"Let Geithner fail"-Salon.com

[pampango]

http://www.salon.com/tech/htww/2009/03/23/let_geithner_fail/

"You know Treasury Secretary Tim Geithner is in a tough spot when one of the most compelling defenses of his plan to fix the banking system is that its inevitable failure will leave us no other option than bank nationalization . In this scenario, Geithner will have given it his best shot, but credit markets will remain stuck, and the big banks will be proven once and for all insolvent, since it will be clear that there are no buyers for the toxic mortgage-backed securities that are annihilating their balance sheets.

Paul Krugman's position is that by choosing to delay the decision to nationalize, Obama is sacrificing the political capital he currently enjoys and thus will have less freedom of action in the future. (Krugman made the same case with respect to the insufficient size of the stimulus, although, if anything, Obama has proved steadily more ambitious in his policy proposals since the passage of the stimulus, not less.) But as Kevin Drum notes in Mother Jones, Krugman's assertion is debatable. Once there are no other options left on the table: "Far from making nationalization more difficult, failure would make it both inevitable and broadly acceptable."

Could this possibly be part of the Obama administration's political strategy? Or is the more common perception among the swelling ranks of Geithner's left-wing critics the real bottom line: White House economic policy is being dictated by incompetent Wall Street plutocrats, and we will all be the worse for it? It is sometimes hard to distinguish whether critics of Geithner are taking issue with the possible efficacy of his plan or the Wall Street-friendly politics of it . But Geithner's dilemma (if not his disaster) is that he could easily be both: a failure and a sellout. And then there's the Geithner paradox: The more euphoric Wall Street becomes (with an hour to go before the close of trading Monday, the Dow was up 370 points), the more suspicious his critics become that the plan stinks. "

"Geithner's plan may well not work, and it may be too beholden to Wall Street, but its rollout has not been an exercise in helter-skelter chaos. In dealing with the economic crisis as a whole, the Obama administration has put into play a steady flow of initiatives that should, in theory, all work together . In addition to the stimulus, the housing plan and credit relief for small businesses, there's also been a budget proposal addressing long-term issues that even Paul Krugman found impossible not to praise. The Fed has been doing its part by engaging in its own extraordinarily broad-scale stimulative monetary policy."

[Skwmom]

1. Geithner has a record of being a failure and a sellout so I'd put my money on

Geithner being a failure and a sellout.

[ThomWV]

3. Please expand on his record of failure and selling out

Honestly - is this just your opinion or can you back it up?

[MannyGoldstein]

7. An Apostle Of Rubin

Under Clinton, and along with Summers, he helped commit wholesale deregulation of financial institutions, and who can forget almost-free trade with China? (Certainly the many millions of Americans who lost their jobs or received lower wages can't forget!)

Then, under Bush, he co-authored the first version of the Paulson/Geithner/Summers Banker Bailout. Now we have the fourth (IIRC) iteration of that same plan.

[notesdev]

9. screwed up with the IMF in asia in 98-99 too -nt

[democracy1st]

13. here ya go!

http://hotair.com/archives/2009/01/14/obama-treasury-nominee-oversaw-citigroups-descent-into-the-toilet/

[truedelphi]

14. The Ozzies understand Geithner quite well

www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x60211

Geithner made one very bad all about the Asian economic crisis whent he IMF sent him over to the Far East in the late 90's.

[MannyGoldstein]

2. "even Paul Krugman found impossible not to praise"

Given that Krugman is a supporter of this administration, that's a very, very low bar indeed!

[ThomWV]

4. Considering his condemnation of the overall plan it is very surprising that he supports it in part

Or haven't you been reading what he writes daily in the blog or three times a week in the Times?

[MannyGoldstein]

5. Been Reading Krugman For 15 Years Or So

He badly wants this administration to succeed. But he is is hung up on "facts" and "reality".

[fasttense]

6. Well of course this Giethner plan is not going to save the real economy.

The only thing it will do is make the banks/Wall Street firms and their CEOs rich again. It wont create jobs. Most banks have been outsourcing to India most of their work anyway. Even if they didn't send jobs to foreign countries, there is no way they could absorb 22 million under and unemployed Americans.

Have you had a problem getting a loan? I certainly haven't. They are everywhere. I get 2 or 3 offerers for credit card, car loans and mortgages a week. Finding a good rate is another issue, but if I needed to get a loan I could have a check in my hands tomorrow. So there really isn't a loan problem out in the real world.

But finding a job tomorrow will be much much more difficult. And Good Paying JOBS, or lack there of, are the real cause of this problem. Seems to me when Wall Street was doing well and DJIA was over 14,000, I was not doing so well. I was just barely making ends meet. Seems that when the dot.com bubble burst, I was doing real well, making good money, had a good savings account. So it is not Wall Street and bankers who are going to save this economy and create Good Paying JOBS.

[KharmaTrain]

8. Who Takes Over The Economy

OK, let it fail...millions are forced out of work as the market tanks to 5,000 or below and many more investments and savings (whats left) are wiped out. Then what?

Yes, the banks need to be nationalized, and yesterday was the FIRST step I've seen heading in that direction by separating the good from the toxic assets (a big reason why the market soared 500 points) and try to get the credit market flowing again. This is like parking a battleship...sudden actions will cause lots of damage...the delicate balance is to try to fix the economy but to keep it as viable as possible.

So if we junk the entire Treasury...sack Geitner and demand Bernake resign, then who takes over? Paul Krugman? I appreciate what the man has to offer, but what qualifications does he have in juggling all the interests that make this economy go? He's a specialist and one who should be listened to, but definitely not an administrator. The same can be said for many other economists. And then, get three together and you'll get three different opinions.

It took 30 years for this mess to play out, it's gonna take years to clean it up...even if the markets crash to zero. Now pick your poison...banks going insolvent and millions being put out of work and homes at once...or trying to soft land things, which will take longer, but could salvage something to build on.

Next move should be attacking the obscene interest rates and charges banks use to try to fatten up their insolvent bottom lines. Interest rates need to be capped that would be a tremendous stimulous as billions would go into people's pockets rather than the banks.

[Leopolds Ghost]

15. Didn't Nixon repeal anti-usury statutes in force since beginning of republic?

[KharmaTrain]

16. Yes He Sure Did...

I read a post the other day of someone citing that repeal as the real start of the markets getting out of control. Another thesis goes back even further...with the establishment of the Federal Reserve and the detaching from the gold standard...it gave money and then corporations the ability to manipulate the economy...setting the stage for the phantom accounting we've seen over the past 25 years.

The 2005 bankruptcy bill is a disaster. I'm amazed people aren't screaming about how these high interest rates have little to no merit and are just another device banks are soaking the taxpayers and middle class for their own arrogance.

Cheers...

[backscatter712]

10. I'd say Obama's approaching this mess the way a doctor treats a patient.

First, he tries the conservative treatments that aren't so unpleasant for the patient and have fewer risks. If that doesn't work, then he moves on to the more aggressive treatments. In other words, your doctor is likely to try to treat you with medications first before he orders surgery.

That's where I think Obama's coming from. We're used to an assclown of a president who lurched from crisis to crisis, making policy based on whims, not thinking things through. Obama's thought it through. Right now, he's trying the conservative treatments - bank bailouts, schemes to stimulate investment, inject some cash and let Wall Street get rid of the toxic assets. It very well might not work, in fact, I don't think the Geithner plan will fix the economy. It will buy time, and it will get rid of some of the toxic crap - putting it in the hands of investors who won't lose everything when the toxic stuff doesn't pay out.

If it doesn't work (and it very well might not,) nationalization and other more aggressive and risky strategies are in the works. It's already part of the plan, he and Geithner probably have analysts working on scenarios as we speak.

[girl gone mad]

11. The patient is dead.

Obama and Geithner are just playing "Weekend at Bernie's".

[chill_wind]

12. The Rude One had some colorful metaphors along those lines.

"(...)

The first bailout under Bush was a gift to the financial institutions, like giving flowers to your rapist. In as simplistic an explanation as possible, the Obama plan is to keep playing the same hand, with a bit more oversight, a little more in the way of loans, and some cash tossed at homeowners, and that's a failure to recognize that the game has changed from poker to Go Fish. It seems like Obama wants to get only to second base with nationalization, but abstinence never works, man, never.

Out here, in this corner of Left Blogsylvania, the Rude Pundit doesn't know non-recourse loans from a glory hole. But he knows who's worth loaning money to at the dog track. And you stay away from the guy who keeps telling you that not only will he get you back your stake, but he'll get your drinks comped for the day. That bastard's gonna keep making deferred promise upon deferred promise until he either disappears or finally comes clean that it was all a scam. If you didn't know it in the first place, you deserve to leave with your pockets empty.

But, hey, maybe Obama and Geithner and Summers know something we don't. Maybe they know how to put a corpse back together and use lightning to reanimate it. The problem will be making sure they didn't use a criminal's brain in there.



That's it - the Rude Pundit's metaphored out."

http://rudepundit.blogspot.com/

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5320641

[sendero]

17. That's fine..

... but in many instances the patient's condition will seriously worsen while the "doctor" fools around. That is what is going to happen here.