Let's flash back to September 2008, the month our financial quagmire fell from the sky. We had Lehman going bankrupt, AIG melting like the Wicked Witch of Wall Street, Merrill Lynch scurrying for cover under Bank of America's umbrella, Morgan Stanley teetering on the edge, and the almighty Goldman Sachs bowing to the gods of investor confidence.

Why? Because the derivatives market had a giant crowbar stuck in its gears. It didn't matter whether it was stuck because nobody wanted to buy the assets or because the sellers expected exorbitant prices. The derivatives were atrophying.

Ever since those awesome, apocalyptic days of September, we've been trying to pry out that crowbar. Without a functional derivatives market, the toxic assets sat still and banks were forced to swallow lemon after lemon as the subprime mortgage market (to which the derivatives were tied) collapsed. At first, the TARP tried to fix that problem, and now we have the Treasury's new private-public partnership to try to do what the TARP could not. The Treasury, meanwhile, continues to chant its mantra. A healthy derivative market leads to a healthy bank leads to a healthy economy leads to a healthy life. Geithner is our yogi.

Which brings us to today, when the Financial Times reported that some banks may not just be sellers of toxic assets in the new Treasury program, but also buyers. This would mean one bailed-out bank would be buying from another bailed-out bank. Taxpayer money—which would underwrite much of the risk—would be swapped around a circle of friends like a game of spin the bottle. The threat of this vulgarity has offended quite a few folks' economic values.

The ranking member of the House financial services committee, Spencer Bachus, calls the bank-on-bank action "a new level of absurdity." Clusterstock claimed that the recursive buy-sell maneuvers amounts to "money laundering." Daily Intel's Jessica Pressler had her "mind boggled" by the newly discovered loophole in the Treasury's plan and hoped that one Treasury official was "high on meth" for supporting such an ill-advised plan. Yves Smith finds it the most galling, wondering whether the Treasury believes "the garbage they shovel out" and scolds them for issuing a "baldface lie."

I usually defer to these people since they, unlike me, actually know something about what they're talking about. But this time, I don't get what merits all the forecasts of doom.