1 of 4
1
Geithner and Summers need to go
Posted: 04 April 2009 11:42 AM   [ Ignore ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

...and we need legitimate investigations.

http://www.huffingtonpost.com/2009/04/03/summers-received-hundreds_n_183058.html

Barack Obama’s chief economic adviser, Larry Summers, received hundreds of thousands of dollars in speaking fees last year from firms that have direct financial interests before the government or are intimately involved in the White House’s bank relief programs.

and:


http://www.pbs.org/moyers/journal/04032009/watch.html

 

BILL MOYERS: Our financial system…

WILLIAM K. BLACK: Became a Ponzi scheme. Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, “Triple-A.”

... They made bad loans. Their type of loan was to sell a guarantee, right? And they charged a lot of fees up front. So, they booked a lot of income. Paid enormous bonuses. The bonuses we’re thinking about now, they’re much smaller than these bonuses that were also the product of accounting fraud. And they got very, very rich. But, of course, then they had guaranteed this toxic waste. These liars’ loans. Well, we’ve just gone through why those toxic waste, those liars’ loans, are going to have enormous losses. And so, you have to pay the guarantee on those enormous losses. And you go bankrupt. Except that you don’t in the modern world, because you’ve come to the United States, and the taxpayers play the fool. Under Secretary Geithner and under Secretary Paulson before him… we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?

...In fact, (Administration under Obama)  they’re outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, ‘contracts, sacred.’..... we don’t want to change the bankers, because if we do, if we put honest people in, who didn’t cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.

....Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses, and that they’re fine.

...These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed…

... Well, Geithner has, was one of our nation’s top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he’s a failed legacy regulator.

...Until you get the facts, it’s harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts.

...The facts about how bad the condition of the banks is. So, as long as I keep the old CEO who caused the problems, is he going to go vigorously around finding the problems? Finding the frauds?

...[The administration policies]  are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they’re refusing to obey the law.

... they are scared to death. All right? They’re scared to death of a collapse. They’re afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we’ll run screaming to the exits. And we won’t rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it’s foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, “We just can’t let the big banks fail.” That’s wrong.


... The Bush administration and now the Obama administration kept secret from us what was being done with AIG. AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson’s firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn’t want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG.

...Where Congress said, “We will not give you a single penny more unless we know who received the money.” And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.

 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 05 April 2009 03:02 AM   [ Ignore ]   [ # 1 ]  
Administrator
Avatar
RankRankRankRank
Total Posts:  2922
Joined  2006-06-15

Yeah…let’s dump Omama’s finance team and start all over.  That’ll instill confidence in the economy.

 Signature 

“Another flaw in the human character is that everybody wants to build and nobody wants to do maintenance.”—Kurt Vonnegut

Profile
 
 
Posted: 05 April 2009 02:02 PM   [ Ignore ]   [ # 2 ]  
Sr. Member
RankRankRankRank
Total Posts:  1221
Joined  2008-07-20
Andrew - 05 April 2009 07:02 AM

Yeah…let’s dump Omama’s finance team and start all over.  That’ll instill confidence in the economy.

Compared to what?
I can’t encourage people enough to go the Moyers link Lindajean provided.  I just watched the show this morning, and it is exceptional.

 Signature 

“I am one of the few people I know who has argued in print that torture may be an ethical necessity in our war on terror.”  Sam Harris October 17, 2005

Profile
 
 
Posted: 05 April 2009 03:28 PM   [ Ignore ]   [ # 3 ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

We all know he is not going to dump anyone, least of all Geithner.


I find it very ironic that he wants to clean up Washington (and presumably Wall Street) and he brings in Geithner and Summers. This will be a bad stain on his legacy.

Obama told “60 Minutes” interviewer Steve Kroft that criticism of Geithner is natural and that neither he nor Geithner had mentioned the possibility of a resignation. The president, according to CBS joked that he wouldn’t accept the Treasury chief’s resignation even if it were tendered, saying he’d respond, “Sorry, buddy, you’ve still got the job.”

http://www.marketwatch.com/news/story/obama-tells-60-minutes-geithners/story.aspx?guid={BBC389B9-A289-466E-850A-321ED00010A3}

 

He also said in the 60 minutes interview that the public needs to be “patient” since the current Administration has only been in office 2 months. He doesn’t seem to understand that time is not what is making people (me) impatient.  I can only speak for myself here, but I understand the time issue clearly.  It is not the time issue that I find troubling.

As William Black said it is about corruption and wolves guarding the henhouse. No amount of time and patience is going to address that.

 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 06 April 2009 02:27 PM   [ Ignore ]   [ # 4 ]  
Sr. Member
RankRankRankRank
Total Posts:  1485
Joined  2007-12-10

Dumping these men would be the worst thing to do right now.  Obama’s goal is to stabilize the markets and inflate them a bit before the broader regulations start being utilized.  Yes, it is unfair.  Yes, it is bullshit and no one is happy about it.  However, it’s the harsh reality we have been dealt.  We don’t have a choice here.  Being too big to fail is so dangerous because it forces the taxpayer to HAVE to bailout the corporation.  Obama should keep both these men on board and just work to limit their agenda if it is indeed dangerous in the long run after they serve their purpose.

Profile
 
 
Posted: 06 April 2009 03:31 PM   [ Ignore ]   [ # 5 ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

We don’t have a choice here.

We do indeed have a choice here—-there are always choices—- but determining the right or best choice is what is difficult to sort out because we are continuously bombarded with the mantra that we are too big to fail. And it is believing we don’t have a choice that sets us up for people to take advantage of the situation.

Being too big to fail is so dangerous because it forces the taxpayer to HAVE to bailout the corporation.

Believing we are too big to fail, leaves things in the hands of people who thrive on us all believing that they will be our saviors. It gives them undo power and literally holds the taxpayers hostage. It gives one group of people too much power to sway in one specific direction while allowing them to ride roughshod on the claim that if it fails we will all be screwed.

Obama should keep both these men on board and just work to limit their agenda if it is indeed dangerous in the long run after they serve their purpose.

If it is indeed dangerous, then why would Obama wait and what purpose will they serve except to exacerbate the problem long term? If Obama limits their agenda (not sure what that means specifically) why keep them at all? It is their agenda that is the driving force in their attempt to improve the economy. If Obama doesn’t support their agenda and wants to limit it, that means he no longer trusts their judgement. If he doesn’t trust them, then they need to go. 

I can hold to the possibility that they could make some short term improvements in the economy over the next few months, but that is only a guess and not a substantive argument, and it is likely true that would be the case in a number of different strategies as well. 

What we do know is that the economic team of Obama’s is wanting to prop up insolvent banks and it would seem credible to expect that the insolvency will have to be dealt with at some point in time. Using taxpayer money to prop up toxic loans seems like putting a band aid on a gunshot wound. And in the long run it is irresponsible and fraudulent.

I am looking at this long term. Geither and Summers are toxic in and of themselves. Keeping them around to push more taxpayers’ dollars into a seemingly black hole won’t solve anything except put us more at risk in the long run.

Like I said before, I don’t think BHO is going to dump them, but I do IMO believe he ought to. Many economists are not supporting this plan.  What I am not saying is G and S are stupid people or that they are even incompetent about economics. No doubt they are brilliant people.

The problem is they are too close to the tit and the conflicts-of-interest are just too monumental and that fact is detrimentally affecting their judgments.

 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 06 April 2009 05:54 PM   [ Ignore ]   [ # 6 ]  
Sr. Member
RankRankRankRank
Total Posts:  1485
Joined  2007-12-10
lindajean - 06 April 2009 07:31 PM

We do indeed have a choice here—-there are always choices—- but determining the right or best choice is what is difficult to sort out because we are continuously bombarded with the mantra that we are too big to fail. And it is believing we don’t have a choice that sets us up for people to take advantage of the situation.

Ok, then lemme rephrase…we don’t have GOOD alternatives.  We nix them, and the markets react violently in the interim.  I say keep them on to help pump up ocnfidence in the stock market, then let them be figureheads to help smooth over more level-headed regulations that Obama himself wants to push for. 

We can pump up the stock market a bit and then try to let them down slowly as the regulators weed thru the fraud across the board.  Geithner and Summers would be very helpful in that end, even if it sucks ass in the short term.  Nixing the CEO’s that destroyed these companies’ bottom lines will only hurt stocks for a few days and won’t be a PR problem either on Wall St or Main St.  Sure, the morons at CNBC might blow a gasket, but the market itself won’t agree with them after a few weeks regardless.  Besides, I’m sure Jon Stewart could use the ratings boost again. 

Believing we are too big to fail, leaves things in the hands of people who thrive on us all believing that they will be our saviors.

Huh?  Who is suggesting that the CEO’s will be our saviors?  Outside the morons at CNBC and FNC I mean.  Nor is anyone saying Summers and Geithner are saviors. 

It gives them undo power and literally holds the taxpayers hostage. It gives one group of people too much power to sway in one specific direction while allowing them to ride roughshod on the claim that if it fails we will all be screwed.

Everyone alredy knows that letting any company get too big to fail is disastrous.  The problem here is that if they fail we WILL all be screwed.  The middle class depends on these institutions to survive.  Without them lending, the middle class’ spending habits go into the shitter.  If you think things are bad now, wait until you see what happens when ppl stop spending any money. 

If it is indeed dangerous, then why would Obama wait and what purpose will they serve except to exacerbate the problem long term?

They serve the purpose of helping Obama pump confidence back into the markets.  The challenge here is to clean up these banks without utterly destroying the stock market in the process.  If things get too crusty, middle class Americans stop buying and the rest of the economy collapses.  The frailty is far worse than most ppl understand.  Now, that is the short term reason to keep them.  It also is better than firing them since doing so would cause a hugely negative reaction from Wall St. which is a major aspect of what the goal here is to avoid. 

The other reason is for useful figureheads.  Obama needs to personally force them to make drastic changes to their approach.  As he helps fix these issues like CEO bonuses etc, he could use them to help smooth those actions over with the rest of Wall St. 

I say sometime after July 1st we hold a nation-wide vote (only for ppl who pay their taxes) to decide which CEO’s to hire/fire, what their salary caps should be, and what other compensation they should get (if any).  As shareholders, it needs to be the ppl (as opposed to Congress) who decide these things.  That should help Obama make a case to these two guys that is beyond their control in Washington or Wall St. 

If Obama limits their agenda (not sure what that means specifically) why keep them at all? It is their agenda that is the driving force in their attempt to improve the economy. If Obama doesn’t support their agenda and wants to limit it, that means he no longer trusts their judgement. If he doesn’t trust them, then they need to go.

 

Because:

1) Firing them REALLY hurts the stock market in the interim.

2) We lose nothing by keeping them IF we let Congress and Obama make the decisions on the stickier issues like exec compensation etc.

3) He doesn’t have to trust their judgment to use them to help save the economy.  As I said, he can use their reknown on Wall St. to smooth over decisions Obama/Congress make that these men normally wouldn’t agree with.  It’d be a PR campaign to help smooth these new regulations over with Wall St. to limit the damage to the stocks as the cleanup process goes through. 

I can hold to the possibility that they could make some short term improvements in the economy over the next few months, but that is only a guess and not a substantive argument, and it is likely true that would be the case in a number of different strategies as well.

They already have done great things towards stabilizing the stock market and rebuilding much of the lost value of the markets as a whole relative to when they took over.  Which is GREAT news btw.  But as we all are aware, there are a lot of other important issues that ought be tackled next, but nixing Geithner and Summers, while it may feel good to you and me, is like using a hatchet to conduct brain surgery. 

What we do know is that the economic team of Obama’s is wanting to prop up insolvent banks and it would seem credible to expect that the insolvency will have to be dealt with at some point in time. Using taxpayer money to prop up toxic loans seems like putting a band aid on a gunshot wound. And in the long run it is irresponsible and fraudulent.

Yes, and it is GOOD to prop them up in the short term lest middle America get totally fucked and the whole of the economy collapse.  There’s a lot of darker consequences that this could have as well, which aren’t worth getting into here, but suffice it to say, things would be VERY ugly not just for the economic outlook for even moreso from the national security perspective. 

I think Summers and Geithner have done well with the banks outside the exec compensation.  Yes, they have done things that suck, but they really are necessary evils in the short term.  However, like you and others, I worry about the longer term and I’m not at all convinced they have the flexibility to change their approach on a dime without someone forcing them to do so.

I am looking at this long term. Geither and Summers are toxic in and of themselves. Keeping them around to push more taxpayers’ dollars into a seemingly black hole won’t solve anything except put us more at risk in the long run.

In the long term, assuming they keep going along the path they are to this point, I agree.  But bear in mind we are only a couple months into this thing and neither you or I are really sure of how long phase 1 needs to last if phase 1 means stabilizing the banks and stock markets before moving into the cleansing period.  Stop the bleeding, THEN tend to the injury. 

Like I said before, I don’t think BHO is going to dump them, but I do IMO believe he ought to. Many economists are not supporting this plan.  What I am not saying is G and S are stupid people or that they are even incompetent about economics. No doubt they are brilliant people.

If he dump them at all, doing it now would be a HORRID idea.  Surely you understand that dumping them right now would only lead to a destabilized stock market and further loss in confidence in these banks, right?  Also, we would be wise to note that economists like Krugman or Liebniz while brilliant aren’t faced with the challenges Summers and Geithner are.  These two men aren’t JUST dealing with ways to help clean the wound, they ALSO have to take into account that in the meantime they have to stop the bleeding first. 

Armchair economists, brilliant as they may be, don’t seem to be taking into account the other elements of this crisis and what it means beyond the periphery.  Most are proposing long term solutions to long term problems, which is good.  They criticize Summers and Geithner for peddling an approach that CANNOT work in the long term.  And I agree with them there. 

But it is entirely possible, and even probable, that Summers and Geithner see this as a preliminary phase to fixing the whole of the economy without having to overtly risk it in the interim.  Whether or not phase 2 involves more of these types of policies or not is another issue.  These two are EXACTLY who we need for this particular phase though.  From there, we need other ppl unless they can turn on a dime. 

Either way, Obama can still keep them while getting his policies from economists with more reasonable long term approaches.  But the economists also often leave out any ideas to help stabilize things in the short term, which is 100% necessary, because we can’t really move into the cleansing phase with the bottom dropping out of the markets day by day.  So I’d say the trickier part is finding ways to form useful, effective policies that Summers and Geithner can shop around to Wall St. and at least give them the best case possible to help limit the adverse market reaction when the new regulations etc start rolling through these corporations and indictments are handed out. 

To that end, I think my idea of having everyone who pays taxes vote could help in that regard.  After all, these companies are trying to quell public outrage and legally shareholders CAN make these kinds of decisions and the taxpayers are legally shareholders…so the corporations are gonna be a tight spot and all the while Obama, Summers, and Geithner can run around Wall St. touting how they are avoiding nationalization by just letting the shareholders do what they are there to do.  Ah, the beauty of capitalism.

Profile
 
 
Posted: 06 April 2009 10:19 PM   [ Ignore ]   [ # 7 ]  
Sr. Member
RankRankRankRank
Total Posts:  2927
Joined  2006-12-17

Anybody recall the saying “Set a thief to catch a thief?”

Profile
 
 
Posted: 07 April 2009 04:13 PM   [ Ignore ]   [ # 8 ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

Tavishhill
Ok, then lemme rephrase…we don’t have GOOD alternatives.  We nix them, and the markets react violently in the interim.

We nix them and so what if the markets react? This is part of the problem. The markets are so sacred now we can’t anger them, or so we are taught to believe.  IN the meantime we continue the hostage holding scenario ad infinitum.

I say keep them on to help pump up ocnfidence in the stock market, then let them be figureheads to help smooth over more level-headed regulations that Obama himself wants to push for.

Why do we need Figureheads and why do we need them to “pump up confidence.”  There is little to be confident of so why are we pretending?

Huh?  Who is suggesting that the CEO’s will be our saviors?  Outside the morons at CNBC and FNC I mean.  Nor is anyone saying Summers and Geithner are saviors.

 

When I talk about G and S being our “saviors” I am not making any religious references. What I mean is they are making decisions that they want Americans to accept, go along with and to trust.  They want Americans to believe that they will be saving us from future bad deals. But their own plan does not fix anything long term and will make the taxpayers the suckers.

Everyone alredy knows that letting any company get too big to fail is disastrous.  The problem here is that if they fail we WILL all be screwed.  The middle class depends on these institutions to survive.  Without them lending, the middle class’ spending habits go into the shitter.  If you think things are bad now, wait until you see what happens when ppl stop spending any money.

This is fear-driven speculation. Many economist recommend sound strategies of various combinations of receiverships, bankruptcies,  and temporarily nationalizing the banks.  It has worked in the past and no reason to consider it would not work again.

They serve the purpose of helping Obama pump confidence back into the markets.  The challenge here is to clean up these banks without utterly destroying the stock market in the process.  If things get too crusty, middle class Americans stop buying and the rest of the economy collapses.  The frailty is far worse than most ppl understand.  Now, that is the short term reason to keep them.  It also is better than firing them since doing so would cause a hugely negative reaction from Wall St. which is a major aspect of what the goal here is to avoid.  The other reason is for useful figureheads.  Obama needs to personally force them to make drastic changes to their approach.  As he helps fix these issues like CEO bonuses etc, he could use them to help smooth those actions over with the rest of Wall St.

You seem to be suggesting all of this is simply a short, temporary approach by Geithner—-kind of a shot in the arm approach—-that will work short term and then when things stabilize and the economy gets back to some semblance of normalcy, he will then acquiesce to some bigger plan that Obama has that will actually work in the favor of the taxpayer and will hold Wall Street accountable to its fraudulent and deceptive ways.  In all honesty it sounds a bit pollyannish and naive.  And where is it written that Obama is going to “personally force them…” to do anything since he has already stated on record that he supports what they are doing. After all, we are dealing with some of the most powerful forces known to mankind (Wall Street and Washington.) The reason I don’t believe these things are going to turn around in our favor (the tax payer) is because if BHO was going to bring on the change he advocated for, he would not have been swayed or influenced in the direction he is apparently going. Geithner knew about the bonuses. One has to believe that BHO knew about the bonuses as well and if he did not then he is keeping a very loose string on his men. Either way, it does not show any leadership into solving the problems. I’m down right suspicious of the whole deal and to accept this in your faithful and hopeful manner is overly optimistic.

I say sometime after July 1st we hold a nation-wide vote (only for ppl who pay their taxes) to decide which CEO’s to hire/fire, what their salary caps should be, and what other compensation they should get (if any).  As shareholders, it needs to be the ppl (as opposed to Congress) who decide these things.  That should help Obama make a case to these two guys that is beyond their control in Washington or Wall St.

Why does Obama need to make a case to Geithner and Summers?  He is the POTUS.  If they are calling the shots over what Obama deems is necessary and productive, they should get out of the way and BHO needs to hire people who see things his way. I am not the least bit convinced that BHO sees things differently than G and S.  There is really nothing to indicate that is the case and a lot to indicate otherwise.

Because:

1) Firing them REALLY hurts the stock market in the interim.

2) We lose nothing by keeping them IF we let Congress and Obama make the decisions on the stickier issues like exec compensation etc.

He doesn’t have to trust their judgment to use them to help save the economy.  As I said, he can use their reknown on Wall St. to smooth over decisions Obama/Congress make that these men normally wouldn’t agree with.  It’d be a PR campaign to help smooth these new regulations over with Wall St. to limit the damage to the stocks as the cleanup process goes through.

This is utter speculation and based on what?

They already have done great things towards stabilizing the stock market and rebuilding much of the lost value of the markets as a whole relative to when they took over.  Which is GREAT news btw.  But as we all are aware, there are a lot of other important issues that ought be tackled next, but nixing Geithner and Summers, while it may feel good to you and me, is like using a hatchet to conduct brain surgery.

You misunderstand.  This is not about feeling good.  It’s more about tough love.  Doing what needs to get done to ensure this crap does not happen again and not let wall street run amok over the taxpayers.  There are other alternatives here. Yes, probably the stock market will be affected by it, but the stock market is a big boy. It has its ups and downs.  The only people who must buy into all the stock market fears of it screeching to a stop are people who use the stock market as a substitute for Las Vegas. Any financial advisor will tell you the stock market is long term.  If you use it for short term gains, you are at high risk. If you are at high risk, you will lose a lot of money when it drops. That’s how the market works.  Geithner wants to play a game of mass manipulation and hold the taxpayers to pay the bill. It sucks. And it is wrong.

Yes, and it is GOOD to prop them up in the short term lest middle America get totally fucked and the whole of the economy collapse.  There’s a lot of darker consequences that this could have as well, which aren’t worth getting into here, but suffice it to say, things would be VERY ugly not just for the economic outlook for even moreso from the national security perspective.

Things are very ugly. Ugly is what we have to deal with. Your solution is based on fear that we are all going to go to hell in a hand-basket if we don’t take the bait and suck up. It is based on a lot of speculation. And what is short term here?

I think Summers and Geithner have done well with the banks outside the exec compensation.  Yes, they have done things that suck, but they really are necessary evils in the short term.  However, like you and others, I worry about the longer term and I’m not at all convinced they have the flexibility to change their approach on a dime without someone forcing them to do so.

Duhh… do you read what economists are saying about his plan. They think it is crap. Yes, I know they are on the armchairs, but they are sending out red flags that are too easily ignored.

And confidence is the new buzz word now. We all must have confidence at all costs or we will end up in a depression. What most fail to see is that confidence erected under the guise of a straw man is no confidence at all and we already are suffering from a deficit in confidence. The longer we fail to see our confidence is manufactured under false pretenses, the harder it will be to actually recreate a healthy and sustainable economy. Playing the “confidence” game results in our denial of the real problems of our economy. It’s really a lot like the emperor wearing no clothes.  As long as we believe that we are addressing and fixing the economic woes, (as long as we believe the emperor is wearing his clothes) then we can convince ourselves that we have “confidence” (then we can convince ourselves he actually is wearing clothes.)

Geithner’s plan shifts all the market losses to the taxpayer. And the only way it will work is for the taxpayer to lose because Geithner’s plan will not let fair market value dictate.  The taxpayer will be the loser in a system that privatizes gains and socializes losses. We are the subsidizers of loss.

In the long term, assuming they keep going along the path they are to this point, I agree.  But bear in mind we are only a couple months into this thing and neither you or I are really sure of how long phase 1 needs to last if phase 1 means stabilizing the banks and stock markets before moving into the cleansing period.  Stop the bleeding, THEN tend to the injury.

I agree that you are talking short term and I am talking long term, so they are really two different situations. The problem with G and S as I mentioned before is all of the conflict of interest issues.

If he dump them at all, doing it now would be a HORRID idea.  Surely you understand that dumping them right now would only lead to a destabilized stock market and further loss in confidence in these banks, right?

Again, you are using words like HORRID to express this phantasmagoric, pervasive and overbearing fear that with out these men our world will fall apart. I don’t buy it a bit.

 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 09 April 2009 04:32 PM   [ Ignore ]   [ # 9 ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

More food for thought:

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

http://www.rollingstone.com/politics/story/26793903/the_big_takeover

 

 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 13 April 2009 07:54 PM   [ Ignore ]   [ # 10 ]  
Sr. Member
RankRankRankRank
Total Posts:  1485
Joined  2007-12-10
lindajean - 07 April 2009 08:13 PM

We nix them and so what if the markets react? This is part of the problem. The markets are so sacred now we can’t anger them, or so we are taught to believe.  IN the meantime we continue the hostage holding scenario ad infinitum.

You are naive if you imagine that the markets can just be allowed to topple over without the rest of the economy collapsing around them.  You keep making the underlying assumptions that somehow anyone who doesn’t want these guys’ heads on a platter are praying to their Wall St. deities.  That’s not the case linda.  The reality is that we got fucked here.  These companies are too big to fail, even if you try to deny it.  If we let them fail, our economy won’t be in any better shape than their stocks which is to say, it will fall apart at the seams. 

It sounds like you are letting your emotions get the better of you here.  It isn’t that I’m worshipping Wall St.  It’s that I know enough to understand that without these companies we are pulling the harpoon out of our chest and we will bleed to death.  No.  The better option, as unpleasant as it is ideologically to us liberals, is to swallow out ideological pride and get the markets stabilized BEFORE doing anything else major that will shake their foundations.  You may not like it when I tell you that these markets are very much dependent on confidence, but the fact is that THEY ARE. 

What I mean is they are making decisions that they want Americans to accept, go along with and to trust.  They want Americans to believe that they will be saving us from future bad deals. But their own plan does not fix anything long term and will make the taxpayers the suckers.

First off, I’m not asking you to just blindly trust anyone here.  I’m saying there are other perspectives out there than yours and as distasteful as they may be philosophically, they are still valid in terms of realisitically dealing with a confidence crisis in the keystone markets for our national economy.  You are operating on the ASSUMPTION that letting the banks go under is a better option than not.  But you aren’t advancing that assumption in terms of actual discussion here.  You just keep asserting that anyone who doesn’t share that assumption up front are worshipping Wall St. or have been douped by Summers and Geithner or are blissfully ignorant somehow. 

This is fear-driven speculation. Many economist recommend sound strategies of various combinations of receiverships, bankruptcies,  and temporarily nationalizing the banks.  It has worked in the past and no reason to consider it would not work again.

Who isn’t considering those options?  I have.  So has the administration.  And no, my comments aren’t fear-driven speculation, they are based onr eality.  Go look what happens to the national economy when you flush the stock markets away.  Look what happens when a country’s economy is completely dependent the flow of credit for the middle class and then consider what happens without that credit at the same time as these middle Americans are losing jobs hand over fist. 

How does letting these banks topple over help the economy in the short term?  It doesn’t.  It puts focus on a long term problem at the expense of ignoring the short term challenges which themselves are every bit as dangerous as the long term concerns you may have.

You seem to be suggesting all of this is simply a short, temporary approach by Geithner—-kind of a shot in the arm approach—-that will work short term and then when things stabilize and the economy gets back to some semblance of normalcy, he will then acquiesce to some bigger plan that Obama has that will actually work in the favor of the taxpayer and will hold Wall Street accountable to its fraudulent and deceptive ways.

Not quite.  Read my previous post more carefully.  I’m suggesting that Geithner’s approach of working to stabilize the banks is the best approach in the short term.  I don’t expect him to want to change his approach on a whim.  Even though I’m sure he prolly does think that at some point we should change focus from Wall St. to ironing out the legislative loopholes, he is a banker and as such won’t ever be satisfied enough to move onto phase 2 assuming he wants to change course anyhow.  As such, that is where I’d prefer Obama and Congress step in. 

And where is it written that Obama is going to “personally force them…” to do anything since he has already stated on record that he supports what they are doing.

And you expect him to say what publically?  That he thinks these guys are nuts?  Or maybe that he is using them to build confidence up and will then push them aside internally?  You’d have to assume that he didn’t choose them specifically for their appeal to the market, which prolly isn’t a reliable assumption. 

After all, we are dealing with some of the most powerful forces known to mankind (Wall Street and Washington.) The reason I don’t believe these things are going to turn around in our favor (the tax payer) is because if BHO was going to bring on the change he advocated for, he would not have been swayed or influenced in the direction he is apparently going.

The problem is you are creating a false dichotomy here and completely ignoring the REAL problem to be tackled.  You are choosing to view these developments as an attack on taxpayers without even acknowledging the fact that saving the taxpayers is NOT the top priority right now.  Yes, that is a shame.  But it is also ignorant to just focus on the long term taxpayer, overtly-populist perspective at the expense of considering the more immediate challenges…like getting the overall economy back to a safer place.  We are in a position where there are no easy choices, no simple solutions that accomodate everyone.  It’s better to fuck the taxpayers over in the short-middle term if it means keeping the entire economy from falling into its own shadow because if that happens, no one will be concerned with where their taxes are going because they will all be struggling to feed their families from day to day.  I’m not saying we ought to be attacking taxpayers by blowing their money on bullshit banks, but there is a more severe and immediate national danger than simply the allocation of taxpayer money.  I know that sounds harsh, but it’s reality.  I don’t know of a way to avoid either screwing over the taxpayers or destroying the economy, so I’d rather we work to minimalize the damage to both as best we can. 

Geithner knew about the bonuses. One has to believe that BHO knew about the bonuses as well and if he did not then he is keeping a very loose string on his men. Either way, it does not show any leadership into solving the problems. I’m down right suspicious of the whole deal and to accept this in your faithful and hopeful manner is overly optimistic.

Except….we already know that Obama DIDN’T know about the bonuses…so your point here falls apart.  And I am with you on the bonusses issue.  There was no realistic use for them in grounding the markets and as such, they aren’t worthy in terms of pandering to Wall St.  Pandering IS needed to some extent, as unpleasant as that may be to us.  But not to the execs and certainly not to the tune of these bonuses.  But that is an issue for Congress moreso than Treasury or Obama.  And spare me you “faithful and hopeful” bullshit.  It’s easy to simply be dismissive or perspectives you don’t agree with lindajean.  It’s much tougher to actually discuss the details out in the open as I’m doing here. 

Why does Obama need to make a case to Geithner and Summers?  He is the POTUS.  If they are calling the shots over what Obama deems is necessary and productive, they should get out of the way and BHO needs to hire people who see things his way. I am not the least bit convinced that BHO sees things differently than G and S.  There is really nothing to indicate that is the case and a lot to indicate otherwise.

You misunderstand my comment there.  I only mean to say that Obama is best served to have a solid case to pass on to these men if he uses them in a Wall St. PR campaign to limit the market reaction to phase 2 which many companies there will not be happy about most likely.  The better talking points they have to work with, the more successful they will be at stemming the market reaction at the start of the cleansing process.  Don’t think with your gut here.  As emotionally unappealing as these guys are, they are useful and you’d be a damned fool to want to fire them simply to make yourself feel better when Obama can keep them on and use them without avoiding cleaning up these banks.

Profile
 
 
Posted: 13 April 2009 07:56 PM   [ Ignore ]   [ # 11 ]  
Sr. Member
RankRankRankRank
Total Posts:  1485
Joined  2007-12-10

You misunderstand.  This is not about feeling good.  It’s more about tough love.  Doing what needs to get done to ensure this crap does not happen again and not let wall street run amok over the taxpayers.

I agree.  But when these banks have bombs strapped to their chests and are holding our economy hostage, we can’t simply lash out at them from the onset.  We need to stabilize things first so we can undercut their potential danger a bit.  This way, when we do need to run in and force major changes via new legislation and regulations, the damage can be contained better than just running in immediately.  Tough love is something we have to be careful with.  There is no reason to assume that simply having Geithner stay on as Sec. of Treasury will automatically make it impossible for these banks to be cleaned up. 

There are other alternatives here. Yes, probably the stock market will be affected by it, but the stock market is a big boy. It has its ups and downs.  The only people who must buy into all the stock market fears of it screeching to a stop are people who use the stock market as a substitute for Las Vegas.

No, the only ppl buying into it are the ppl who actually determing the market’s real world viability.  The companies who use these banks to get credit flowing in their communities, the corporations who pay their employee healthcare bills via loans through these banks, the small businesses who depend on loans for getting started, etc.  These are the fiscal cornerstones of the vast majority of communities in America.  Those ppl may be buying into what you imagine is merely “fear-driven speculation”, but nevertheless they are buying into it and as such they determine if the markets sink or fall, regardless of whether or not you imagine there is an objective reality for them to deal with and they will all magically see thru this crisis of confidence and turn things around. 

I’m not willing to bet on that.  The investors aren’t either, which makes everything more dangerous because even if I think the market can sustain phase 2 without adequate preparations from Geithner, the more ppl disagree with me the more likely I will be wrong because those ppl will pull their investments and with it goes the market viability.

Any financial advisor will tell you the stock market is long term.  If you use it for short term gains, you are at high risk. If you are at high risk, you will lose a lot of money when it drops. That’s how the market works.  Geithner wants to play a game of mass manipulation and hold the taxpayers to pay the bill. It sucks. And it is wrong.

Whether you find it morally wrong or not is irrelevant lindajean.  All that matters at this point is its effectiveness to stabilize the economy, which his approach has done relatively well with thus far, as ideaologically distasteful as it is to you or me or anyone else.  It does suck and it may well be wrong, but that doesn’t mean it isn’t the ebst course of action for fixing the economy.  I feel we are at a point where we can’t both save taxpayer money and clean up Wall St. and muscle our way thru this depression all at the same time as laying the foundation for infrustructure.  Maybe you disagree.  That’s fine.  But stop splitting the argument down the lines of ‘for’ or ‘against’ the taxpayers.  There are other considerations that are necessary and some of them are even more important in the immediate short term for our economy as a nation than protecting the taxpayers every step of the way.  Again, that sounds harsh but there are reasons these corporations are said to be too big to fail and it’s not simply rhetoric. 

Things are very ugly. Ugly is what we have to deal with. Your solution is based on fear that we are all going to go to hell in a hand-basket if we don’t take the bait and suck up. It is based on a lot of speculation. And what is short term here?

I’d say that I’m using short term to mean from now until we get the markets stable enough to sustain the hit taken at the opening of phase 2.  Geithner has stabilized the markets decent enough in my opinion that by the end of the fiscal quarter in June, maybe in July would be the best time to jump right into phase two assuming there aren’t major destabilizing factors in the meantime.  And btw, EVERYTHING either of us offer here is speculation.  When Sweden nationalized their banks to clean them up they didn’t have the entire economy (let alone much of the global economy) riding on their success in that endeavor.  We aren’t in the same situation as they were and as such we need to be careful about what lessons we learn from their approach. 

Duhh… do you read what economists are saying about his plan. They think it is crap. Yes, I know they are on the armchairs, but they are sending out red flags that are too easily ignored.

Yes I do.  And I know their opinions on it.  However, they are also almost exclusively basing their opinions on speculation and from perspectives that aren’t the same as the administration’s, who has to worry about a helluva lot more than a simple plan to clean up the banks.  Cleaning up the banks can’t be the top priority when these banks still have bombs strapped to their chests.  There needs to be an intermediate step to help diffuse things first.

And confidence is the new buzz word now. We all must have confidence at all costs or we will end up in a depression. What most fail to see is that confidence erected under the guise of a straw man is no confidence at all and we already are suffering from a deficit in confidence.

No one cares what your feelings are about whether this is inflated confidence or not.  You aren’t the one making the investment decisions all across the country.  You aren’t sitting in the boardrooms of our nation’s companies deciding whether to keep your employees healthcare coming or pulling out of the market.  These markets ARE deteremined entirely by confidence.  It is easy for you to simply dismiss my comment out of hand by saying it is nothing but buzz words, but that doesn’t make your argument any more valid or well supported.  It’s funny you bring up the deficit of confidence here and imagine that it has nothing to do with our current economic problems.  Did you not note the effect this defecit of confidence had on our economy when it came full force last September?  We NEED to get more confidence built up in these markets and Geithner has done that rather well.

The longer we fail to see our confidence is manufactured under false pretenses, the harder it will be to actually recreate a healthy and sustainable economy. Playing the “confidence” game results in our denial of the real problems of our economy. It’s really a lot like the emperor wearing no clothes.  As long as we believe that we are addressing and fixing the economic woes, (as long as we believe the emperor is wearing his clothes) then we can convince ourselves that we have “confidence” (then we can convince ourselves he actually is wearing clothes.)

Sure.  And as long as we imagine that we have to jump right into tackling the long term goals while ignoring the short term consequences and NOT taking measures to limit those effects, we will only make things worse.  Your emperor has no clothes analogy falls a bit flat when you recall that confidence in his imaginary wardrobe has no basis in reality wherease the markets actually ARE tangibly determined by confidence, manufactured or not, and that those markets ARE the bedrock for most of our national economy.

Geithner’s plan shifts all the market losses to the taxpayer. And the only way it will work is for the taxpayer to lose because Geithner’s plan will not let fair market value dictate.  The taxpayer will be the loser in a system that privatizes gains and socializes losses. We are the subsidizers of loss.

That’s not totally correct, but it’s not far off at least for theshort-middle term.  Nevertheless, the act of subsidizing is unfortunately necessary for a while lest the rest of the economy fall apart.  Then we end up with bigger problems than simply taxpayer money going into blackholes.  We are then in a position where ppl are more worried about feeding themselves and finding a place to sleep at night than where their tax dollars are going.

I agree that you are talking short term and I am talking long term, so they are really two different situations. The problem with G and S as I mentioned before is all of the conflict of interest issues.

This seems to be the crux of the disconnect here I think.  You seem to think the short term is ok and that we can survive well enough without these banks.  I don’t believe that to be the case.  You can simply assert that I am drinking the Wall St. kool aid here, but that’s not an argument.  It’s dismissive denial.

Again, you are using words like HORRID to express this phantasmagoric, pervasive and overbearing fear that with out these men our world will fall apart. I don’t buy it a bit.

Eh?  No, I’ve never even suggested that without these men everything would fall apart.  My argument is that while it may well be possible to get through this without them, they are an asset to Obama and Congress to help them leverage new regulations against a strong market reaction upon entering the clean up phase of the strategy.  They are doing a good job (bonusses not withstanding) for the strategy that I think best suits the challgnes that we are faced with economically in the short term. 

I also feel they shouldn’t be trusted with handling the cleansing process but they would be well suited to stay on to help Obama smooth the new regulations over with Wall St. to minimalize the damage there.  It’s not some overbearing fear lindajean.  It’s solid, calculated, cool headed strategy.  Why nix them if they can be used to help stem market reaction if we can still have Congress and Obama working on regulations for phase 2?  Sure, it’d feel good for the taxpayers most likely.  But does that actually help our economy much?  Not really.

Profile
 
 
Posted: 14 April 2009 05:05 PM   [ Ignore ]   [ # 12 ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

Tavishhill:

In the long run we both see the systemic problems of this economic situation and the dangers in the investment banks’ insolvency. We disagree on the short term solution because you think Geither’s approach for the tax payers to subsidize any losses incurred by investors buying toxic assets is sensible and over the long run will result in stimulating the economy. 

I think this short run solution is dangerous because I believe,  like Krugman and many other economists, it makes the taxpayer even more vulnerable to investments that are being propped up artificially and sold not at a fair market value. IOW, as I’ve stated before the gains are privatized and the losses are socialized. You seem to believe this is our only way out and back to a healthy economy.  I say there are other options that have worked in the past.

TH

You are naive if you imagine that the markets can just be allowed to topple over without the rest of the economy collapsing around them.

Topple over is not the exact scenario.  They need to take their natural dive due to their insolvency and then the Feds would have to reorganize them,get rid of the toxic worthless stuff and then sell them/privatize them at fair market value.

TH

You keep making the underlying assumptions that somehow anyone who doesn’t want these guys’ heads on a platter are praying to their Wall St. deities.

I’m saying that is what Wall Street is preaching.  They believe they are too mighty to let fail and that is the package they are selling to the public.  I don’t think most people actually believe in any Wall Street deities. But most people probably have a hard time understanding the complexities of economics.

TH
That’s not the case linda.  The reality is that we got fucked here.  These companies are too big to fail, even if you try to deny it.  If we let them fail, our economy won’t be in any better shape than their stocks which is to say, it will fall apart at the seams.

You keep arguing this point as if there is an ultimate truth here. There is not an ultimate truth.  Who outside of the Obama Admin (and the loop)  is actually supporting this plan?

TH
It isn’t that I’m worshipping Wall St…

I don’t think you are worshipping Wall Street.  I think Wall Street wants the public to believe they are sacred—that without their expertise we will fail—and—-that they are above recrimination.

lindajean
  This is fear-driven speculation. Many economist recommend sound strategies of various combinations of receiverships, bankruptcies,  and temporarily nationalizing the banks.  It has worked in the past and no reason to consider it would not work again.

TH
Who isn’t considering those options?  I have.

But you are not in charge.

TH
So has the administration.

Seriously?  In what manner?

TH
And no, my comments aren’t fear-driven speculation, they are based onr eality.  Go look what happens to the national economy when you flush the stock markets away.  Look what happens when a country’s economy is completely dependent the flow of credit for the middle class and then consider what happens without that credit at the same time as these middle Americans are losing jobs hand over fist.

As I‘ve said before, the stock market dives and peaks over decades of economic stability and instability.  History shows this to be the case from decades of fluctuations. So when you “flush the stock markets away” I take that to mean when the markets take a dive and there is abundant losses.  A natural ebbing and flowing of the markets.

TH
How does letting these banks topple over help the economy in the short term?  It doesn’t.  It puts focus on a long term problem at the expense of ignoring the short term challenges which themselves are every bit as dangerous as the long term concerns you may have.

What exactly is “short term” here. Your emphasis on short term is ambiguous and needs a specific time allotment. Is Geither talking about a few weeks, a couple months, 6 months, a year, 2 years?  Until the markets rebound?

lindajean
  You seem to be suggesting all of this is simply a short, temporary approach by Geithner—-kind of a shot in the arm approach…

TH

Not quite.  Read my previous post more carefully.  I’m suggesting that Geithner’s approach of working to stabilize the banks is the best approach in the short term.  I don’t expect him to want to change his approach on a whim.  Even though I’m sure he prolly does think that at some point we should change focus from Wall St. to ironing out the legislative loopholes, he is a banker and as such won’t ever be satisfied enough to move onto phase 2 assuming he wants to change course anyhow.  As such, that is where I’d prefer Obama and Congress step in.


That sounds like a shot in the arm to me. How long are you waiting for Geithner to implement his short term plan?  More importantly, how long is BHO going to wait? The clock is ticking.

lindajean
  And where is it written that Obama is going to “personally force them…” to do anything since he has already stated on record that he supports what they are doing.

TH
And you expect him to say what publicly?....

He’s not going to say anything publicly. That is my point. He isn’t going to can these guys.  You are the one claiming he is going to “personally force them out….”  What is that based on?

TH
...That he thinks these guys are nuts?  Or maybe that he is using them to build confidence up and will then push them aside internally?  You’d have to assume that he didn’t choose them specifically for their appeal to the market, which prolly isn’t a reliable assumption.

And you are saying you can read his mind and knows what he is going to do?  That at some point he is going to dump them even though he has never alluded to anything close to this scenario you are suggesting?

lindajean
  Geithner knew about the bonuses. One has to believe that BHO knew about the bonuses as well and if he did not then he is keeping a very loose string on his men. Either way, it does not show any leadership into solving the problems. I’m down right suspicious of the whole deal and to accept this in your faithful and hopeful manner is overly optimistic.

TH

Except….we already know that Obama DIDN’T know about the bonuses…so your point here falls apart.

My point is that it’s either one or the other. If he did not know about the bonuses (as you claim) that is a serious problem.  He should have.

lindajean

  Why does Obama need to make a case to Geithner and Summers?  He is the POTUS.  If they are calling the shots over what Obama deems is necessary and productive, they should get out of the way and BHO needs to hire people who see things his way. I am not the least bit convinced that BHO sees things differently than G and S.  There is really nothing to indicate that is the case and a lot to indicate otherwise.

TH
You misunderstand my comment there.  I only mean to say that Obama is best served to have a solid case to pass on to these men if he uses them in a Wall St. PR campaign to limit the market reaction to phase 2 which many companies there will not be happy about most likely.  The better talking points they have to work with, the more successful they will be at stemming the market reaction at the start of the cleansing process.

Say what? I still don’t understand.

 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 15 April 2009 03:52 PM   [ Ignore ]   [ # 13 ]  
Sr. Member
RankRankRankRank
Total Posts:  1639
Joined  2007-12-20

TH

There is no reason to assume that simply having Geithner stay on as Sec. of Treasury will automatically make it impossible for these banks to be cleaned up.

My position does not support that anything is impossible. I remain hopeful that the economy will eventually turn itself around, since history is on my side here.  The question is what will the fall out be from the overall deliberate manipulation that ensues?

My position is that Geithner, et., al., have a huge conflict of interest and this conflict puts him in a position to make seriously bad choices and actions.  Short term solutions not withstanding.

I could conceivable go along with a short term shot in the arm kind of solution but there is no indication that BHO is going to rid us of these guys at all, only a proclamation from Tavishhill that he will. 

TH
...  These are the fiscal cornerstones of the vast majority of communities in America.  Those ppl may be buying into what you imagine is merely “fear-driven speculation”, but nevertheless they are buying into it and as such they determine if the markets sink or fall, regardless of whether or not you imagine there is an objective reality for them to deal with and they will all magically see thru this crisis of confidence and turn things around. 

Ironically, BHO said recently that nationalizing is not an option because in his words, first we must “do no harm”; thereby insinuating that Geithner’s plan is not the least bit harmful. Clearly a disingenuous remark.

Nationalizing the banks is one option to keep credit flowing. The Feds step in and take over until they can be rearranged and retooled   to private sectors. There is also controversy over the exact extent of failures that banks are currently experiencing. An interesting conversation that pooh-poohs all of the hullabaloo over the bank failures:

http://www.npr.org/templates/story/story.php?storyId=103119140

“98% of loans in the banking system are paying interest ...”
“...why the whole system is driven by the loss of a few loans is beyond my comprehension.”

Some failure is not going to bring on the demise of the banking system.

TH

I’d say that I’m using short term to mean from now until we get the markets stable enough to sustain the hit taken at the opening of phase 2.  Geithner has stabilized the markets decent enough in my opinion that by the end of the fiscal quarter in June, maybe in July would be the best time to jump right into phase two assuming there aren’t major destabilizing factors in the meantime.

In 2-3months phase 2 will be launched?  And then what?  You’re giving Geithner 2 months to get his shot in the arm working?

TH
Whether you find it morally wrong or not is irrelevant lindajean

It’s not about a moral wrong necessarily, it is about business ethics (lack of), credibility, economic effects and after shocks.  The people who have committed fraud are still at the helm. Geithner wants the taxpayers to be the fall guy while the banks are still declared “solvent.”  Geithner says we should be skeptical about too much regulation (whatever that means.)

There is a fool born every minute as some guy that used to run the circus once said.

[ Edited: 15 April 2009 04:02 PM by zelzo]
 Signature 

“Every war is a war against children.”
Howard Zinn

Profile
 
 
Posted: 24 April 2009 03:24 PM   [ Ignore ]   [ # 14 ]  
Sr. Member
RankRankRankRank
Total Posts:  1485
Joined  2007-12-10
lindajean - 14 April 2009 09:05 PM

In the long run we both see the systemic problems of this economic situation and the dangers in the investment banks’ insolvency. We disagree on the short term solution because you think Geither’s approach for the tax payers to subsidize any losses incurred by investors buying toxic assets is sensible and over the long run will result in stimulating the economy.

No, but see, you don’t seem to have a short term solution at all. We all agree that there are systemic problems, but those are the types of things only Congress can properly address in due capacity. I don’t see what you are offering as a short term solution. I see you merely calling for heads on sticks which an emotional response rather than a policy proposal.  Nothing necessarily wrong with that but if you think firing these guys will fix anything, you’re just not thinking clearly.

Do you agree that there will be a significant drop in the market once the systemic changes you are hoping for get announced? If so, do you agree that we need the stock market to be stabilized before such announcements are made? If not, what evidence do you offer suggesting that middle America’s finances won’t dry up almost completely if we simply let all those banks fail? 

I think this short run solution is dangerous because I believe, like Krugman and many other economists, it makes the taxpayer even more vulnerable to investments that are being propped up artificially and sold not at a fair market value. IOW, as I’ve stated before the gains are privatized and the losses are socialized. You seem to believe this is our only way out and back to a healthy economy. I say there are other options that have worked in the past.

Simply saying there are other viable options that don’t cripple the remainder of our country’s economy is one thing…presenting them is quite another. What other options are there besides nationalizing the banks (which I’m for as part of an overall, structured strategy)? 

Topple over is not the exact scenario. They need to take their natural dive due to their insolvency and then the Feds would have to reorganize them,get rid of the toxic worthless stuff and then sell them/privatize them at fair market value.

You are complaining about terminology vis a vis how it might sound to shareholders of these banks. That isn’t the proper context to view this in. The proper context is to look out at the range of ppl and companies and the overall web of businesses and industries that depend on the survival of these banks, and THEN evaluating the risk involved in doing what you say. 

Again, the reason these banks are deemed ‘too big to fail’ is precisely because they are too big to fail. Simply denying that fact isn’t helpful to anyone. The “natural dive” you are referring to would lead to overwhelming financial collapse in many of those industires that depend on the backing of those banks.  Before taking the “natural dive”, those banks will stop lending altogether, effectively crippling the rest of our economy that haven’t been demolished thus far. 

You can sit there and complain that what I’m saying would happen is just hyperbole, but first you ought to put together an argument for how these tangential industries will stay afloat without loans.  Are we just gonna bailout all those other industries too?  Because that is what everyone will be demanding not just on the corporate side but also on the side of all those employees and the Congressmen and women whom are indebted to such a constituency. 

I’m saying that is what Wall Street is preaching.  They believe they are too mighty to let fail and that is the package they are selling to the public.  I don’t think most people actually believe in any Wall Street deities. But most people probably have a hard time understanding the complexities of economics.

Just because your “enemy” claims something doesn’t make is a lie.  YOU are assuming that we can let these institutions fail and still be ok.  I’m not that optimistic, at least not by doing things the way you seem to be advocating.  I’m all for nationalizing them temporarily, but we have to stabilize the markets first lest we cede all the ground we’ve gained in the last 4 months.

You keep arguing this point as if there is an ultimate truth here. There is not an ultimate truth.  Who outside of the Obama Admin (and the loop)  is actually supporting this plan?

I am.  And your barometer for reality is misguided if you think the way to establish fact or truth is to look at who says the opposite.  Again, Paul Krugman is on the outside and has no idea how bad things are on the inside of this debacle.  He is an outside who knows his shit better than virtually anyone…but a genius without necessary information isn’t a genius at all.  He also isn’t charged with preserving our nation’s overall economy.  I’d take my argument to Krugman just as I have here to you.  Don’t imagine I am unaware of his prestige or intelligence or his positions.  I assure you I am.  I simply am not convinced that he is considering all the necessary challenges the administration HAS to counter here. 

Anyone who looks at this from the taxpayers’ perspective will naturally have an emotional chord pulling them toward the types of arguments you and Krugman make.  But Obama is trying to save the national economy here…not simply fix how taxes are spent.  And yes it seems to me that in this scenario was have to betray one for the other.  His top priority is to get the economy back to safe level to build up from going forward…NOT to only worry about how taxpayer funds are spent.  Yes, that is painful, but surgery ain;t fun for the patient usually either.  You need to stop the bleeding even if it means you risk wider infection.

I don’t think you are worshipping Wall Street.  I think Wall Street wants the public to believe they are sacred—that without their expertise we will fail—and—-that they are above recrimination.

No doubt they want that.  But this wasn’t the case anyone was making beafore this collapse happened, when I was telling ppl that these types of institutions have been allowed to become too big to fail thanks to massive deregulation efforts in Wahsington.  IOW, my argument comes from watching this happen with disgust over the last several yrs.  NOT from drinking any Wall St. kool aid as you are impatient to suggest so you can mindlessly dismiss what I post.

Seriously?  In what manner?

In the manner that Summers has said they don’t wanna do it yet, but may have to.

As I‘ve said before, the stock market dives and peaks over decades of economic stability and instability.

Thjis sounds like the argument Glenn Beck gives for why he imagines Global Warming isn’t real.  It’s not the fact that the market would dip that concerns me…it’s the potential for the severity of the dips and the dominoes that fall on account of such severity in other sectors of the economy, be it manufacturing or healthcare or auto sales or retail or whatever. There’s a limit to how far you can let the markets sink before the businesses making up the rest of our economy sink too.

What exactly is “short term” here. Your emphasis on short term is ambiguous and needs a specific time allotment. Is Geither talking about a few weeks, a couple months, 6 months, a year, 2 years?  Until the markets rebound?

I’ve no idea what Geithner would deem ‘short term’.  I’m again not saying HIS plan is to simply do an about face and change his approach to something I favor for phase 2.  I’m saying there is reason to think that Obama’s strategy for building the economy back up involves stabilizing it first and foremost and THEN taking the necessary steps to worry about the infection in the system.  I may be wrong about that.  But if I were running things there, that’s the strategy I’d take. 

And ‘short term’ depends on the goal.  I say not too long after June 31st, if the goal is to stabilize the markets a bit before implementing more rational regulatory measures and possibly natinoalizing some banks, then we should be able to do that from that point on.  I think the markets are about as stable as they are gonna get and in all honesty have done fairly well in maintaining their level for the last few weeks now.  So let’s make sure they can maintain this until say August and then Congress should move to nationalize the banks as quickly as possible.

That sounds like a shot in the arm to me. How long are you waiting for Geithner to implement his short term plan?  More importantly, how long is BHO going to wait? The clock is ticking.

That’s exactly what it is…a shot in the arm so to speak.  But you say this like it’s a bad thing somehow.  Look, if we don’t stop the bleeding, we bleed to death period.  We have a much better chance at surviving if we nix that problem as it is the most immediate threat to our economy atm and THEN go back in and fix the structural issues.

And Geithner is already implementing his short term plan.  Note how he has done a marvelous job at stabilizing the stock market since coming into office.  That’s good.  Maintaining and/or improving that should be his primary goal from now until the end of the fiscal quarter in late June.  I dunno how long Obama would wait if this is really his plan.  I’ve no inside info here.  I’m just tellin ya that the best strategy here isn’t far deviant from what the administration has done thus far.  The only thing I’d change would be the bonus situation which is an issue Congress needs to take up.

He’s not going to say anything publicly. That is my point. He isn’t going to can these guys.  You are the one claiming he is going to “personally force them out….”  What is that based on?

You are deliberately misunderstanding this point.  Your argument was that Obama agrees with Geithner’s agenda, whatever it is, based on what you heard Obama say on television as if you naively believed he was going to fire them on national television.  My point was that Obama isn’t going to come out and tell you he disagrees with Geithner’s plan as a long term solution because:

a) it’s horrible PR and would force his hand at firing them.

...and…

b) such action would threaten the entire strategy IF Obama did want to change tracks as I suggest would be ideal here.

My point was that you can’t seriously take what Obama says in a PR interview as being representative of his personal feelings on a topic this fragile.  Same goes for his outlook on prosecuting the Bush administration for torture.  He knows it isn’t the president’s place to do that and as such is smart for not pushing it politically.  Yet he knows as well as the rest of us do that what happened shouldn’t go unpunished…but on the other hand it’s never been the president’s job to look into such matters…it is that of the sitting Congress anyway.  Obama is being careful with these issues as he should be, even if it upsets some of his base. 

I’m sure that is another topic we can talk about another time, just wanted to use it as an example of a situation where Obama is being extremely careful and parsing his words with considerations, which is something he is certainly doing in the interviews where he talks up Geithner. And no, I’m not saying I can read anyone’s mind. I’m saying that in my honest opinion if I was in Obama’s place I’d be have gotten ppl like Summers and Geithner to do the same stuff so far.

Profile
 
 
Posted: 24 April 2009 03:58 PM   [ Ignore ]   [ # 15 ]  
Sr. Member
RankRankRankRank
Total Posts:  1485
Joined  2007-12-10
lindajean - 15 April 2009 07:52 PM

My position does not support that anything is impossible. I remain hopeful that the economy will eventually turn itself around, since history is on my side here.  The question is what will the fall out be from the overall deliberate manipulation that ensues?

Economies in this type of situation NEVER spontaneously fix themselves.  You need to deliberate, considered strategies for how to implement the necessary changes in order to recover.  You are being rather flexible with your use of history here.  And what are you meaning by ‘manipulation’ here?  You mean assuming Obama’s plan is akin to what my strategy would be, the manipulation whereby he stabilizes the markets and then implements more drastic measures to fix things up a bit?  I’m sure for a while it’d cause downtime on Wall St., hence my point about the need to build it up before entering into a phase where we have to announce such plans.

My position is that Geithner, et., al., have a huge conflict of interest and this conflict puts him in a position to make seriously bad choices and actions.  Short term solutions not withstanding.

No one has disagreed with you here.  However, firing them isn’t the most considerate solution to this problem by a long shot as I’ve been pointing out to you.

I could conceivable go along with a short term shot in the arm kind of solution but there is no indication that BHO is going to rid us of these guys at all, only a proclamation from Tavishhill that he will.

But…there WOULDN’T be an idication if he was either!  I watch the consumer electronics industry like a hawk and one thing anyone who does this for a while knows is that if a company is coming out in interviews telling you that they see no need to drop the price of their product what they really intend to do is drop price within that quarter.  They can’t tell you they are gonna drop the price soon because then it ruins the hopes of selling the hardware to consumers in the interim period as everyone would wait for the drop.  then again, they are being asked about the issue, so they have to say something otherwise it sounds ominous and fuels rumors that a price drop is around the corner, which has the same problematic short term effect. 

My point here is that they only lose by being totally upfront in such a situation and Obama is in the same boat here.  If he really was wanting to follow my strategy then he can’t hope to make that work while telling Geithner and Summers that he wants to nationalize or do whatever which they likely would oppose too early.  If he lets the cat outta the bag he then has to battle them in the interim which is bad for everyone.

So in short, don’t base you opinion on whether Obama is implementing a strategy I’m advocating for on an interview where he is only punished by broadcasting that strategy to the world.

Ironically, BHO said recently that nationalizing is not an option because in his words, first we must “do no harm”; thereby insinuating that Geithner’s plan is not the least bit harmful. Clearly a disingenuous remark.

Harmful to what end exactly?  You keep confusing Obama’s priorities as if they centerd around protecting the taxpayers at the expense of letting the economy collapse wholly.  He will blow all the taxpayer’s money before he lets the country completely collapse financially because once that happens, there are serious national security threats to be examined and we set the stage for something truly dangerous. 

Now I agree it is harmful to the taxpayers, but then, the alternatives don’t look like rainbows either. Those same taxpayers rely on these banks for their jobs, their cars, their education, their homes, their other property…And again, you act as if you expect Obama to rip Geithner apart on television which makes no sense politically nor does it make any sense strategically.  How do you imagine the markets would react to such a tongue lashing? 

Nationalizing the banks is one option to keep credit flowing. The Feds step in and take over until they can be rearranged and retooled   to private sectors.

Yep, and I fully support doing that…but not until we can make sure the markets are at a comfy place before doing so because if they are still volitile and we try to pull this off, the whole market will eat itself alive and that has widespread consequences which I’ve already mentioned many times by now.

Some failure is not going to bring on the demise of the banking system.

It’s going to stop the big lenders from lending for long periods of time and ahve drastic effects on the rest of the stock market who don’t just sit idly by and watch as huge sectors of the national economy evaporate overnight.

TH

I’d say that I’m using short term to mean from now until we get the markets stable enough to sustain the hit taken at the opening of phase 2.  Geithner has stabilized the markets decent enough in my opinion that by the end of the fiscal quarter in June, maybe in July would be the best time to jump right into phase two assuming there aren’t major destabilizing factors in the meantime.

In 2-3months phase 2 will be launched?  And then what?  You’re giving Geithner 2 months to get his shot in the arm working?

Hopefully.  Again, I’m only telling you what I’d say is the best strategy and it just so happens that it follows closely with Obama’s actions thus far.  Maybe he has the same general outlook as I do.  Or maybe he doesn’t.  Either way, thus far it’s way too early to simply assume he doesn’t have a reasonable strategy in place.  He got these two guys specifically because of their ties to Wall St. because he knew they could influence the banks in ways he found appropriate for whatever strategy he is employing. 

And again, Geithner is already WELL into doing what he should be doing at this stage, stabilizing the stock markets and working to help it’s growth.  Note the difference between the January and February Wall St. headlines vs that of today.  We aren’t still talking about 800 pt drops overnight.  We are seeing things stabilize for the DOW at about 8000 for instance.  That’s in no small part to Treasury’s efforts, maliciously motivated as you may see them.

It’s not about a moral wrong necessarily, it is about business ethics (lack of), credibility, economic effects and after shocks.  The people who have committed fraud are still at the helm. Geithner wants the taxpayers to be the fall guy while the banks are still declared “solvent.”  Geithner says we should be skeptical about too much regulation (whatever that means.)

Again, you opt to only consider the protection of the taxpayers.  There is another elephant in the room that is more important to Obama, and honestly it should be.  That being the economy as a whole needs to be stabilized and supported in the short term. 

What about all those companies who NEED these banks to stay open in order to afford employee healthcare costs and other items?  They’ll start laying everyone off if these banks who provide them their loans start evaporating, even if it’s only for a couple months as the govt nationalizes them.  What do you tell those workers who are now out of the job and not spending any expendible income in their communities?  What do you tell the businesses in their communities who now have fewer ppl spending money nearby?  All the sudden these ppl have more immediate challenges than worrying where their tax money went (as important as that is).  We have to stop the bleeding.

Profile
 
 
   
1 of 4
1
 
RSS 2.0     Atom Feed