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purejuiceHere.
Obama's Katrina moment has arrived, not least with the deployment of the unspeakable Larry Summers, explicitly because he's totally tone-deaf.
http://www.nytimes.com/2009/03/22/opinion/22rich.html?em
Geithner totally doesn't get it either, and needs to resign.
The common element to the Paulson and Geithner plans is the insistence that the bad assets on banks’ books are really worth much, much more than anyone is currently willing to pay for them. In fact, their true value is so high that if they were properly priced, banks wouldn’t be in trouble.
And so the plan is to use taxpayer funds to drive the prices of bad assets up to “fair” levels. Mr. Paulson proposed having the government buy the assets directly. Mr. Geithner instead proposes a complicated scheme in which the government lends money to private investors, who then use the money to buy the stuff. The idea, says Mr. Obama’s top economic adviser, is to use “the expertise of the market” to set the value of toxic assets.
But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.
http://www.nytimes.com/2009/03/23/opinion/23krugman.html
Obama is pissing away his moral authority by ignoring the peoples' will on this. Which is, I submit, way more Darwinian and free market than Geithner's cronyism. I think the people are willing to let Ford and GM and the banks disappear, as well as an economy suicidally based on new housing starts and auto sales. I don't think my own instincts, as ignorant as they may be, are that far off.
Put it another way, there isn't a price that banks are willing to accept and investors are willing to pay. This is the problem that's bedevilling governments the world over and it's worth repeating. It's not that these assets have no value, as some would suggest, it's that there's no price that the banks are willing to accept.
...If you start from the position that banks cannot be allowed to go bankrupt, and they cannot be nationalised, this may be as good a scheme as you are likely to get. The problem, as I said at the start, is not the detail but the basic idea.
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/
Obama may have lost the war. I think a sense of the political opportunity here is best reflected in the actions of the New York state AG, Cuomo, and the Connecticut AG, Blumenthal -- which you also first read here. Blumenthal is the one who released the figures over the weekend on the even higher AIG boni than were first reported. Their instincts are that crimes have been committed -- something the FBI is apparently investigating at 30 different major Wall Street firms. There's not more news on this because They think it will influence the markets.
So be it. The people don't care about that. Our retirement accounts are already gone, literally, due to the speculations of the boni. We get that, and we get it to the degree that having already undergone the worst that the unregulated shadow economy can dish out, we don't flinch from the more Darwinian solutions to the problem. The only people who care about whether or not the "markets" are affected are the rich. As my friend the diplomat explained to me, when Geithner talks about "saving" the "economy", he's not talking about my economy or yours. (Apparently, this idea of "two markets" is one broached by Jon Stewart in his takedown of Jim Kramer.)
Geithner, Summers and Obama are becoming like the fences on this. And I'm disturbed by Obama's jocularity -- his belief that a mere touch of the king will cure the scrofula. Jay Leno is not a even an effective policy for dealing with populist rage, much less the total redo of the real economy. Is he, after all, all bling and no bam?
This is kind of hysterical, but underestimating the draconian mood of voters who've already lost it all is very, very unwise. Down $200K is lunch money to Geithner, but it's life and death to me.
Obama's Katrina moment has arrived, not least with the deployment of the unspeakable Larry Summers, explicitly because he's totally tone-deaf.
http://www.nytimes.com/2009/03/22/opinion/22rich.html?em
Geithner totally doesn't get it either, and needs to resign.
The common element to the Paulson and Geithner plans is the insistence that the bad assets on banks’ books are really worth much, much more than anyone is currently willing to pay for them. In fact, their true value is so high that if they were properly priced, banks wouldn’t be in trouble.
And so the plan is to use taxpayer funds to drive the prices of bad assets up to “fair” levels. Mr. Paulson proposed having the government buy the assets directly. Mr. Geithner instead proposes a complicated scheme in which the government lends money to private investors, who then use the money to buy the stuff. The idea, says Mr. Obama’s top economic adviser, is to use “the expertise of the market” to set the value of toxic assets.
But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.
http://www.nytimes.com/2009/03/23/opinion/23krugman.html
Obama is pissing away his moral authority by ignoring the peoples' will on this. Which is, I submit, way more Darwinian and free market than Geithner's cronyism. I think the people are willing to let Ford and GM and the banks disappear, as well as an economy suicidally based on new housing starts and auto sales. I don't think my own instincts, as ignorant as they may be, are that far off.
Put it another way, there isn't a price that banks are willing to accept and investors are willing to pay. This is the problem that's bedevilling governments the world over and it's worth repeating. It's not that these assets have no value, as some would suggest, it's that there's no price that the banks are willing to accept.
...If you start from the position that banks cannot be allowed to go bankrupt, and they cannot be nationalised, this may be as good a scheme as you are likely to get. The problem, as I said at the start, is not the detail but the basic idea.
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/
Obama may have lost the war. I think a sense of the political opportunity here is best reflected in the actions of the New York state AG, Cuomo, and the Connecticut AG, Blumenthal -- which you also first read here. Blumenthal is the one who released the figures over the weekend on the even higher AIG boni than were first reported. Their instincts are that crimes have been committed -- something the FBI is apparently investigating at 30 different major Wall Street firms. There's not more news on this because They think it will influence the markets.
So be it. The people don't care about that. Our retirement accounts are already gone, literally, due to the speculations of the boni. We get that, and we get it to the degree that having already undergone the worst that the unregulated shadow economy can dish out, we don't flinch from the more Darwinian solutions to the problem. The only people who care about whether or not the "markets" are affected are the rich. As my friend the diplomat explained to me, when Geithner talks about "saving" the "economy", he's not talking about my economy or yours. (Apparently, this idea of "two markets" is one broached by Jon Stewart in his takedown of Jim Kramer.)
Geithner, Summers and Obama are becoming like the fences on this. And I'm disturbed by Obama's jocularity -- his belief that a mere touch of the king will cure the scrofula. Jay Leno is not a even an effective policy for dealing with populist rage, much less the total redo of the real economy. Is he, after all, all bling and no bam?
This is kind of hysterical, but underestimating the draconian mood of voters who've already lost it all is very, very unwise. Down $200K is lunch money to Geithner, but it's life and death to me.
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One more time:
Date: 2009-03-23 03:19 pm (UTC)Re: One more time:
Date: 2009-03-23 09:57 pm (UTC)no subject
Date: 2009-03-23 07:42 pm (UTC)http://www.washingtonmonthly.com/features/2009/0903.galbraith.html
The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?
no subject
Date: 2009-03-23 09:37 pm (UTC)