President Obama said this morning that the United States didn't "choose" to fight the war in Afghanistan.  I think we did.  It may have been the right choice.  I certainly thought so at the time.  But it was a choice.  No choice means no other reasonable options.  We had another reasonable option though.  We could have said, "We weren't attacked by Afghanistan, we were attacked by crminals operating under Afghanistan's protection."  Then we might have had a different response.  No matter, the choice was made.

And we're making choices now.

In the face of all our problems at home I'm having a tough time getting behind more money and more troops going to Afghanistan.  I was surprised this morning when Obama said that 2008 was the deadliest of the war for US soldiers.  I have to admit, when I supported the war back in 2001 I never thought it would lead to an occupation going into its 8th year.

Where's the exit strategy?

Beyond that, and probably more important -- we can't fix our economy if we continue to allow our military to dominate our budgets.  We can't trim military spending while leaving a huge force in Iraq and calling it a withdrawal and by increasing our military exposure to Afghanistan.  It's time to bring troops home and declare ourselves at peace with the rest of the world.  Our economy needs a peace dividend.   This occupation just isn't vital to our interests.

So, Geithner has announced the next phase of the bailout plan -- the FDIC will partner with hedge funds, private equity funds, pension plans and other large institutional investors to buy loan securities off of the banks.  Hopefully, they'll do this at prices that will allow the government and its partners to make money over time while not forcing the banks to take excessive writedowns now.

The plan could work but its problematic at best and it focuses on helping the wrong people - institutional investors rather than ordinary citizens.

It's inevitable that if anyone makes money at this, they're going to be politically well connected and we're going to have to discuss some uncomfortable relationships among members of the Obama administration.  For example, Larry Summers was a partner at hedge fund giant DE Shaw Group and so we have to ask ourselves whether or not it's appropriate for Shaw funds to participate in this.

The beauty of the Geithner plan is that if the private interests win, the Treasury wins too.  But the public only wins in the abstract.   At best, if you're covered by a pension fund that participates you get some benefit.  But if this is really a great deal for private investors, shouldn't there be some sort of mutual fund set up so that smaller investors can participate directly?  Heck, if this is really going to work, maybe the government should agree to use positive returns to pay out a dividend to every citizen?

It's stunning to me that in the wake of AIG I'm now being asked to help well connected hedge funds get a good deal on mortgage backed securities.  I'm also concerned that if these mortgage backeds really do represent some reasonable future return that the hedge funds would have bought them already or will eventually buy them without public financing and guarantees against losses.

We are, yet again, subsidizing private sector profits  with little regard for the public interest. It's going to be interesting following the money on this one.  My guess is that some funds will make a lot of money while the public will do okay. A few well connected hedge fund managers and financiers will get a lot more out of this than the rest of us will and they will never even deign to thank us for the yachts we'll be buying for them.