Indecision On The Financial Crisis

Why was I asking for specifics in President Obama's speech last night? Because the severe problems we face need more than vague platitudes. To put it bluntly, the Obama Administration is fiddling while our financial system burns. Here is Krugman on the nonexistent plan for the financial crisis:

Ben Bernanke’s testimony over the past two days gives us our best clue yet about where the administration and the Fed are going with bank rescue. And the answer seems to be … nowhere. . . . More and more, it looks as if we’re headed for the decade of the living dead.

Pretty speeches in February 2009 won't be worth a hill of beans in elections in November 2010 and 2012.

Speaking for me only

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    The administration is being more timid (5.00 / 3) (#1)
    by andgarden on Wed Feb 25, 2009 at 04:24:46 PM EST
    than even many Republicans. It's maddening.

    Timid is ... (5.00 / 8) (#4)
    by Robot Porter on Wed Feb 25, 2009 at 04:40:50 PM EST
    the new bold.

    It's in the 11 dimensional chess rules.


    Would that poor (5.00 / 2) (#8)
    by Anne on Wed Feb 25, 2009 at 04:43:14 PM EST
    is the new rich...

    Eat the poor? ;-) (none / 0) (#12)
    by andgarden on Wed Feb 25, 2009 at 04:48:00 PM EST
    The Administration is NOT being timid about using (4.42 / 7) (#49)
    by FoxholeAtheist on Wed Feb 25, 2009 at 06:59:10 PM EST
    "capital injections as a way to bail out the people who got us into this mess" (Krugman). In fact, the Administration has been quite bold about that.

    The Administration is only timid about taking charge of the banks and putting public interest before private profit.


    Obama knows that pouring money (none / 0) (#83)
    by Cards In 4 on Wed Feb 25, 2009 at 08:56:59 PM EST
    into the banks is the easy thing to do right now.  Taking over the banks or liquidating them can create more problems than such actions cure.

    What happens to all the banks that are not nationalized when the Citis and BoAs are nationalized?  You think the stock value of your regional bank is bad now - wait until they are competing against the government with the threat of nationalization hanging over them. Liquidating them could be a lot more expensive.

    It's been 20 years since I've audited any banks or other businesses but I would be interested in knowing why the banks are losing money.  The toxic assets should already have been written down and would not be burning cash. If the government does not know where the cash is going it's easier to pour money into banks than to actually run them.


    Krugman would respectfully disagree... (5.00 / 4) (#92)
    by FoxholeAtheist on Thu Feb 26, 2009 at 12:28:43 AM EST
    he didn't get a Nobel Prize for shooting blanks. His views are shared by James K. Galbraith, William K. Black and a slew of other economists who are concerned about the public interest.

    Some of them, like Krugman, predicted this crisis years ago and called for early preventive intervention. He is the economist of choice for virtually every progressive blog. So, in this context, pro-market, anti-nationalization rhetoric doesn't rule the day - glad to say.


    Yeah, well... (none / 0) (#85)
    by NealB on Wed Feb 25, 2009 at 09:16:22 PM EST
    ...that's gonna go over real well.

    The stress test (5.00 / 1) (#2)
    by lilburro on Wed Feb 25, 2009 at 04:29:15 PM EST
    plan is out here.

    "Decade of the living dead" ... (5.00 / 3) (#3)
    by Robot Porter on Wed Feb 25, 2009 at 04:39:38 PM EST
    Wonder if Krugman is the only Nobel Prize winner to make a zombie reference in print?

    Were that his wit was as good on TV (none / 0) (#5)
    by andgarden on Wed Feb 25, 2009 at 04:41:17 PM EST
    His slow burn wit ... (5.00 / 2) (#9)
    by Robot Porter on Wed Feb 25, 2009 at 04:43:35 PM EST
    occasionally evokes delayed chuckles from TV reporters.

    He could use some of Chris Matthews's (none / 0) (#11)
    by andgarden on Wed Feb 25, 2009 at 04:47:27 PM EST

    He's one of those ... (none / 0) (#17)
    by Robot Porter on Wed Feb 25, 2009 at 05:13:54 PM EST
    newfangled energetic zombies.

    Er, *were as good (none / 0) (#7)
    by andgarden on Wed Feb 25, 2009 at 04:42:55 PM EST
    Stupid English subjunctive!

    And 'Would that ...' (none / 0) (#31)
    by Demi Moaned on Wed Feb 25, 2009 at 05:59:27 PM EST
    Ah, the perils of blogging. How often have I labored over a comment and then after posting realized "But I meant to write ..."

    That just screams for a graphic . . . (none / 0) (#88)
    by nycstray on Wed Feb 25, 2009 at 09:37:47 PM EST
    Treasury has just announced (5.00 / 2) (#6)
    by Anne on Wed Feb 25, 2009 at 04:42:30 PM EST
    how the stress tests will work; per the NYT:

    Nineteen major banks worth more than $100 billion will face a mandatory "stress test" to judge whether they have enough capital to survive another steep drop in housing prices or a sharp increase in unemployment rates.

    Those that fail would have six months to raise money from the private sector, or would receive additional capital injections from the government in the form of securities that could be converted into common stock at a 10 percent discount to the price before Feb. 9.

    Common stock carries voting rights and could hand the government greater influence over the banks that take on additional money -- or the executives who run them -- but the government would no longer be in a more senior position to be paid dividends or paid back first in the event a bank collapsed.

    Also, existing shareholders could have their stakes further diluted if the government converted preferred shares to common stock.


    The stress tests will use two economic situations to determine a bank's health: consensus projections of how the economy will fare in the next two years, and more pessimistic outlooks.

    Under the so-called baseline expectations of the economy's performance, unemployment will rise to 8.4 percent this year, economic growth will contract 2 percent and home prices will fall 14 percent.

    A worse outlook envisions home prices falling 22 percent this year, the gross domestic product contracting 3.3 percent and unemployment rising to 8.9 in 2009 and 10.3 percent in 2010.

    The government said the stress tests would be finished as soon as possible, but no later than the end of April.

    And in the middle of the article, this:

    The Treasury and Fed are also expanding programs to unlock commercial credit and planning a $1 trillion public-private partnership to entice investors to buy troubled mortgage-related assets from banks.

    The plan would require banks that take on additional government money to comply with executive pay limits passed under the $787 billion economic stimulus package, and would require banks to be more transparent about how they use taxpayer dollars.

    "Banks must submit a plan for how they intend to use this capital to preserve and strengthen their lending capacity -- specifically, to increase lending above levels relative to what would have been possible without government support," the Treasury Department said in a statement.

    What is not clear to me is whether the banks that get help via the trillion-dollar plan are those that are not being subjected to the stress tests - are these the still-healthy banks that will benefit?

    What I also don't get is why Obama could not address these details in his speech, unless he feels that the public is so tired of what looks like the constant and exponentially growing amount of "aid" that is being handed out, that he thinks the "there, there, don't worry" approach is the best option for dealing with the people.

    The Obama approach (5.00 / 6) (#10)
    by andgarden on Wed Feb 25, 2009 at 04:44:46 PM EST
    is allergic to discussing policy details. Go read his website!

    I wish he could understand that (5.00 / 5) (#13)
    by Anne on Wed Feb 25, 2009 at 04:48:07 PM EST
    his aversion/allergy to getting into the details is contributing to the sense people have that he is detached from it all.

    Is this the community-organizer approach, and are we supposed to get to work ourselves on fixing this mess?


    Personally, I don't think he knows... (5.00 / 5) (#15)
    by trillian on Wed Feb 25, 2009 at 05:08:21 PM EST
    ...what to do and as such, is depending solely on Geithner...whose loyalty unfortunately is to Wall St.

    Most economists are screaming for nationalization but they are ignored.  


    Nationalization is what you do if you (5.00 / 3) (#45)
    by FoxholeAtheist on Wed Feb 25, 2009 at 06:48:08 PM EST
    want to STOP the bail-out gravy train and FIX the banking system once and for all.

    Obama knows that, as does Geithner. The problem is that they are not WILLING to pull the plug on the gravy train. They are choosing to enable bank profiteering for as long as we let them get away with it.


    Geithner knows (5.00 / 3) (#46)
    by BobTinKY on Wed Feb 25, 2009 at 06:51:29 PM EST
    Obama probably doesn't but he will find out the hard way listening to Geighther, Summers et al. The are Wall Street deregulators from way bank and NOT the people we need now to resolve the problems we have.

    Why do you think Obama doesn't know (5.00 / 2) (#53)
    by FoxholeAtheist on Wed Feb 25, 2009 at 07:04:44 PM EST
    what you and I and every other sentient being in the world knows?

    Because he's listening...... (5.00 / 2) (#62)
    by trillian on Wed Feb 25, 2009 at 07:30:25 PM EST
    ....to the wrong people.  People he chose by the way.

    People he chose (5.00 / 1) (#72)
    by jen on Wed Feb 25, 2009 at 08:11:31 PM EST
    and people who chose him.

    yes, he chose those people (5.00 / 2) (#84)
    by FoxholeAtheist on Wed Feb 25, 2009 at 09:01:39 PM EST
    knowing full well what their ideological slant is - it's a matter of public record. He chose them because of the way they think not in spite of the way they think.

    Obama is not the 'boy in the bubble'... (none / 0) (#78)
    by FoxholeAtheist on Wed Feb 25, 2009 at 08:28:57 PM EST
    He reads papers and listens to the news and he probably reads blogs.

    No doubt Obama reads KRUGMAN; as does Rahm Emanuel who slammed Krugman, I'm assuming, with Obama's tacit approval - at the very least.  


    Again, I point people ... (5.00 / 2) (#16)
    by Robot Porter on Wed Feb 25, 2009 at 05:12:08 PM EST
    in the direction of FDR's banking crisis speech.  The right mix of politics, policy, explanation, broad themes and specifics.

    You can read and/or listen to the whole thing here.


    Hopefully, none of the banks (5.00 / 3) (#32)
    by inclusiveheart on Wed Feb 25, 2009 at 06:04:34 PM EST
    have heart attacks while they're undergoing these stress tests or looking for private capital etc.

    You're in a car crash.  You can't get out of the mangled car.  The guy with the jaws of life shows up and tells you he wants to wait a couple of hours to see if you can get out on your own.  You agree because you don't want him to do any more dammage to your already totalled car.  Shaking head.

    This approach avoidance really needs to stop.


    19 Major Banks Will Be subject to the ... (none / 0) (#23)
    by santarita on Wed Feb 25, 2009 at 05:31:16 PM EST
    stress test.  

    Bernanke made it clear yesterday (at least I thought so) that the purpose of the stress test is to see how much more capital the major banks needs if the economy takes a turn for the worse.  I don't think smaller banks are going to be left out of the federal dole.  But the Fed and USG can afford to take more traditional routes with the smaller banks - conservatorship and liquidation.  So some smaller banks may receive capital assistance.  And some might not.

    As to why Obama didn't go into detail last night... that's what his subordinates are for.  And besides what could he say other than: "We are going to stress test the major banks to see how much more of your money they need in order to keep banks kind of functioning until the economy turns around or other countries stop buying our paper."


    Yves Smith ,,,,,, (5.00 / 1) (#29)
    by trillian on Wed Feb 25, 2009 at 05:51:34 PM EST
    ....on the so called stress tests...

    We have been skeptical that the pending Treasury stress tests on banks, designed to ascertain their state of health, were inadequately staffed and therefore could not do the job properly. Our big concerns were that they had too few bodies to test financial data versus underlying documentation adequately (usually done on a sampling basis) and they lacked the expertise (and perhaps the mandate) to vet risk models (which we all know have performed impeccably over the last two years.

    Is it a test if the results are pre-determined? Apparently Team Obama thinks so.....



    Yes... (5.00 / 1) (#36)
    by santarita on Wed Feb 25, 2009 at 06:22:01 PM EST
    she has been very skeptical about this ever since Geithner talked about this two weeks ago.  The comments to some of her diaries have been instructive.  I'm not sure that at the outset Ms. Smith understood about modern bank examination.  The banks have to submit call reports to the regulators electronically on a quarterly basis.  These reports have a lot of data.  So the feds already have a ton of data.  

    To my mind one of the key benefits of the stress tests will be to provide a common pool of information for the regulators that will be analyzed in a common way.  With patchwork quilt of regulatory agencies, each has had their own way of looking at their charges.  Now they will have one uniform approach.

    If Bernanke can be taken at his word, then in a sense the stress tests have preconceived endings - that is they will tell the Fed and Treasury how much capital is needed to adequately capitalize the banks.  Many commentators wanted the stress tests to indicate which banks were irrevocably insolvent.  But that is not the way the Fed is looking at the tests.  Or so Bernanke says.


    Well, she's not alone ..... (5.00 / 2) (#64)
    by trillian on Wed Feb 25, 2009 at 07:41:58 PM EST
    ....in her skepticism...

    William Black: "There Are No Real Stress Tests Going On"

    By way of background, William Black is a former senior bank regulator, best known for his thwarted but later vindicated efforts to prosecute S&L crisis fraudster Charles Keating. He is currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City.

    More germane for the purpose of this post, Black held a variety of senior regulatory positions during the S&L crisis.He managed investigations with teams of examiners reporting to him, redesigned how exams were conducted, and trained examiners.

    Via e-mail, he has confirmed our suspicions about the bank stress tests announced by Treasury Secretary Timothy Geithner: they simply cannot be adequate, given the number and experience of the staff, and perhaps as important, their relationship with the banks (see detailed comments below).

    I also asked him about the fact that bank examiners examine banks (duh) and would not have much (any?) experience in the capital markets operations or sophisticated products that the big investment bank, now banks, participated in. Goldman and Morgan Stanley ought to be subject to these exams; Citi, JP Morgan, and Bank of America have large capital markets operations. These firms are where the biggest risks and exposures lie. Do the examiners what to look for in a even the low-risk operations, like repo desks, much the less derivatives and proprietary trading books? He agreed (as presented below) that it was a near certainty that this was beyond their skill level....



    I'm skeptical as well ... (none / 0) (#71)
    by santarita on Wed Feb 25, 2009 at 08:07:06 PM EST
    especially with regard to the knowledge of derivatives but I think the following ought to be considered:

    • the stress testing will be limited to examining how  tangible common equity ratios are affected by various scenarios

    •  the examiners will be from a consortium of all regulators - not just FDIC or OCC examiners - hopefully there is enough expertise to examine derivatives

    I'm not sure but suspect that part of the purpose of the exam is to get all of the various regulators on the same page, i.e. using the same language, the same measurements etc.

    So, they don't have enough folks (5.00 / 1) (#40)
    by 1jpb on Wed Feb 25, 2009 at 06:36:12 PM EST
    to audit the books (even on a sampling basis, rather than looking at everything), but a lot of folks (e.g. Krugman) think that these extremely complicated corporations w/ activities well beyond the traditionally regulated forms of banking should be taken over and run (actually not just run, they are to be rebuilt/reformed/optimized/divided to improve/salvage performance) by the government.

    Yesterday, I heard on the NPR that the FDIC recently hired 600 folks for a new office in CA.  And, they're calling back retired folks.  The new hires were getting ready to head out to start taking over the banks pretty much as soon as they ran through orientation.  And, these new hires were new to the bank taking over business.  And, the institutions they were taking over were minuscule and relatively traditional banking institutions compared to the big "banks" in question.

    But, Krugman and others think that the government should take over Citi, or some other similar "bank."  The gov can barely manage (w/ all sorts of new inexperienced folks) the tiny takeovers already on their plate, but now they should somehow take over Citi, which can barely be statistically audited for a stress test.  

    Seems like it's irrelevant to discuss IF the big "banks" should be taken over, since it's obviously logistically impossible for that to happen with effectiveness.  After all, they can barely handle the little guys.


    Common Stock at pre-Feb 9 prices (none / 0) (#66)
    by BackFromOhio on Wed Feb 25, 2009 at 07:50:46 PM EST
    is the clue that this is handout, not a bailout.
    The government gives insolvent banks taxpayer billions, and in return gets a number of shares of common stock determined by using Feb 9 prices rather than current, lower market prices per share.  Is this arrangement a fraudulent transfer?  & then banks can still file for bankruptcy and wipe out taxpayer equity?

    I thought his discussion (5.00 / 2) (#14)
    by Maryb2004 on Wed Feb 25, 2009 at 05:05:52 PM EST
    (or lack of discussion) about the bank plan was the worst part of his speech last night.

    On the other hand I understand, and have tended to engage in, the kind of wishful thinking that Kevin Drum is engaged in.  Economists like Krugman and lawyers like us demand and need facts to do our jobs and are therefore irritated when those facts and details aren't presented.  Politicians do whatever is politically necessary.  And in this case it might be necessary to deceive until the bitter end to avert a bigger Wall Street catastrophe.

    I don't think that the announcement today about the stress test details negates the possibility that there is necessary deception going on.  If the plan requires deception up until the day of the final announcement about what is going to happen to the banks then ... in for a penny in for a pound.

    Of course I know you'll hate the whole wishful thinking part of this.  

    In reading the two paragraphs that (5.00 / 4) (#18)
    by Anne on Wed Feb 25, 2009 at 05:19:55 PM EST
    Kevin highlighted, I found the first one more disturbing:
    I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won't be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.

    than the second because of the phrase "this time;" it just screamed to me that the "first time" we handed out money, we didn't do it right.

    The only thing that was missing is what I have come to regard as the Dems' unsaid tag line after so many of their efforts to take control and get accountability and basic information have failed: "and this time, we mean it!"

    "This time" is an empty threat, unless and until we get some details about what happens if there is no compliance.


    As I recall, Congress wanted (5.00 / 3) (#21)
    by oculus on Wed Feb 25, 2009 at 05:29:05 PM EST
    limits on CEO compensation in the stimulus bill and the White House didn't.  How in the heck is Joe Biden supposed to make sure we get our money's worth if there are no restrictions in the legislation?

    I disliked that first (5.00 / 1) (#28)
    by Maryb2004 on Wed Feb 25, 2009 at 05:49:23 PM EST
    paragraph when I heard him say it because it meant nothing.  "fully accountable" seems to mean after the fact (that's when most accounting happens) and what do they have to demonstrate: "They will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer".  This is the crux of the problem (credit freeze) and all we got was this bone thrown in with no details on how this happens -- requiring a demonstration after the fact does no good if they didn't do it.  Which is what happened last time.

    But there is no way to demonstrate in advance that something will happen after the fact - the only way to make sure it happens is to control the board and senior mgt because then you control the facts.

    Details about what happens if there is no compliance means details about measuring it after the fact.  Details about how we are going to make it happen is what concerns me.

    I hope that made sense.


    It Was A Bow to Populist Sentiment... (5.00 / 1) (#33)
    by santarita on Wed Feb 25, 2009 at 06:11:34 PM EST
    Talking about accountability, that is.  The first $350 bn was handed out with the belief (presumably) that this would free up the frozen credit markets (which it did a little).  What happened was that banks that were not well capitalized took the money and used it to build up reserves (and pay salaries and bonuses) and/or complete mergers and acquisitions.  

    Since money is fungible, the only ways to prevent this from happening with the next tranche is to:  dictate conditions, remove the board and senior management,  or to make sure the banks have enough capital so that they will lend $$$ out and to use the supervisory and regulatory powers to insure that this happens.  I think this later course is what they are pursuing.  

    I think Kevin Drum's wishful thinking may be right.  But I also think that Bernanke and Geithner believe that the economy will turn around and all will be well with the big banks or at least well enough so that the Fed and Treasury can do what they normally do with troubled banks - force mergers and/or conservatorships.


    Holding companies (none / 0) (#70)
    by gyrfalcon on Wed Feb 25, 2009 at 08:06:18 PM EST
    An op-ed in the Times the other day pointed out that for some reason, unexplained by the writer at any rate, the Bush Treasury Dept. handed out the first chunk of the TARP to bank holding companies, not the banks themselves.  The holding companies, instead of pushing the $$ out to their actual banks so they could start lending it, hung onto it for fear of not being able to pay off investors if there was a meltdown like happened to Bear Stearns.

    As you say, whatever they did with TARP 1 did work, in that it at least partially unfroze the commercial paper market and short-term business lending, but the banks have clenched up even more on consumer and small business credit, which has to also get unfroze somehow.


    There was a Congressional Oversight ... (none / 0) (#74)
    by santarita on Wed Feb 25, 2009 at 08:13:22 PM EST
    hearing where the Chair of the Oversight Group raised a lot of questions about how TARP I was handled.  The group was essentially stonewalled by Paulson.  Geithner promised to be more forthcoming.  There was apparently a $78 bn discrepancy between par value of shares and amount given to the banks.  It will be interesting to see if Congress follows up on this.  

    CNBC just re-ran that particular statement (none / 0) (#89)
    by Inspector Gadget on Wed Feb 25, 2009 at 09:46:25 PM EST
    from the speech. Listening to him say it was better than reading it. I believe he was referring to how the banks were given money without restrictions in the "Bailout" under the bush administration v. how "His" stimulus handout will not be so unmanaged.

    Lies and wishful thinking, (5.00 / 1) (#20)
    by jussumbody on Wed Feb 25, 2009 at 05:28:11 PM EST
    a couple dedaces of both, are what got us in this mess.  I don't buy it at all.  We need something straightforward and sound before it's too late.  

    Wishful thinking, isn't the the reason Ian Welsh has Tinkerbell for his avatar?

    What we'll get from Team Obama will almost certainly be too little too late.


    I meant to ask last night (5.00 / 1) (#22)
    by NJDem on Wed Feb 25, 2009 at 05:30:52 PM EST
    how come no one pointed out Obama's line, which he repeated last night, that he will either "save or create" 4 million new jobs (I think it was four?).  

    Save or create?  How is stopping the bleeding (saving the jobs) stimulative?  

    I think we'd all like more details on his plan, but for this, I just need a simple explanation.  

    3.5 million was ... (5.00 / 2) (#24)
    by Robot Porter on Wed Feb 25, 2009 at 05:36:03 PM EST
    the number.

    And regarding your other point, it's argued that it's better for the economy for someone to keep their job than to be laid off and get a new one.


    Thanks (5.00 / 2) (#27)
    by NJDem on Wed Feb 25, 2009 at 05:48:25 PM EST
    I see your point, and obviously I'm in favor of saving jobs, particularly for the reason you stated).  

    But isn't the issue (or a big one) in the rust belt/MI/OH, etc., that the old factory jobs and others have been superseded and we need to create new kinds of jobs?  What about the millions of green jobs?  

    I guess would have loved to for him to have announced a Green WPA...    


    "Save or create 3.5 million jobs" (none / 0) (#63)
    by FoxholeAtheist on Wed Feb 25, 2009 at 07:34:26 PM EST
    is an obtuse proposition, it leaves you wondering WORM, or in my case WTF?

    What if future job losses exceed 3.5 million - what if 7 million people lose their jobs? Is Obama saying that he only plans to "save or create" jobs for half of those people?


    Its a hypothetical number that has no (none / 0) (#91)
    by coast on Wed Feb 25, 2009 at 10:05:03 PM EST
    basis in fact.  He has generally kept the number between 3 and 4 million, but he could say 10 jobs or 10 million for all that matters.  All the are estimates that should be taken as such with the expectation that there is a large margin for error.  In other words, they have no idea how many jobs the stimulas package may or may not create.

    Zombies... (5.00 / 1) (#26)
    by kdog on Wed Feb 25, 2009 at 05:47:22 PM EST
    I'm really liking that analogy.

    "Can't offend the shareholders"...that one always cracks me up.  If only OTB or the Borgata were as averse to offend.  

    Truly mind boggling.

    Indecision Might Not Be the ... (5.00 / 4) (#30)
    by santarita on Wed Feb 25, 2009 at 05:55:48 PM EST
    right word.  I think Treasury and the Fed have made a decision which is to give the banks the capital that they need.  Bernanke said it yesterday at the Congressional hearing.  The purpose of the stress testing is to determine how much capital is needed.  Bernanke also said that the Fed and Treasury don't need to nationalize the banks in order to obtain control over the banks.  

    I think what Krugman is saying is not that the Fed and Treasury are being indecisive but that they have apparently made a decision to prop up zombie banks.  

    The stress test is a charade which will allow (5.00 / 1) (#57)
    by FoxholeAtheist on Wed Feb 25, 2009 at 07:15:41 PM EST
    the Administration to continue giving the banks a perpetual "slow, intravenous drip" (Krugman) of bail-out money at taxpayer expense.  

    Not a Very Good Charade... (5.00 / 2) (#61)
    by santarita on Wed Feb 25, 2009 at 07:24:26 PM EST
    if everyone can see right through it.

    Agreed, but it doesn't have to be a good (5.00 / 1) (#67)
    by FoxholeAtheist on Wed Feb 25, 2009 at 07:55:58 PM EST
    charade. It only needs to have a semblance of propriety, a little something, something to give them a bit of cover - a fig leaf, so to speak.

    By way of precedent, everybody could "see right through" Colin Powell's UN charade with the little CG graphics about aluminum tubes and yellow cake uranium. Still, that charade was sufficient to scare a nation into pre-emptive war.


    But Colin Powell Had An Ally in a (none / 0) (#75)
    by santarita on Wed Feb 25, 2009 at 08:15:09 PM EST
    willing and gullible media and public.

    However, I agree that we need to be skeptical.


    Santa, it looks like Obama also has an ally in (none / 0) (#79)
    by FoxholeAtheist on Wed Feb 25, 2009 at 08:37:37 PM EST
    the media and the public - BIG TIME. If he wanted to pull the wool over our eyes, the time to do it would be now.

    Right Now It Seems Like... (none / 0) (#81)
    by santarita on Wed Feb 25, 2009 at 08:46:54 PM EST
    people are more than ever on their guard against that kind of collusion.

    I read the three articles by Wm Black.  He makes some good points but to equate a takeover of an international money center bank the size of Citi with the takeover of an S & L that pretty much had one line of business - real estate lending is just not apt.  If he had talked about Continental illinois being put into receivership and then multiplied the complexity of that times 10, he'd be more believable.  

    The one question that he does raise that is worth my do more research on is the question of valuation of the toxic assets or as Citibank says "challenged assets".  That is the ballgame right there.  The Treasury FAQ didn't really address that.


    Santa, thanks for the repartee... (none / 0) (#82)
    by FoxholeAtheist on Wed Feb 25, 2009 at 08:54:25 PM EST
    I have to say I don't think the general public is in a frame of mind to 'second-guess' Obama right now. Imo, the vast majority are all on board - for better or worse.

    Trust but Verify... (none / 0) (#87)
    by santarita on Wed Feb 25, 2009 at 09:33:04 PM EST
    there are complex problems out there and no easy solutions.  

    I wish everyone who yells 'nationalize the banks' (5.00 / 2) (#35)
    by steviez314 on Wed Feb 25, 2009 at 06:17:48 PM EST
    would tell me what they'd do on Tuesday if Citibank were nationalized on Monday.

    Do you wipe out the preferred stockholders?  Do you zero out the bondholders?  How far down the capital structure do you go?  How could you possibly know, when you have no idea what the assets are worth (and don't tell me about mark-to market, there is no functioning market)?

    If you just decide, arbitrarily, to wipe out all the preferred stock and bondholders, even though the bank is current on all obligations and has no liquidity issues, why shouldn't every bondholder in every industry in America get worried they're next--that's hardly encouraging for capital raising.

    And who's going to run the bank?  I assume "nationalization" means "get rid of them", but who should the government get to trade out of CDOs, match assets and liabilities and conduct regular business?  Other guys from Wall Street?  Me?

    Oh, and when the government owns the $1 Trillion in assets and since we all know it doesn't really want them, well I can just imagine the fire sale that would go on.  Do you think the gov't can get good prices on them from private equity?  

    I'm not saying I have the right answers, or that  the stress testing will be perfect, or that putting more money in is ideal, but "nationalization" is a word, not an answer at all to any of these questions.

    It seems much more like a synonym for revenge than a plan.

    Revenge, maybe but... (5.00 / 1) (#38)
    by santarita on Wed Feb 25, 2009 at 06:33:38 PM EST
    there is also a lack of confidence  in  the  boards and senior management.  And a concern that the US taxpayers are not getting a fair deal in terms of upside possibility for the at-risk money being pumped into the banks.

    But you are right - there are enormous operational problems with a government takeover.  That's largely why the regulators force marriages of banks - they don't want to operate them.

    Since everyone has a pet theory, I have one too.  The Group of 20 will meet in April, I believe.  That meeting will produce an international resolution of major counterparty risks in derivatives and then the large international banks that are the most problematic can be dealt with more forecfully.


    Steviez, you're a floor trader right? (5.00 / 1) (#76)
    by FoxholeAtheist on Wed Feb 25, 2009 at 08:19:59 PM EST
    For 20 years according to a prior comment. I'm not saying that's a bad thing, but it could explain why you may be more pro-market and anti-nationalization than the average disinterested party. Just sayin...I'm one of the really little people, so I see it very differently.

    While self-analysis is difficult, i don't (none / 0) (#94)
    by steviez314 on Thu Feb 26, 2009 at 05:14:58 AM EST
    think that's the case.

    First, I just work for myself (and wife and kids) so I'm not particularly in love with Wall St.

    Second, 20 years has shown me the market is irrational almost all the time, driven by emotion not logic, so hard;y a good arbiter of our lives.

    But most important, I really have looked at those banks' balance sheets and don't think "nationalization" is a plan--just like I don't think there's been anu other plan presented yet either.


    I'm still going to have to say Krugman is in a (none / 0) (#100)
    by FoxholeAtheist on Thu Feb 26, 2009 at 10:40:01 AM EST
    much better place to judge than any of us.

    As for the pols, pundits, and fat cats: If the Iraq War taught us anything definitive, it is that we ought to be thoroughly skeptical when we find the GOP, the MSM, conservative Democratcs, and corporate interests all rabidly promoting the same idea.

    Common sense, history, and personal experience suggest that their proposed course of action is generally NOT in the public interest.


    But remember that Krugman (none / 0) (#107)
    by gyrfalcon on Thu Feb 26, 2009 at 11:53:51 AM EST
    is a macroeconomist, not a financial economist.

    Heh, aren't there ANY reputable, (none / 0) (#108)
    by FoxholeAtheist on Thu Feb 26, 2009 at 11:59:00 AM EST
    progressive "financial economists" who have advocated for some form of public ownership (nationalization), at least in the short term?

    Could well be but (none / 0) (#109)
    by gyrfalcon on Thu Feb 26, 2009 at 01:35:35 PM EST
    that's not my point.

    Krugman opines on things he's a true expert on -- macroecnomics -- and stuff he isn't -- the financial system.  Because he's a visionary in macroeconomics does not make him the Word of God on what it will or won't take to get the arcane and largely subterranean world of banking and credit and securitizations of securitizations straightened out.

    That's a wholly different world with complicated interconnections and multiple levers, many of which are invisible even to the knowledgeable until they're pushed, and one in which disasters can happen quite suddenly.  That's so different from the way macroeconomics works that it requires not only an entirely different knowledge base but a different way of thinking.

    I revere him as a macroecnomist, but I'm extremely wary of his pronouncements on the best way to go about fixing the financial system.  He made a whopping, glaring, terrible, fundamental error when TARP was first proposed that I found frankly quite stunning, and I think he is simply not wholly trustworthy in this entire area.

    Not suggesting he's even necessarily wrong in the things he's said about it since, just that it should not be taken as gospel, whereas his opinions on the larger ecnomic picture, I think anyway, should be.


    Curious, do you have a background (none / 0) (#110)
    by FoxholeAtheist on Thu Feb 26, 2009 at 07:10:25 PM EST
    in economics that would be inclusive of "macroeconomics" and "financial economics"? I do realize that Krugman is fallible, but I doubt that his expertise in macroeconomics precludes a working knowledge of financial economics.  

    I guess my question remains, are there financial economists who are more or less in agreement with what Krugman and James K. Galbraith (another macroeconomist) are saying about the potential merits of some form of nationalization?


    No, sir, not at all (5.00 / 1) (#111)
    by gyrfalcon on Thu Feb 26, 2009 at 09:32:15 PM EST
    Just a somewhat informed layman who's been following all this fairly closely.

    One more time, I'm NOT saying anything precludes Krugman from having a working knowledge of financial economics.  What I am saying is that his macroeconomic genius does not automatically mean he has any real expertise in financial economics, or the deep weeds of the way our financial system has come to organize itself over the last 10 years.

    I'm also saying he failed utterly to grasp the point of Paulson's original TARP 1 plan until some days after it was announced and explained, and some days after I, a totally untrained layman, had understood it. (I can prove that with emails, btw, but I hope you'll spare me and take my word for it.)  He nevertheless gave himself permission to rail against it like a banshee for those days.

    That does not, you will agree, engender confidence that he really knows what he's talking about on this stuff.

    I certainly don't have any reason to think nationalization isn't a good idea-- except for the fact that the presumably very small number of people in the Obama administration who do very much know the weeds of the financial system don't seem to think it is, at least not right now.  (There's also the question of what everybody means by "nationalization," but that's another issue.)

    All I'm trying to do is caution folks not to assume that Krugman's opinion, or the wonderful Jamie Galbraith's, for that matter, is the very last word on what should or shouldn't be done to fix the banking/financial system.

    Nationalization would seem, on the surface at any rate, to be exactly the right thing to do if these huge banks were standalone institutions.    The whole problem is that they aren't, so nationalizing, say, Citi, which might be the best way to fix Citi's problems, would have substantial repercussions and ricochets on the other non-nationalized banks.  Maybe those would be good, but I rather suspect they'd be awful.

    I don't hear/read Krugman really dealing with that issue very much, which is part of the source of my discomfort with his pronouncements on the subject.

    I reject out of hand the idea that Geithner and Summers and the entire Obama administration are totally in the tank to the "fat cat bankers/Wall Street," and I've yet to hear from Krugman, Galbraith, et al, anything approaching a thoughtful technically-based hypothesis for why they're not taking their advice and rushing to nationalize-- particularly given that there are very real and increasing costs for continuing to wait to act.

    My own tenative conclusion, given all the above, is that Geithner et al believe there's potentially a much worse down side for our very fragile economy to nationalizing than there is to waiting until they have a clearer sense of these banks' real position before deciding when and how to act.

    Doesn't mean they're ultimately going to do what turns out to be the absolute best thing here, but we are, as is now a cliche, in uncharted waters.  Nobody knows for sure.  We've never been here before.

    A lotta words to explain one thought-- don't automatically assume Krugman is 100 percent right about everything that has a dollar sign attached to it.


    Thanks for your thorough responses gyr.. (none / 0) (#112)
    by FoxholeAtheist on Thu Feb 26, 2009 at 10:56:04 PM EST
    Have you read this piece from the Financial Times, 2/18/09, Greenspan backs bank nationalisation:
    In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers.

    "It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years this is what you do."

    I'm no expert either and I think I've hurt my head! But if you have any further thoughts, I'll be more than happy to read through. Peace.


    Interesting speculation in a (none / 0) (#113)
    by gyrfalcon on Fri Feb 27, 2009 at 12:28:02 AM EST
    comment on Krugman's latest blog post:

    "It is possible that after looking into the abyss of what happens when too big to fail-fails- the government rationally concluded the costs are unacceptable.  If we nationalize, then credit default swaps are triggered.

    The whole system collapses. Think Lehman times 10. After all we are talking Citigroup."

    Hmmm.  Might that be true?  If so, pulling the string would be catastrophic.

    That's the kind of discussion I'm missing from all these big boys who are shrieking for immediate nationaliztion.  Don't know if it's true, but if so, it sure would explain a lot.

    As for Greenspan-- honestly, it's not at all clear to me that he understands the current CDS-based system we have now.  After all, he was truly stunned when the meltdown happened.

    But in any case, proclamations of "Nationalization is essential" don't carry a lot of weight with me unless they're backed up by a good discussion of the pros and cons, and one that specifically addresses things like what happens to all those CDSes when a bank's assets are wiped out either by nationalization or collapse.

    It's one reason I was rather in favor of the original TARP plan to buy up all the toxic crap and just get it out of the system.  (This was while Krugman et al were shrieking for just straightforward capitalization, which, um, hasn't worked out all that wonderfully, I think you'd agree.)  I can speculate, but I've never read/heard a coherent explanation for why Paulson abandoned that idea almost from the beginning.


    Well, we've arrived at an impasse.. (none / 0) (#114)
    by FoxholeAtheist on Fri Feb 27, 2009 at 12:05:33 PM EST
    You and I are not the only ones to have what I would call opposing ideological perspectives on the question of bank nationalization.

    Basically, we have both heard many of the same pro vs. con arguments on nationalization. I've come down in favor of nationalization based on the arguments I've heard from progressive economists; and evidently you have remained in favor of the current system of government-assisted privatization.

    You have said that neither Krugman, nor James K. Galbraith, nor GREENSPAN, understand economics and the current situation well enough to recommend that some banks be nationalized, at least temporarily.

    I doubt that there is any standard of proof adequate to convince you that this may be a good idea. Yet you present no equally high standard of proof in favor of continuing to provide the "slow intravenous drip" of taxpayer money in order to keep the banks "shambling along" to sustain the illusion that they are still privatized entities.

    These "zombie banks" are on life support at public expense and they leave us with the untenable burden of "LEMON SOCIALISM".

    "lemon socialism": taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right

    So why does the Obama Administration prefer to administer an endless, slow drip of life support rather than a full fledged robust infusion of life restoring financial aid?

    Bank stocks are worth so little these days -- Citigroup and Bank of America have a combined market value of only $52 billion -- that the ownership wouldn't be partial: pumping in enough taxpayer money to make the banks sound would, in effect, turn them into publicly owned enterprises.

    My response to this prospect is: so? If taxpayers are footing the bill for rescuing the banks, why shouldn't they get ownership, at least until private buyers can be found? But the Obama administration appears to be tying itself in knots to avoid this outcome.

    The Administration is tying itself into knots because banking interests would make a concerted effort to annihilate Obama if he pried them off the taxpayer teat and put the public interest above private profit. We are simply not as powerful as them; and a good many of us can always be convinced to vote against our own socio-economic interests.

    I don't presume to speak for you, so please don't misunderstand when I say: nowadays, it appears many Obama supporters are also tying themselves into knots to avoid disagreeing with him on this matter.


    Here's how nationalization would work (none / 0) (#65)
    by FoxholeAtheist on Wed Feb 25, 2009 at 07:47:02 PM EST
    This column is from William K. Black who was a Senior Regular during the S&L crisis:
    There are proven ways to resolve the crisis that are far cheaper and more effective because they don't subsidize bankers and "risk capital." We know how to resolve failed banks.

    The Federal Deposit Insurance Corporation (FDIC) can place even the largest banks in "pass through" receiverships on Friday at the close of business and reopen them as "New Federal" bank Monday morning with minimal disruption to customers and creditors and retain "going concern" value. This is how the Reagan administration resolved failed S&Ls during the debacle.

    S&Ls in the 1980s are not even close to the (5.00 / 1) (#68)
    by steviez314 on Wed Feb 25, 2009 at 07:56:23 PM EST
    $2.5 Trillion behemoth that is Citigroup.

    CDOs, RMBSs, credit default swaps, the sheer international score of operations, are not comparable to the RTC.  Not even close.

    By the way, if there's mininmal disruption to creditors, then what's the point of nationalization.  If it's not to reorganize the capital structure it's meaningless.

    I know people who made LOTS of money buying assets from the RTC....the fire sale of a Citi's assets would be extraordinary.

    And how many people would an RTC need to manage this?  And how could they get them, except from the Wall Street everyone hates.


    My money is still on William K. Black... (none / 0) (#69)
    by FoxholeAtheist on Wed Feb 25, 2009 at 08:05:25 PM EST
    I only cited a small portion of his column: "The Audacity of Dopes". He has more columns at HuffPo; here's the LINK again.

    Not Really Describing Nationalization... (5.00 / 1) (#77)
    by santarita on Wed Feb 25, 2009 at 08:22:47 PM EST
    If that is descriptive of what you mean by nationalization, then the feds have already nationalized about 30 banks.  

    I am under the assumption that if the feds have some bank that can take over Citi without massive federal funding, that they would have done it already.  While I think that Bernanke and Geithner may be too close to the senior management of the big banks, I don't think that they owe allegiance to them and if there were a quick and easy way out, they'd take it.  Personally, I think they will pursue a dual track of injecting capital while looking for ways to make Citi attractive to private investors/banks.  


    I wonder (5.00 / 1) (#41)
    by lentinel on Wed Feb 25, 2009 at 06:43:00 PM EST
    if Chris Matthews had a point when he said that the Dow Jones is a good barometer of how much confidence the American people have in Obama. It doesn't look too good.

    I can't stand inspirational speeches because I don't feel inspired by them. I feel like someone is trying to pull the wool over my eyes.

    Chris Matthews is about as ... (5.00 / 5) (#51)
    by santarita on Wed Feb 25, 2009 at 07:01:12 PM EST
    credible as the his colleague on CNBC, Rick Santelli.

    Dow Jones High in Oct 2007: 14,000 (5.00 / 1) (#55)
    by steviez314 on Wed Feb 25, 2009 at 07:06:18 PM EST
    George Bush job rating, Oct 2007:  32

    So, I'd guess not a great barometer.


    I meant (none / 0) (#58)
    by lentinel on Wed Feb 25, 2009 at 07:16:50 PM EST
    on the economy. That was the focus of the speech yesterday.

    Bush's popularity, imo, was in the toilette because of Iraq.
    But investors still had confidence, albeit misplaced, in the economics of the Bush administration. So the Dow was still high.

    It has to mean something that the market sank the day after Obama's speech. I know that were I Obama, I would have hoped for the market to soar after a speech to both houses of Congress and the American people about what he was going to do to fix the economy.

    I think potential investors might have been more exuberant if there had been more specifics from Obama. I have more confidence in Krugman's analysis than I do Obama's actions. Would that it were not so.


    On the ither hand, if the market soared, you (5.00 / 1) (#59)
    by steviez314 on Wed Feb 25, 2009 at 07:20:53 PM EST
    might also think that it was Obama giving away freebies to investors at the expense of taxpayers.

    I've been a trader for 20 years, and it is folly to try to figure out the rason behind stock moves.

    But if you insisted, I'd say it was the collapse of Latvia and Ukraine's credit ratings today, and the serious damage it's doing to the German economy that caused today's down move.  See, sounds good too!


    You (5.00 / 1) (#60)
    by lentinel on Wed Feb 25, 2009 at 07:22:45 PM EST
    have a point.

    Thank you!! (5.00 / 1) (#73)
    by gyrfalcon on Wed Feb 25, 2009 at 08:12:32 PM EST
    This idea of equating the DJIA with the public is just wrong.

    In terms of the popularity of the POTUS, yes, (none / 0) (#80)
    by Inspector Gadget on Wed Feb 25, 2009 at 08:41:09 PM EST
    but, the DJIA dramatically impacts the people's confidence in the economy, and eventually those things have to intersect.

    The investors who control a big chunk of the economy are reacting to what the administration is currently doing and says they will be doing down the road.


    Well, obviously (none / 0) (#86)
    by gyrfalcon on Wed Feb 25, 2009 at 09:17:03 PM EST
    But it's not the case, as seems to get suggested all too frequently, that it works the other way around, that the DJIA is a reflection of public attitudes.

    DJIA and stock prices generally are a reflection of a whole lot of different things on any given day, most of which aren't even on the radar screens of most of the public.


    So, can we agree to disagree (none / 0) (#98)
    by Inspector Gadget on Thu Feb 26, 2009 at 08:41:20 AM EST
    on this?

    Almost every really big news event becomes a segway to how the market "responded". It's been that way for years.


    Not sure what we're disagreeing (none / 0) (#105)
    by gyrfalcon on Thu Feb 26, 2009 at 11:45:41 AM EST
    about.  The fact that the financially dim and sensationalist media insists on announcing that every rise or fall in the Dow Jones is a reaction to something the president said or did doesn't make it so.  (just fyi-- "Segway" is that motorized scooter thing Bush managed to fall off of, "segue," pronounced the same way, is the word you want for something that happens after something else.)

    Out of touch (none / 0) (#99)
    by KoolJeffrey on Thu Feb 26, 2009 at 09:21:20 AM EST
    Apparently many posters on this site are not part of the 85% of people who were more hopeful following the Obama speech. The tiresome nitpicking of Obama by the extreme left is premature and counter-productive.

    Obama knows that you can't roll out specifics before a general agreement of the need for action has been reached. Why on earth should he give America's enemies (a.k.a, the GOP) a chance to shoot it down before it is finalized?

    Even Bill Clinton, who is not an Obama supporter, gave the speech glowing reviews. He understands the complexity of the situation better than any of you backstreet drivers around here.


    If you think TL is the extreme left, that (none / 0) (#102)
    by FoxholeAtheist on Thu Feb 26, 2009 at 10:52:07 AM EST
    may say more about you than it says about TL - not that that's a bad thing.

    Imo, the US has a very skewed sense of where the left is, particularly since McCarthy. In other Western Democracies with a 3+ party system, Liberal is not equated with Left. Liberal is generally defined as the middlin-middle between Right and Left. We'd be wise to get with the rest of the world on that account.

    Frankly, I've haven't been able to find more than a couple of prominent blogs that I would call remotely far-left. I'm sincerely interested to know what sites you've been reading. Can you share that info?


    THis is an absurd comment (none / 0) (#106)
    by gyrfalcon on Thu Feb 26, 2009 at 11:50:13 AM EST
    on numerous fronts.  TL is hardly "extremely left."

    And Obama has long, long since gotten whole-hearted agreement from the public on the need for action and  general approval of his general approach.  The longer he goes on without providing more specifics, the more that support will erode.  One of the big problems the economy has right now is anxiety and uncertainty.  He's making that part of it worse-- as Bill Clinton also very wisely said.

    The reason given by his aides for his continued lack of specifics is, and I quote, "The American public isn't interested in specifics."


    Tweety's only barometer is in his pant-leg... (none / 0) (#101)
    by FoxholeAtheist on Thu Feb 26, 2009 at 10:42:24 AM EST
    Geithner on Newshour (5.00 / 1) (#43)
    by BobTinKY on Wed Feb 25, 2009 at 06:46:48 PM EST
    seemed to dimiss Lehrer's question about nationalization on pure ideological grounds, insisting the only choices were his plan and to do nothing.

    Bizarre.  Finances are not yoru typical lawyer's strong suit and I fear Obama may be relying on the wrong crowd to solve this problem.  How can Geithner insist with a straight face that the private sector provides the best leaderhsip for these banks and best guardians of the massive public investment?


    Geithner is absolutely correct. (5.00 / 2) (#50)
    by Green26 on Wed Feb 25, 2009 at 07:00:04 PM EST
    It's astonishing to me that some people believe the government could run industries, like banking, better than bankers.

    It reminds me of football fans who think they know more than football coaches.

    Of course, executives make mistakes and don't make all the right decisions. However, they are much more skilled and qualified than the government.


    An Unsupported talking point (5.00 / 1) (#93)
    by pluege on Thu Feb 26, 2009 at 04:33:11 AM EST
    There is no evidence that government in general runs things any worse than similar types of things run privately, but a lot of the opposite where privately run organizations are corrupt and inefficient, the big banks being just the latest case of disastrously corrupt private management. Most government run programs are pretty efficiently run because there is oversight and constant pressure to reduce costs.  

    It is republican ideology that spews the myth that government can't do anything right.  


    they are worried that government (5.00 / 1) (#97)
    by Salo on Thu Feb 26, 2009 at 08:40:41 AM EST
    will run things all too well and actually turn a small profit.

    Problem is... (5.00 / 1) (#103)
    by santarita on Thu Feb 26, 2009 at 11:11:23 AM EST
    that the government may run well under Democrats but not so well under Republicans.  You only have to look at some of the big failures of the last 8 years to get a feel for this:
    -Katrina Recovery
    -Iraq Occupation
    -SEC and other Financal Regulators Asleep at the Swotch

    The difference between private and public management is that the private sector has always one overriding goal: to turn a profit.  The government's overriding goal changes.


    Once again, its a (none / 0) (#95)
    by NYShooter on Thu Feb 26, 2009 at 07:58:17 AM EST
    play on words...semantics.

    What, exactly is "THE" Government? That's kind of like Bush saying he "Cut Taxes." He cut taxes for 5% of the richest people, so technically he's correct. But for most people, except for talking points for jerks like Limbaugh & Hannity, "cutting taxes" meant nothing.

    Similarly, its not "THE GOVERNMENT" that runs things, its "THE PEOPLE" assigned to run things that makes all the difference.

    I thought everyone understood that, but apparently not.


    Geithner Can't Really Say the ... (5.00 / 1) (#54)
    by santarita on Wed Feb 25, 2009 at 07:05:40 PM EST
    opposite, though.  After all he is just saying a truism of capitalism.  

    I'm not sold on Geithner,  I am not sure that he is better than Paulson.  But I'll give him a year to prove that he is not just a handmaiden to the big banks and investment firms.


    first order of business. (5.00 / 1) (#96)
    by Salo on Thu Feb 26, 2009 at 08:38:36 AM EST
    stop the expensive wars.

    second: Go after these criminals offshore accounts.

    third order: Listen to Krugman.

    The Markets Aren't Buying the Hokum (2.00 / 1) (#19)
    by kidneystones on Wed Feb 25, 2009 at 05:24:00 PM EST
    We're in the middle of a deal, right now, involving lots of money, to purchase a new home and sell our old one. Call this a quality problem. That said, the collapse of the market and consumer confidence has destroyed about 30% of the equity we have in our existing property, at least. All we need is some level of stability and we're not seeing it.

    Re BTD's remarks about Clinton: Is there anyone who thinks Bill Clinton, working for HRC or Obama, would do a worse job running the US economy than the current gang? Is there anyone who thinks investors around the world are happier seeing BHO running things than HRC and WJC? Acorn and Chicago versus two successful terms and balanced budgets.

    We're living the choice Dems and Americans made, again. I'm not liking it much.

    What remark of BTD are you referring to? (1.00 / 0) (#25)
    by jussumbody on Wed Feb 25, 2009 at 05:39:34 PM EST
    I don't know that HRC or WJC would have done much better than Obama, et al.  I think they would have, but then again, I can't see how anyone 'cept McCain could have done worse.  And remember Bill's team does not have immaculate hands here, deficit reduction notwithstanding.  A lot of deregulation happened on his watch.

    Anyway, you can't use that argument with the Obamabots.  Any time you criticize Obama, they snap back sarcastically with "I'm sure Hillary would have done so much better" (as if it is self evident that she would have done worse).  And what's the point?  To paraphrase an eloquent SOD (sec of def), "You go into financial Armageddon with the Vichy Dem corporate shill you have, not with the one you want."


    I'm avoiding (3.50 / 2) (#52)
    by kidneystones on Wed Feb 25, 2009 at 07:03:33 PM EST
    the derogatory terms you employ to describe that portion of supporters most indifferent to fact.

    I'm not simply posing rhetorical questions. Obama could appoint WJC his economics czar and Bill is certainly wonky enough to ride herd on Summers, Volker, and Giethner.

    That's the kind of bold, effective management I'd like to see: where proven talent is used to solve problems.

    More than that, I'm certain that Bill's many fans around the world would be much happier with a known factor, rather than a question mark. The US and UK press largely avoided any mention of 'right-wing talking points' that undermined the notion that a poli-student who stumbled out of Columbia without honors into Harvard Law is the sort of person we all want cleaning up after G. W. Bush.

    Were pride, vanity and fear not coursing through the ranks of hope and change, the powers that be might take a step back and recognize that Bill has had far more experience dealing with numbers and challenges of this scale than anyone.

    It's absurd to leave the most experienced, capable player on the bench.

    But that's the way things are in Dem land.


    So is this wordplay or what? (none / 0) (#34)
    by lilburro on Wed Feb 25, 2009 at 06:13:55 PM EST

    Feb. 25 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner said that a government takeover of troubled banks is unnecessary for solving the country's deepening economic and financial woes.

    Nationalization "is the wrong strategy for the country and I don't think it's the necessary strategy," Geithner said, according to a transcript of an interview on public television's "The News Hour with Jim Lehrer" to be broadcast later tonight.

    Similar to NPR (none / 0) (#47)
    by 1jpb on Wed Feb 25, 2009 at 06:55:01 PM EST
    UPDATE: First thought: The secretary said nationalization of the banks would be the wrong approach, but he would not say the word "nationalization."

    Geithner talked about that "broad strategy" and what was and was not the "right strategy." But he never said "nationalization."

    Example: "Adam, that's not the right strategy for the country, for basic, practical reasons that our system will be stronger if it remains in private hands with support from the government to make sure those institutions can play their critical role."



    Big banks well-capitalized as of now. (none / 0) (#37)
    by Green26 on Wed Feb 25, 2009 at 06:28:23 PM EST
    From today's NY Times:

    "Sheila C. Bair, the head of the Federal Insurance Deposit Corporation, said on Tuesday that the nation's banking industry was safe. "All these large banks exceed regulatory standards for being well capitalized, so for right now, they're fine," Ms. Bair said on CBS television's "The Early Show."

    "At Bank of America, Kenneth D. Lewis, the chief executive, assured the bank's employees on Monday that Bank of America has enough capital, including common stock. "I have said repeatedly that our company does not need further assistance today and I don't believe we'll need any more in the future," Mr. Lewis wrote in a memorandum."

    The key hedge being... (none / 0) (#39)
    by santarita on Wed Feb 25, 2009 at 06:34:34 PM EST
    "for right now".

    And... (none / 0) (#42)
    by lentinel on Wed Feb 25, 2009 at 06:46:02 PM EST
    what a hedge!

    Moving on the health care, (none / 0) (#48)
    by oculus on Wed Feb 25, 2009 at 06:57:05 PM EST
    apparently.  But, how to save soooo much money on Medicare when the population is getting older?

    If we can't bring the law to bear on Bush et al (none / 0) (#104)
    by FoxholeAtheist on Thu Feb 26, 2009 at 11:28:59 AM EST
    I don't have much hope that the law will be brought to bear on the banking cabal.

    The Bush cabal and the banking cabal are hand-in-glove, seems nothing will happen to one if nothing happens to the other.