With double digit unemployment looming over 2010 like a vulture, President Obama last week talked about using the remaining TARP money to help create jobs.

First of all, it is about time the administration recognized that someone other than the bankers are deserving of help. Economists, local politicians, civic leaders, and even some real business leaders (bankers are not real business leaders – they are just greedy you-know-whats) have been saying all along that money should be spent on fixing the country (infrastructure, manufacturing, repairing schools etc.) and generating jobs, rather than propping up a financial system that apparently is benefiting no one but the financial system itself. In addition to fixing the broken parts of USA Inc., putting people back to work through government projects would enable them to have money to spend – considering consumer spending makes up 70-75% of the US economy.

When Fearless Leader appointed Mr. Peabody (Larry Summers) and Sherman (Secretary of Treasury Tim Geithner) to clean up the financial house, those two put the country smack in the middle of some sort of fractured fairytale. As in the cartoon, the genius Mr. Peabody would use the WAYBACK time machine to take himself and “his boy” Sherman to an earlier point in history. It was back in time where they could fix the problem that was occurring in the future. Peabody and Sherman told Fearless Leader that a massive infusion of unregulated cash and guarantees to the very institutions that caused the problem over the past decade would act just like magic beans and get the US on the yellow brick road to a real recovery. By making trillions of dollars available to the stock, financial and commodity markets, the sharp rise in asset prices would allow Ye Olde Bank to resume lending to the masses in the forms of loans, credit lines and investments. It is a trickle-down economic policy that has to make St. Ronnie of Reagan beaming from his resting place in a very cold Frostbite Falls.

Problem is, all this money trickled down the pants of the bankers like warm smelly urine. None of it went to the citizens of the Usaland.

Instead of laying the groundwork for a broad recovery by helping the masses that really needed it (and who in the end really drive the economy), all the money and energy went to making “too big to fail” even bigger.

Why can’t the media see this just keeps getting worse, instead of quoting statistics which say ‘recovery’. Statistics do not put bread on the cable or shoes on children’s feet. As the “Give-Away of the Century” called Health Finance Reform is discussed (and wateredteabagged down) – we are constantly being reminded that “entitlements” are breaking the bank and have to be slashed, delayed or eliminated. Of course the wars in Iraq and Afghanistan and Bush tax cuts for the rich are left alone as some sort of sacrosanct fairy dust.

The Fed, headed by Boris Badenov, keeps talking about the twin fears of rampant inflation and its cousin spiraling deflation – both pretty bad. Inflation is generally caused when there is too much money chasing too few goods. What did Badenov think is going to happen as he dumped trillions into the financial system – a well-oiled economy? Instead of unleashing all those dollars into the public, Ye Olde Banks squirreled the money away, traded investment vehicles with each other, bought more high risk assets (they after all were guaranteed) and made windfall profits for Ye Old Banks. But when it comes to giving billions (not trillions) to the peons – all of a sudden Badenov is on the inflation war path. Follow the gold-brick road Boris – it leads right to Emeraldman Sachs City.

With 300,000,000+ Americans not earning the king’s ransom as salary and barely having enough money to buy aspirin, shoes, and potatoes (forget Retin A, Prada and lattes), where does Fearless Leader think demand is going to come from? Consumers and businesses have basically stopped spending (you do that when you have no money). Many small businesses can’t get a wooden nickel from the banks to meet payroll or pay vendors. Since the Wall Street execs (who have plenty of money to spare) cannot single-handedly spend enough to get the economy moving, fiscal expansion–particularly through government jobs programs–is the best way to get money into the hands of people that will actually spend it.

Economist Marshall Auerback:

Unemployment is not going to bounce back like it did after previous recessions. In fact, unemployment is following the same flat-line trajectory as business investment. Too many high-paying jobs have been shipped overseas; too many businesses have moved offshore. Free trade has changed the economic landscape dramatically. If Obama doesn’t take decisive action now, the wealth gap will widen, double-digit unemployment will be the norm, and a permanent underclass will emerge in America. The social unrest that this will generate, will be significant. It would be wiser to avoid potential disruptions and preemptively address the minimal needs of ordinary people in distress. That means jobs, lots of jobs.

At the end of each episode, Peabody and Sherman would talk to each other about what had just happened, with Peabody always having the last word. That hasn’t changed, as Goldman Sachs has the final word today as well.

For more on this same topic - Brilliant at Breakfast is another great read.