Glenn Greenwald, a commentator in Salon, posted a scary observation in which he compares the U.S. economy to Russia and Argentina. He quotes Desmond Lachman, an IMF expert on emerging markets and former Salomon banker, who notes how we’ve seen the same thing in those emerging markets.

In an emerging market, a banking crisis like this looks like a liquidity crisis, and the government tries to shore things up with an injection of cash. In fact, it’s a solvency crisis. Outsiders like the IMF generally recommend to fix such things with transparency not with cash. Otherwise the local oligarchs will manipulate the crisis to get rich off the ‘recovery’ money. Meanwhile, the IMF and such require the government to reduce spending on social programs to pay for the enrichment of the fat cats.

Greenwald argues that this is what’s happening here. Citibank and Bank of America are said to be using TARP money to buy distressed assets, since Sec of Treasury Geitner is planning to buy up distressed assets with government money. This is obviously a win-win for the banks – they use taxpayer money to buy distressed assets and then make a profit off the distresset asset purchases.

As for ‘oligarchs,’ several people have noticed President Obama’s inclination to choose Treasury officials from the same ranks of Wall Street that presided over today’s economic crisis. I sympathize with the stated theory – that these guys are the experts after all. On the other hand, aren’t there a few experts, even among Wall Street’s elite, who predicted our current predicament? Where are their voices?