The Obama administration is fooling itself if it thinks it can help banks rid themselves of their toxic assets by relying on the same system that created the mess in the first place. This according to Joseph Stiglitz, a professor at Columbia University and winner of the Nobel Prize in economics in 2001. The problem lies in the Treasury Department letting the market determine the prices of toxic assets, including outstanding house loans and securities based on loans, argues Stiglitz, who adds that in reality “the market will not be pricing the toxic assets themselves, but options on those assets.” As a result, the government will have to insure almost all losses, thanks to Treasury Secretary Timothy Geithner’s idea to have the government provide 90% of the money to buy toxic assets but then only receive 50% of any gains realized. “What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses,” writes Stiglitz. “It is a ‘partnership’ in which one partner robs the other.”