reason… other than the Chinese stimulus… to own the infrastructure stocks, the steel stocks, the machinery stocks… these should be a big part of any stimulus package… they are sure not of this one… we are giving up on the current proposal… Obama will have to give up on it if he wants a second honeymoon… maybe give us something… let’s just say we need something loaded with infra spending.

Here is the bottom line…