Six weeks ago, he was a neophyte who fluffed his first test; on the weekend a Republican Senator was confidently asserting that Tim Geithner’s term as US Treasury Secretary would be short and was drawing to an end; overnight, he’s the toast of Wall Street as the latest bank assistance program hit the spot, sparking an enormous rally.

Gone was the carping and sniping, the trembling fears in market indices, bank shares and the like. Suddenly, the likes of Citigroup and Bank of America are looking good; the angst from last week about those scandalous AIG bonuses put behind everyone; the ambitious narks Congress silenced.

Gone, too, the emerging potshots at President Obama from supporters in the media.

Some commentators, such as Nobel prize winner for economics, Paul Krugman, reckons the plan is wrong (it’s on the New York Times registration site), reckons it will fail and don’t like it at all, other critics of Mr Geithner were more guarded, even optimistic, with some claiming that if it starts working, then we could have seen the bottom of the long plunge in financial markets.

The Financial Times Lex column (the most important media commentary on finance around the globe) said in part:

“After lambasting past announcements for being too broad brush, it is churlish to accuse Tim Geithner, US Treasury secretary, of obscuring his latest taxpayer-funded giveaway with excessive detail. In fact, the latest plan to cleanse the system of bad assets is appropriately nuanced. It is better crafted, using private involvement to lessen taxpayer risk. And there is the odd nice touch, like using a portion of fees to bolster deposit insurance funds.”

It went on to point out potential problems, but on the whole the plan got an enthusiastic reception, judging by market reaction.

Wall Street’s 7% rise was the fifth biggest on record, the Australian dollar climbed back over 70 US cents (which will further cut falling export revenues if it persists), gold fell, oil rose over $US53 a barrel and copper rose past $US4,000 a tonne as the Chinese strategic material group continued its stock rebuilding purchases.

But there’s an irony here: for the new plan to work the way it should and start providing certainty to the markets, lenders and borrowers, the Obama Administration has to work with many of the people blamed for some of the excesses of the credit bubble, and use some of their techniques of leverage, special investment structures and suspend financial belief until values settle down.

As we saw last week with AIG and as we saw overnight in France with a controversy over bank options at a big bank, the bankers and others are still living the high life of easy credit, big payouts, bonuses and private jets. That is going to cause more problems for the US Government, Mr Geithner and others before the situation starts showing upside.

The leverage for some of the deals could be up to six times, for others there will be a minimum. Some of the largest funds in the US are onside, funds such as Blackrock, Carlyle and Pimco, the world’s biggest bond fund, have all said they will be investing with the US Government. That will lead to a stream of other funds investing, fearful that these early acceptors will get the best deals.

Over time, this will see big gains for some of the early deals competed away as more funds, banks and insurers clamour to get a piece of what’s likely to be the only funds management game in town that’s legit.

Look at it as a licenced casino, as opposed to the previous free for all that made big profits, but created the big losses the new scheme is part of the campaign to clean up. The smarties, the early adapters to changed circumstances will support this move because they understand if it fails, then the slump will intensify, banks will shatter regardless of who stands behind them and a Depression will follow.

But the cost of the crunch continued to mount. $US100 billion at most will be used to seed this latest proposal, with extras on an adhoc basis. Adding in the $US1 trillion, to the $US1.1 trillion the Fed will spend buying up mortgages, the $US700 billion from the first bail out fund (some of which is being used in this by the Government as capital), the $US300 billion in purchases of US Government bonds by the Fed from banks, and the billions spent supporting the likes of Fannie Mae and Freddie Mac, plus the money used on swaps, special Fed funds for commercial paper, etc. and the spending is utterly gigantic. Then there’s the $US784 billion stimulus package.

Take into account the $US800 billion-plus in write-downs and losses taken by banks and other financial groups and you easily get to $US5 trillion (a conservative estimate), out of a US economy with around $US14.1 trillion in GDP last year. This money, losses, etc. will be taken and spent over three years or more, so the proportion of annual economic activity will ease, but when you add in the enormous figures from other countries, the spending is mind boggling.

And this doesn’t take into account the tens of trillions of dollars wiped off property and share values globally.

In the US in 2008, the net worth of American households fell by a record $US11.2 trillion, which should be added to the impact in the US.

But then you wonder about bankers, those w-nkers who linger and moan about Government intervention, spending, deficits and inflation, while holding their hands out for more.

We’ve already seen the idiots at Merrill Lynch line their pockets after the investment bank was saved from collapse by a combination of a takeover by bank of America and Government cash, and we’ve seen the fools and idiots at AIG rewarded to imperilling the company and the financial system by being paid bonuses of close to $US200 million (something that was quietly allowed by a senior Democratic senator late last year without telling anyone), now the drongos at French bank, Societie Generale have tried to pay themselves bonuses after the worst year in the bank’s history.

Remember the rogue trader in January 2008 and the 5.8 billion euros of losses that almost caused SocGen to fail? The CEO was removed, but remained on the board as non-executive chairman.

Sunday it cancelled a plan to award discounted stock options to four directors, including Daniel Bouton, the non-executive chairman who was removed over the rogue trader scandal and the replacement as CEO, Frédéric Oudéa.

In a letter released overnight, the bank admits that its plan to award 150,000 options to Mr Oudéa and 70,000 to Mr Bouton had sparked “strong indignation” among the public and “incomprehension” from its own clients and staff. France’s president, Nicolas Sarkozy, called it a “scandal” that the bank’s directors could receive such incentives after accepting state funds.

SocGen had received 1.7 billion euros of taxpayer money from the French Government, and even managed to get some of the US Government assistance to AIG through financial derivatives it had with the stupid US company.

No shame, and no brains. Bankers are the same the world over.

The most galling thing for Governments, especially in the US, is that they know they have to save banks and bankers from themselves because their institutions are vital. You can’t save bankers (and many in the corporate sector) from themselves, no matter how many laws you pass, how high you set tax rates and how much moral indignation you show. But that doesn’t mean you have to condone their actions, as some in business and in the commentariat seem to be doing.