Larry Summers: Wrong Man for the Job
I have been wondering why the new administration has continued carrying out the ruinous, misguided policies of the Bush administration when it came to the banks. I simply couldn’t figure out why the hell we were giving away trillions of dollars on absurdly favorable terms to a group of incompetent managers — reckless speculators, really — who destroyed their own companies.
Perhaps this helps shed some light:
“Top White House economic adviser Lawrence Summers received about $5.2 million over the past year in compensation from hedge fund D.E. Shaw, and also received hundreds of thousands of dollars in speaking fees from major financial institutions.
A financial disclosure form released by the White House Friday afternoon shows that Mr. Summers made frequent appearances before Wall Street firms including J.P. Morgan, Citigroup, Goldman Sachs and Lehman Brothers. He also received significant income from Harvard University and from investments, the form shows.
In total, Mr. Summers made a total of about 40 speaking appearances to financial sector firms and other places, with fees totaling about $2.77 million. Fees ranged from $10,000 for a Yale University speech to $135,000 for an appearance paid for by Goldman Sachs & Co.
The disclosure — in a financial report that is required for federal office holders — comes as Mr. Summers is involved in shaping the Obama administration’s policy decisions on the financial meltdown as well as the broader recession. Among the many decisions the economic team has wrestled with has been whether to step up regulation of hedge funds, one of the most contentious subjects during a summit of world leaders this week. European nations pushed for tougher rules, while the Obama administration preferred a less stringent approach.” (emphasis added)
Let’s review: Summers, along with Robert Rubin, pushed for the repeal of Glass Steagall, and supported the Commodity Futures Modernization Act; If memory serves, he was also around during the LTCM bailout.
If the history books eventually judge the Obama administration a failure, they may have to point to one horrific appointment as the root cause of the misguided policies: The “Smart Guy” who decided to continue the “Dumb Guy’s policies.
And that’s not very smart at all . . .
>
Source:
Hedge Fund Paid Summers $5.2 Million in Past
JOHN D. MCKINNON and T.W. FARNAM
WSJ, APRIL 3, 2009, 11:38 P.M. ET
http://online.wsj.com/article/SB123879462053487927.html
See also:
Summers Earned Millions in D.E. Shaw Salary, Bank Speech Fees
Timothy J. Burger and Kristin Jensen
Bloomberg, April 4 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4iGjejJVRko&
April 4th, 2009 at 7:55 am
Another important piece of the puzzle. This one is even making MSM. I hope a few more folks begin to see what is going on as a result….
Thanks Barry for all you do.
April 4th, 2009 at 8:04 am
If Summers should resign for conflict of interests, then Paulson should go to jail. The latter made $500 million from Goldman Sachs, the firm he probably kept alive with the AIG bailout.
April 4th, 2009 at 8:26 am
Wall Street and Congress… a den of thieves
MSM… a circus act
MSM+WS+Congress… an unholy alliance
Taxpayer… screwed
April 4th, 2009 at 8:29 am
We need some credible figures right now running this banking show. I keep hoping Obama will hear that, see that. So far – no go. I keep hoping (since he supposedly carries his Blackberry where ever he goes) that he will one day get “The Big Picture.”
April 4th, 2009 at 8:33 am
he worked for DE Shaw so he shouldn’t get to work for the government?
has DE Shaw had anything to do with the current crisis?
you are just getting mad about something stupid and using that anger instead of logic to make a conclusion.
April 4th, 2009 at 8:50 am
Expecting the people like who ran the ship into the iceberg to take it back into port is delusional.
Enjoy the rally while it lasts.
April 4th, 2009 at 8:50 am
Last night Bill Moyers interviewed William K. Black, author of “The Best Way to Rob a Bank is to Own One”. He gave an overview of a what he describes as a coverup of a subtle criminal conspiracy that led to our current economic crises and the subsequent cover up. He names Summers, Geitner, Rubin, Paulson, Rubin, et. al.. Black argues his thesis well. His background with this subject goes back to the Keating 5. Yves Smith thought enough of it to place the interview on Naked Capitalism. Black wants the removal of the leadership of the troubled too big to fail banks so ther can be a proper investigation.
April 4th, 2009 at 8:52 am
yeah, if he worked for DE Shaw and he’s conflicted – has a conflict of interest (who knows?) – he shouldn’t work for the government. Pretty basic stuff here.
April 4th, 2009 at 8:55 am
“While on the commission and after becoming its chair two years later, Born sought comments on the need to regulate derivatives, specifically swaps that are traded at no central exchange, known as the dark market, and thus have no transparency except to the two counter-parties (no actual regulatory scheme was proposed at the time). The request for comments, called the “Concept Release,” stated that the growth of trade in derivatives had prompted the CFTC to re-examine its regulatory scheme. [1] The request for comments was opposed by Federal Reserve chairman Alan Greenspan and Treasury Secretaries Robert Rubin and Lawrence Summers.[2] Specifically, on May 7, 1998, former SEC Chairman Arthur Levitt joined the other members of the President’s Working Group – Treasury Secretary Rubin and Federal Reserve Board Chairman Greenspan – in objecting to the issuance of the CFTC’s concept release, in which Born attempted to shed light on the dark market, citing grave concerns about the possible consequences of the CFTC’s action. ” Wikipedia
I watched a Judy Woodruff hour-long interview with Summers waiting for ‘the question’, why he opposed bringing derivatives like CDS under CFTC regs. He basically said it was the other two guys fault, not him. But you
had to back up the DVR and watch and back up and refer to the web to what he said at the time, etc.
Summers can skate across thin ice the width of Hudson Bay before you can think and be back again in case you tried. Of the range of culpabilities in the debacle, public and private, Summers is certainly amongst them.
April 4th, 2009 at 9:02 am
Why didn’t this information impress someone in the vetting process? How long will it take for Obama to understand the Geithner and Summers are undermining his administration? At some point the degree to which Goldman Sachs is woven into every detail of the disaster and all the moves that have been made to address it is going to be so obvious that all the MSM will be trumpeting it. For the sake of the good that he wants to do Obama must jettison Summers and Geithner and remake his economic team. Otherwise it will be a tragedy to have this potentially great president end up a target of justified public anger about how the financial world is being rewarded for its sins.
April 4th, 2009 at 9:03 am
http://brontecapital.blogspot.com/
Bronte Capital has been referring to Sheila Bair as “corrupt” for days now. (It all started with the WaMu fiasco.)
April 4th, 2009 at 9:03 am
When a Pujo/Pecora type commission is finally seated by Congress I hope Summers is not exempted by executive privilege. He has a lot to answer for.
BTW, the creation of a Pujo/Pecora type of commission is one of my “tells” that we are near a true bottom.
April 4th, 2009 at 9:04 am
Its easy for us to criticize from the sidelines and do Monday Morning Quarterbacking of Obama’s economic policy. However, I think it was Brad DeLong who put it best. He was talking about Adam Posen, an expert on the Japanese lost decade.
He said that if Posen was the Secretary of the Treasury (or if Krugman, or if Ritholz) what would they do? Pretty much the same thing. Because once they realize the political realities of the situation. PPIP would be the best way to go.
April 4th, 2009 at 9:05 am
The merger of governmental and corporate interests has a name. Why do we constantly avoid acknowledging the obvious? There is only one reason a person making huge wealth in the private sector would want to be inside government, and it’s not patriotism.
If we ever retake our government, the penalties meted out will have to be horrific. Otherwise, the same dastardly alliances will reoccur. Tripled criminal penalties for elected or appointed government officials convicted of crimes an/or misdemeanors would be a good start. Putting an end to quasi-governmental agencies and positions would also be a step in the right direction.
April 4th, 2009 at 9:12 am
Wait …the rich and powerful and connected rotate between gigs?
The MSM used to be called “the News” …so I rephrase, this is news to you?
April 4th, 2009 at 9:22 am
Pujo/Pecora type commission–
Something of the level of the 9-11 commission…JFK…Challenger is fully warranted.
Ain’t gonna happen, high friends, high places. The very lumpy rugs swept under,
skeletons stacked to the ceiling in every room, on every level, both ends of the mall,
spilling from the judiciary in whitewashing-ton DC. There is poesy in justice, freely
elected representative democracy condemning all by majority.
April 4th, 2009 at 9:32 am
http://www.pbs.org/moyers/journal/04032009/watch.html
Thanks Zell @ 8:50 – This is riveting. I could even follow the concept of pulling the FBI agents that would have helped solve the problem – post 9-11. To think we have 1/5 the agents today that they had to delve into the S/L crisis. Not acceptable.
“Our system became a Ponzi scheme.” Barry – much about the rating agencies as well.
April 4th, 2009 at 9:32 am
He said that if Posen was the Secretary of the Treasury (or if Krugman, or if Ritholz) what would they do? Pretty much the same thing.
If so, De Long is wrong. Wouldn’t be the first time.
April 4th, 2009 at 9:33 am
Machiavelli999,
Here, here.
The possibility of firing Summers is more realistic than the shrill cries for the jettison of Geithner. But I’d like to hear of some feasible replacements and how they should apply whatever more favorable perspectives and/or approaches they may have in order to change the course of the administrations’ economic policy for the better. What’s the alternative and where would it lead us? Nothing is wrong with opinion, alternative ideas are vital, the search for solutions should be constant. But ideas without a strategy that is politically and financially applicable in the current environment are more opinions than solutions.
Everything changes when you’re ass is in the chair and you have to make the big decision.
April 4th, 2009 at 9:40 am
… you are just getting mad about something stupid and using that anger instead of logic to make a conclusion.
That’s right, that hedge fund gave Summers all that dough ‘cuz he’s such a sharp guy. Has nothing to do, I’m sure, with how policy has been shaped – or better, not shaped – to the benefit of hedge funds.
Let’s just hope Obama isn’t also bought and paid for by the same crew that has Summers on their payroll. Write your representatives in Congress today. Demand real ‘change’.
April 4th, 2009 at 9:41 am
I’d be derelict to my folk if I don’t chime in too .. said this all before . I’ll say it again ..
Governmnt should be of laws rather than of men. (I’m repeating a line in the Jaycee creed).
Is America the businesses or its people? (the way money has mingled – I’d say business)
Investing in corporations and giving that entity more favors than the investor is a problem.
We should be voting at the booth on policy not characters.
April 4th, 2009 at 9:43 am
Everything changes when you’re ass is in the chair and you have to make the big decision.
Sure, if you’re a coward. These times demand men and women of courage.
April 4th, 2009 at 9:48 am
Personally I think Lawrence Summers is doing a fantastic job. He only fixes the stupid policies of Bush (not all of the policies were stupid and he is intelligent enough to recognize it).
Bush is definitely responsible for allowing Mr. Cox ideology (allowing naked short selling and removing uptick rule), allowing 5 FASB idiots stupidity (only one out of five was an accountant, the rest were detached from real world academics like Roubini and Krugman).
“William M. Isaac, a former chairman of the Federal Deposit Insurance Corp., told a House Financial Services subcommittee hearing on March 12 that “MTM accounting has destroyed well over $500 billion of capital in our financial system.”
Since capital can be leveraged about 10 times in making loans, the rules have “destroyed over $5 trillion of lending capacity,” said Isaac, now a consultant with the Secura Group of LECG Corp.”
“Recovering Writedowns — Banks Reporting Write-ups
Now FASB has to deal with how banks deal with recoveries of previous writedowns due to other-than-temporary-impairment losses when there’s evidence that loss is no longer there.
A March 27 letter sent jointly by the five federal regulators of financial institutions — the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corp., the National Credit Union Association and the Office of Thrift Supervision — urged FASB to add such a recovery to current earnings.
Since the losses were subtracted from earnings, that would be an equitable way for FASB to go — and soon.”
http://www.bloomberg.com/apps/news?pid=20601039&sid=ajc25z7IOrTk
SEC Said to Weigh Two Plans for Short-Selling Limits
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoa7KqzRsoP8
P.S. Barry, I would like to thank you for going on Bloomberg radio and declaring bank nationalizations and Citi going to zero. As I posted here before, I have loaded up on a number of bank shares like Citi, JPM, Wells, and BAC after your call and have already made 200-300% profits (2009 is my best year ever)
Thank you Barry for creating this fantastic buying opportunity for us!
April 4th, 2009 at 10:07 am
As long as Economics remains an unscientific pseusoscience, these problems will persist. The tobacco industry was able to tie up medicine for years until epidemiology came through. How much more so can vested interests confound and obfuscate policy around economic decisions?
April 4th, 2009 at 10:08 am
Everyone beats up on Summers, et al, maybe for good reason, but how bout some names of replacements? Begginning to sound like the party of No?
April 4th, 2009 at 10:09 am
Pseudoscience
April 4th, 2009 at 10:10 am
number2son,
You misunderstood.
What changes is that the luxury of observing and criticizing disappears.
Your decisions have real implications.
Your cry for “men and women of real courage” is an example. It’s easy to type or shout that these times demand them, not so easy to find them, appoint them and watch them contribute constructively to an effort that will produce positive results.
April 4th, 2009 at 10:14 am
Completely agree, Machiavelli and Thomas
Barry, do you really think Obama was just being “soft” when he rejected France and Germany’s call for an international super-regulator with jurisdiction over every financial market in the world (yes, including the US)?
The whole history of American foreign policy, from 1900 to the present, is one of firm unilateralism interrupted by brief interludes of internationalism when it suits our interests. Americans will and have accepted international military alliances in desperate times, but Americans will never accept the idea that what they can and cannot do as individuals will be regulated by Frenchmen, Indians, Japanese and Zimbabweans.
April 4th, 2009 at 10:15 am
From Kenneth Black “It is our integrity that often prevents the greatest abuses.”
How about we start by hiring those who paid their taxes.
And those who are willing to:
Get rid of the CEO’s covering up the losses.
April 4th, 2009 at 10:16 am
ps -
On the sync of business & politics .. since we don’t have the policy changing abilities – slowly retract from corporate stocks and make them borrow like the rest of us. (imo) Wouldn’t that return self governing?
On presidents, govenors, senators, representatives, mayors and councilmen .. they are allotted enough time in each of their periods to do much damage or good during their tenure. I think they all do the best for their constituency. The trick is who is their constituency? These days the world and its people are very dependant on well engineered structures for their well-being. And for many the system has wrung out over capacity.
Hense the people need to get smart .. get out to vote on Issues .. and take the responsibility. (imo)
pss – we would still need to vote for managers who hire* clerks.
* install .. since we would be better off in The Long Run** with a moneyless society (imo)
** The Eagles released 1979
psss – another grounder fav these day Don Henley’s The Garden of Allah from Actual Miles … fyi – been up most of the night (still going) watching Mtv’s 1988 100 Countdown on VHS (them were the days) what happened?
April 4th, 2009 at 10:23 am
It’s easy to type or shout that these times demand them, not so easy to find them, appoint them and watch them contribute constructively to an effort that will produce positive results.
What complete rubbish. There are plenty of people who could take Summers’ place who are honest, are not conflicted and who would have no problem whatsoever promoting policies of real change.
April 4th, 2009 at 10:30 am
number2son,
Names, please.
Ideas, please.
April 4th, 2009 at 10:30 am
EAR,
I could hear your point, more clearly, if anyone in this administration had even bothered to explain anything, in anything approaching detail, to the American People. But, quite sadly, that hasn;t been the case–instead, we’ve been entreated to, yet, more of the ol’ Soft Shoe..
This– http://www.youtube.com/results?search_type=&search_query=the+obama+deception&aq=f
is more the case than I’d ever care for, yet, there it is..
April 4th, 2009 at 10:39 am
Mark (really now)- we had two choices McCain or Obama? I voted for who I trusted more .. and am on record for who .. but it really doesn’t matter much now and for roughly 4 more years.
ps – the 1988 Mtv Countdown is inserting Randy of the Redwoods for President every now and then.
April 4th, 2009 at 10:44 am
Barry:
I am sorry but i am surprised at the shallow conclusion and consipiracy story by you.
just because they dont agree with you or you dont understand their actions does not mean they are corrupted.
we are talking as though everything is so simple, and we could have fixed things in couple of months.
or they are doing proven bad things…
as some one said, its easy to become monday morning armchair quarterback…..but hard to accept that we dont understand all the complexities……but the best part we dont understand that we do not have all the data.
so instead of calling names just because we dont agree how about saying that they should give more information about what they are doing,but we are assuming that the masses will be delighted to know that the whole world is sitting on financial derivatives time bomb…..remember that economy is a confidence game…..if we can fool the masses that everything is hunky-dory…50% of things will take care of itself(they will go back to their consumption mode…instead of savings any stimulus they get).
but if you scare the masses…they will not buy any stuff for couple of months..leading to a huge economic down feedback cycle.
btw its hard to believe but what if the stock market keeps going up….people feel that the worst is over and they go back to normal life….and companies stop laying off…stimulus helps pick up the slack in employment and spending….and the market will stay higher….
we keep forgetting that return from safe investment is only 2%…so why not pay 30 times multiple for a cash rich, zero debt company making good products…like say aapl, goog etc..
April 4th, 2009 at 10:47 am
EAR, you can’t possibly be that disingenuous.
http://baselinescenario.com/
http://en.wikipedia.org/wiki/Joseph_Stiglitz
http://www.prospect.org/csnc/blogs/beat_the_press
Now it’s your turn to prove you’re not a PR flack for Summers or his employers on Wall Street.
April 4th, 2009 at 10:49 am
I’m not sure why we continue to be obsessed with how government is skewing things up. As smart People who realize that crisis brings opportunity, Maybe if we focused on getting improved shareholder rights. There could be a chance that we could fix these companies ourselves. Instead of being skewed by all the incompetent managers, who spend the day playing golf, and figuring out how to pass the buck Or figuring out how to obfuscate the proxy.
I just think if I had a big powerful blog, that many people read, maybe that could be a focus, as opposed to “Ken Lewis and Larry Summers should be fired” But I guess taking things into our own hands isn’t popular anymore… I guess we just need the government to step in with every listed company, and set the management right.
April 4th, 2009 at 10:55 am
Greg,
do me a favor, stop trying to me into the (false) Left/Right paradigm.
also, I said Nothing about it..
~~
techy,
to this: “but hard to accept that we dont understand all the complexities……but the best part we dont understand that we do not have all the data.”
“we do not have all the data.”
why is that? and, to your own point, How do we even know that 44’s administration does ?
April 4th, 2009 at 10:58 am
Obama won the latest version of Big American Idol because he looked best in a suit, spoke best, and was considered no threat to the status quo.
April 4th, 2009 at 11:01 am
techy @ 10:44 “but if you scare the masses….they will not buy any stuff for couple of months…leading to a huge economic down feedback cycle.”
Huh?
You sound like a banster trying to convince O why he should not investigate the bad CEO’s.
I can handle the truth. I understand that the FDIC insurance is in place. We have survived huge investigations into financial wrong doings in the past. These losses need to be exposed – those stopping that from happening need to be replaced. The longer you lie to people, the more the trust erodes.
April 4th, 2009 at 11:06 am
Relying on placebo effect to placate the masses is not “rigorous” in any sense. I’m a big fan of the American flim-flam man. Read your Mark Twain. It’s part of who we are. But this. Exchange between very bright people quickly devolves into barstool BS with no real foundation.
April 4th, 2009 at 11:17 am
But I’d like to hear of some feasible replacements and how they should apply whatever more favorable perspectives and/or approaches they may have in order to change the course of the administrations’ economic policy for the better.
The reason you won’t hear any other feasible ideas is because they don’t exist. As I’ve said before, what Geithner is doing now is pretty much the best thing that can be done when you consider the economic and political realities of the situation.
Nationalization is a non-starter not because its bad policy, but because its politically not realistic. As soon as Obama comes out with plans to nationalize and asks for $1T to recapitalize the banks, all hell breaks loose, Obama’s popularity plummets and he becomes inneffective.
Krugman, Posen, Ritholz and all the other critics never take in consideration the political realities of the situation.
April 4th, 2009 at 11:18 am
Eric,
Shareholders do have rights: We have the right to remain silent, and anything we say will be laughed at by the BoD!
April 4th, 2009 at 11:25 am
The reason you won’t hear any other feasible ideas is because they don’t exist. As I’ve said before, what Geithner is doing now is pretty much the best thing that can be done when you consider the economic and political realities of the situation.
Repeating this lie will not make it any less true.
April 4th, 2009 at 11:27 am
Or rather any less a lie.
April 4th, 2009 at 11:29 am
number:
Has anyone come up with a feasible alternative plan? Even Barry is a rank daydreamer in this regard: He has never told us how his support for nationalization translates into an actual plan that will receive 60 votes in the US Senate.
April 4th, 2009 at 11:31 am
Old Warren ain’t doin too bad on the bailouts either:
http://www.chron.com/disp/story.mpl/business/6358451.html
And Fannie and Freddie are still giving retention bonuses (where they gonna go?), the justification being that many workers lost savings when the stock crashed. In that case, most everyone with a 401k deserves a bonus:
http://www.chron.com/disp/story.mpl/business/6358421.html
April 4th, 2009 at 11:33 am
which does nothing more than confirm that the masses bought hook-line-and-sinker all the puffery of hope and “change.” change is good just as long as it’s NIMBY (read Congress’). the only change they were really looking for is more power to befuddle the masses. and now they don’t even have to try at the befuddling part. they’ve clearly adopted the Nike manta. . . Just Do It!
April 4th, 2009 at 11:39 am
snapshot:
do you know how 90% of people in this country live?? do you know how much they know about economics?? or about how the politicians always rape the country…..because the masses are stupid, they want to continue living their life….even though at the end, it was just a stressed out slavery to the elites, who have taken control of the system.
BTW i do not think O was the best man….but who the F***K wants to run for office….with so much dirt thrown around…and the voters…they dont even Effing deserve to vote….unless they seriously spend 100 hours getting educated and qualify(In my perfect world…. sigh )
but you cannot say Obama is the worst we got so far….and doubt his every intention, so far i have not seen evidence that he is worse than any other politicians…..he is far better than Mccain. sorry we had to choose one.
with all the lobbying that goes on in DC, who knows it may be impossible to do anything for the best of the country…..
and who cares about the country…..its all about our self…isnt that what we are all supposed to do….as long as we do ok, its all fair….right??
i digress, my point is Obama’s team has inherited so much mess….that it may look like they are not doing the right thing, but i beleive we dont have data.
we dont know for a fact…that the 70-80% consumers must have reached a point of no return when it comes to debt servicing….given that their wages stagnated in the last 10 years.
we may not know that all that financial engineering may have created such mess, that every financial asset is worthless(insurance, investments etc..)…imagine if people lose 50% in debt market because of rampant defaults….what happens to all the pension funds…401ks etc if market tanks another 60%??
what happens to say MSFT and others cash if it has invested in corporate bonds, and they take a 80% hit
all i am saying is…give some benefit of doubt to these people.
and if they are really the same elite class who will screw the masses…..who cares, this is the best we can get…..i think we elected the best candidate of the two.
now i am all confused. so why i am critical of conspiracy theories when they can be really happening because the elite controls the system??
because we dont have enough data. but they will never tell us if that will disturb the normal way of life.
so what are we supposed to do? ask for more data and hope that the masses can handle it…..
but if we point finger without proof…..i think we lose credibility, not that anyone gives a rats ass to what barry is writing on these blogs..
and i think barry will give a rats ass as long as he can make his millions….i am not blaming him, its the way of capitalist life…..every man for himself….
BTW:
you guys really need to think about why our politicians suck so much…..why the elite class rapes the country year after year…
30% of votes are decided based upon religious beleifs….i live in the bible belt, and it hurts to see humans in delusion.(you should be happy that american being 80% christians….we dont have rules that we have to be in church on sunday morning else the cops will pick us up…..etc..)
50% of the outcome is decided by who spends the most on campaign spreading bad information about their opposition(voters are stupid…).
April 4th, 2009 at 11:40 am
Also, you can voice your views directly to White House Office of Public Liaison:
http://www.whitehouse.gov/administration/eop/opl/
Unless you’re cynically addicted to bad government, demand that President Obama remove Wall St. insiders from public office; starting first and foremost with Larry Summers.
April 4th, 2009 at 11:41 am
Mark E Hoffer Says:
April 4th, 2009 at 10:30 am
EAR,
“I could hear your point, more clearly, if anyone in this administration had even bothered to explain anything, in anything approaching detail, to the American People. But, quite sadly, that hasn;t been the case–instead, we’ve been entreated to, yet, more of the ol’ Soft Shoe..”
Hey, I’m not beatin’ the drum for anyone in particular. I think immersing yourself in political affiliation and affection leads to myopia and disappointment. Humans have many more dimensions than labels we concoct to align/separate ourselves.
The party I’m most interested in has my eyes and a future full of challenges they had no part in creating. In their interests I seek knowledge and perceptions that form a constructive way forward… ideas.
That’s why I come here and “listen”
Machiavelli999,
Thanks for the pragmatism. It’s calming. I find the “Japan v. Sweden” argument troubling and a bit expedient. Are the two scenarios specifically comparable to a mess of this magnitude? Are the scenarios comparable politically?
April 4th, 2009 at 11:47 am
Has anyone come up with a feasible alternative plan
Joseph Stiglitz, Dean Baker, Simon Johnson: just a few who have offered sound alternatives to business as usual.
April 4th, 2009 at 11:48 am
@techy: If I had to worry about shit like whether touching the Queen is breach of protocol… Just shoot me now.
April 4th, 2009 at 11:52 am
Yea. Another “spirited” Sunday morning bash. It should be obvious to all that there is an arrogance here on the part of the insiders that says that sharing full disclosure with the public would do more harm than good. “Trust us to do what’s necessary”. Well, duh, isn’t that how we got here?
The Moyer-Black interview was dead on even if there was nothing new to it. There’s an old saying “the definition of insanity is to keep doing what you’re doing expecting a different outcome”.
Those in power would have us believe that the safest future is to keep them in power. So why exactly did we elect BO? So that Summers and Mongo can continue to run the asylum? There must be hundreds of executives of strong regional banks (how about from Utah), that do not have taxpayer blood on their hands, and are not part of the problem and cover-up.
As long as Summers and Mongo are there, BO’s credibility takes a major hit: bottom line. What’s more interesting is that’s a price he’s willing to pay for the banker’s continued collusion.
Years ago, Fukayama wrote a book: Trust. Should be required reading. Summers was outed today by the NYT article.
Summers and Geithner have to go, for some fresh blood from outside NYC and DC. To do otherwise would be to perpetuate the fraud and cover-up.
April 4th, 2009 at 11:54 am
Thanks for the pragmatism. It’s calming.
You may find this a bit less comforting:
Bill Moyers interview with Bill Black
April 4th, 2009 at 11:56 am
Numbers,
If you google “Stiglitz Plan” you come up with no results in the last 4 months.
April 4th, 2009 at 11:59 am
Geithner is set up to go next summer if the economy has not turned around clearly at that time. That was clear from the beginning, someone will have to be sacrificed for that sake of the midterm elections. If the economy is a lot worse by then, they will also have to get rid of Summers. If, by some miracle, the dow is 5 digits and unemployment has gone from double digits to less than 8%, then both stay and they will be heroes.
The PPIP was clearly designed by someone without any political experience. Whether the assets are purchased for 5 or 80 cents on the dollar you will find some screming media idiot claiming that the gobernment and taxpayers are being robbed. Given the current sentiment and how hard it is to determine the fair value, many people will believe the screeming idiots. This is why you have to go Swedish. Punish the “bad” share- and bond-holders, by wiping them out. Then let new functional banks and financial institutions do business under tight regulations, while the bad assets are slowly sold. Even if you don’t think it is the best policy it is so much easier to defend politically in a way that even J6P can understand. If you are against it you are defending those big bad criminal share/bond holders; and it also has the classic simpleton logic of punishing someone, followed by licking the wonds, and getting back to normal.
As much as I hate Karl Rowe and the previous administrations “politics-trump-policy” approach and all the damage it did to this country; you have to have someone in the white house who understand the political implications of the policy. If not, you quickly end up losing the power and ability to implement good policy.
April 4th, 2009 at 12:00 pm
PS–I did find this article:
A Bank Bailout That Works
By Joseph E. Stiglitz
March 4, 2009
http://www.thenation.com/doc/20090323/stiglitz
Sadly, it offers no plan. Stiglitz just bitches and moans about the Geithner plan without offering any realistic alternative. He calls for nationalization, but refuses to tell us how that would work politically or economically.
We don’t need eggheads throwing rocks at realistic plans and not offering anything to replace them. Stiglitz, Krugman and men of their ilk need to get real or STFU.
April 4th, 2009 at 12:00 pm
Transor Z:
you said it man….I cannot even imagine that sane people still live with such insane thoughts…
i can understand that F***ing the queen will be a crime…..but WTF touching a person while pretending to be nice is bad
Who the F** even cares about that queen…..but remember it will be a diplomatic suicide if the head of a country visiting london does not make an effort to visit her majesty…
the world of delusion we live in…..I am gland Obama won(compared to the alternative), i would have lost all hope in humanity…and i would have started on the path to finish my “create a black hole” experiment with stewie.
i hope my IP address will not be traced and me hunted down for the blasphemy….i have said worse thing about jesus being in bible belt
April 4th, 2009 at 12:05 pm
Absolutely, Summer AND Geithner need to go before this gets turned around. Looking at recent history though, say Rumsfeld, when 99% knew he was not the right man for the job, it still took damn near two years to dislodge him. I think we’re stuck with Summers for a while yet,….unfortunately.
April 4th, 2009 at 12:06 pm
We don’t need eggheads throwing rocks at realistic plans and not offering anything to replace them.
Unfortunately for you, and ad hominem attacks notwithstanding, Stiglitz does offer a viable and honest and workable alternative plan. Your problem is that you and the interests you represent are threatened by it. Why’s that?
April 4th, 2009 at 12:08 pm
If you google “Stiglitz Plan” you come up with no results in the last 4 months.
ROFLMAO.
April 4th, 2009 at 12:12 pm
Number,
No he does not. There are two obstacles that any practical person knows must be overcome on ANY issue (not just bank bailouts): Money and Politics.
1. Money: Stiglitz does not tell us how much his plan will cost or save us. There are no numbers in his plan. That’s like saying your “plan” for getting rich is to make a lot of money really fast. Um…no numbers, no plan.
2. Politics: Stiglitz does not tell us how any such plan for government ownership of the banking system would ever make it through Congress. Congress just voted down an authorization for a $250bn emergency bank fund. What makes him think Congress will vote for a potentially gargantuan bank bailout? And what about the way the Republicans have behaved since 1/22 makes people like him think that the GOP wants the American economy to improve rather than fail? The GOP has every incentive to work to undermine the economy.
April 4th, 2009 at 12:13 pm
@techy: According to Lyndon Larouche’s manifestos, you’re a dead man, dude.
April 4th, 2009 at 12:17 pm
franklin, you must have a morbid sense of humor to suggest that a plan for making the polluters pay for the clean up of their own mess should be rejected because of it is prohibitively expensive. And given the costs of the Paulson/Geithner/Summers cover ups and bailouts, it’s just plain ludicrous to boot.
Your objection on the basis of politics relies on the cynical canard that politicians can never be persuaded to do the right thing. It’s our job as citizens to fight the lobbyists and vested interests to force them to do that. And that won’t happen if we remain silent.
April 4th, 2009 at 12:25 pm
D.E. Shaw runs one of (if not the) most secretive quant shops in the business. Everything on a need to know basis. I once brought a deal to them and couldn’t walk past the reception desk without a non-disclosure document in place and this while I brought the deal to them!
No one except very high ups really know what everyone does. Highly technical place. David Shaw wrote the original paper which defined parallel computing. He built probably the first parallel computer with backing of the NSA. Where does an economist like Larry Summers fit into this mix? I doubt he’ll make much of a contribution to the exploitation of market micro-structure or applying non-linear dynamics or information theory to advance price series analysis. If he works for D.E. Shaw and at the same time gets paid to talk to competitors they’ve very likely put him out there to spread disinformation, get them looking in another direction while they attack yet another inefficiency in the markets.
In any case I don’t see his association with D.E. Shaw as relevant at all to what he does now. He and Geithner seem either very afraid or stooges for the powers that be — maybe both. The public can envy his compensation from D.E. Shaw and his speaking engagements, but anyone a bit better informed ought to pay attention to the things that matter.
April 4th, 2009 at 12:29 pm
number,
Morality’s got nothing to do with it. The government needs to do whatever it takes to produce a the fastest recovery that can be delivered at the lowest added cost to the taxpayer while simultaneously laying the foundation for future prosperity (since money must be spent, it should be spent on programs that add value whenever possible, such as education).
It seems to me that the bigger one’s canoe in this society, the more “outrage” they have. Those of us who don’t even have canoes and have to worry about paying the rent tomorrow don’t have much time for philosophizing about the injustices of it all. We just need bread and jobs.
April 4th, 2009 at 12:36 pm
Anyone catch the Bill Moyers interview with William Black? Great piece….msm never picked this guy up….
http://www.pbs.org/moyers/journal/04032009/watch.html
April 4th, 2009 at 12:42 pm
DeDude @ 11:59
“The PPIP was clearly designed by someone without any political experience”
I take the opposite view. While I am personally opposed to the PPIP, I think that it is politically clever. It puts the taxpayers on the hook, but does it in such a way that the average person doesn’t realize it; moreover, there is no need to ask Congress for more money, at least in the near term.
April 4th, 2009 at 12:45 pm
one glaring mistake we continue to make is to assume that the taxpayer contributions are still the people’s money and that those in charge treat it such. once that dollar leaves my hand it becomes “their” money. putting those in charge of government is like owning a restuarant; it becomes a game of who can steal the most. only in this case the numbers and the back door is so large millions (more likely now billions, since we’ve lept into the Trillions category rather handily) no longer matter.
April 4th, 2009 at 12:48 pm
Sorry, franklin, but your argument is breaking down into incoherence. You suggest the fastest recovery is the best, even if it doesn’t address the underlying structural problems that caused it in the first place. And yet the recovery has so far only enriched the risk takers. The money given away to Wall Street has not found its way into loans to the businesses that produce jobs. Loans that would, as you put it, lift a few canoes.
This is the essence of Stiglitz’s argument.
Conflating the Wall Street bailout with the stimulus bill doesn’t make the former any more palatable or just.
April 4th, 2009 at 12:49 pm
DL,
Exactly. That’s the heart of the problem: How do you fix the financial system knowing you can’t spend more than a nickel doing it? Geithner’s plan is the only realistic plan on the table.
April 4th, 2009 at 12:58 pm
Joseph Stiglitz, Dean Baker, Simon Johnson: just a few who have offered sound alternatives to business as usual.
Their alternatives all require a lot more public money and hence they are politically impossible.
The End.
April 4th, 2009 at 1:02 pm
Moyers drops bailout bomb on Obama
http://www.dailykos.com/story/2009/4/4/716394/-Moyers-drops-bailout-bomb-on-Obama#c1
WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the 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.
BILL MOYERS: In other words, they could have closed these banks without nationalizing them?
WILLIAM K. BLACK: Well, you do a receivership. No one — Ronald Reagan did receiverships. Nobody called it nationalization.
BILL MOYERS: And that’s a law?
WILLIAM K. BLACK: That’s the law.
BILL MOYERS: So, Paulson could have done this? Geithner could do this?
WILLIAM K. BLACK: Not could. Was mandated—
BILL MOYERS: By the law.
WILLIAM K. BLACK: By the law.
SNIP
WILLIAM K. BLACK: In the Savings and Loan debacle, we developed excellent ways for dealing with the frauds, and for dealing with the failed institutions. And for 15 years after the Savings and Loan crisis, didn’t matter which party was in power, the U.S. Treasury Secretary would fly over to Tokyo and tell the Japanese, “You ought to do things the way we did in the Savings and Loan crisis, because it worked really well. Instead you’re covering up the bank losses, because you know, you say you need confidence. And so, we have to lie to the people to create confidence. And it doesn’t work. You will cause your recession to continue and continue.” And the Japanese call it the lost decade. That was the result. So, now we get in trouble, and what do we do? We adopt the Japanese approach of lying about the assets. And you know what? It’s working just as well as it did in Japan.
BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: You are.
WILLIAM K. BLACK: Absolutely, because 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.
Great comment by a poster
Below is a list of the notable speeches given by Summers last year, the amount he was paid, and the date of the address.
Skagen Funds, $60,300, (1/9/2008)
Skagen Funds, $60,300, (1/10/2008)
Skagen Funds, $59,400, (1/11/2008)
JP Morgan, $67,500, (2/1/2008)
Itinera Institute, $62,876 (1/8/2008)
Citigroup, $45,000 (3/3/2008)
Goldman Sachs Co., $135,000, (4/16/2008)
Associon de Bancos de Mexico, $90,000, (4/3/2008)
Lehman Brothers, $67,500, (4/17/2008)
State Street Corporation, $45,000, (4/18/2008)
Siguler Guff & Company, $67,500, (5/7/2008)
Hudson Institute, $10,000, (05/28/2008)
Citigroup, $54,000, (5/30/2008)
Investec Bank, $157,500, (6/13/2008)
Goldman Sachs, $67,500, (6/18/2008)
Lehman Brothers, $67,500, (7/30/2008)
Tata Consultance Services, $67,500, (9/21/2008)
State Street Corporation, $112,500, (10/2/2008)
McKinsey and Company, $135,000, (10/19/2008)
Charles River Ventures LLC, $67,500, (11/112008)
Pricewaterhouse Coopers, $67,500 (9/9/2008)
American Chamber of Commerce In Argentina, $135,000 (10/7/2008)
American Express, $67,500 (5/7/2008)
(http://www.huffingtonpost.com/2009/04/03/summers-received-hundreds_n_183058.html)
Speeches my ass….these were payoffs. I think it’s time to call Barney Frank and read the ‘law’ as posted above and ask him why it has been ignored. I think it’s time to email and fax and call Barney until he gets so sick of it he won’t be able to stand it.
The Federal Reserve, Geithner and Summers are working for ‘the money changers’ and it’s time to stop this insanity.
April 4th, 2009 at 1:04 pm
um .. 1st sorry for any inferences
2nd I finished 1988’s Top 100
#1 Genesis – Land Of Confusion http://www.youtube.com/watch?v=Yq7FKO5DlV0
#2 Michael Jackson – Man in the Mirror http://www.youtube.com/watch?v=bb2bIKwwEpU
and for the sake of 3 places “Big American Idol” #3
Bon Jovi – Wanted Dead Or Alive http://www.youtube.com/watch?v=k99h5aikc4g
April 4th, 2009 at 1:05 pm
Machiavelli, see my earlier response to franklin. You need to find another approach because repeating the same lie over and over again ain’t working.
P.S. – well-chosen name
franklin, once again you are wrong. The government has committed a huge amount of money to the bail out and that hasn’t worked. And the Geithner plan will waste more money in its guarantees of private risk. Tossing good money after bad isn’t a realistic plan. It is business as usual. And that’s the problem.
Do either of you guys work for hedge funds, btw? They should be the only people happy about this.
April 4th, 2009 at 1:06 pm
um .. 1st sorry for any inferences
2nd I finished 1988’s Top 100
#1 Genesis – Land Of Confusion http://www.youtube.com/watch?v=Yq7FKO5DlV0
#2 Michael Jackson – Man in the Mirror http://www.youtube.com/watch?v=bb2bIKwwEpU
and for the sake of 3 places “Big American Idol” #3
Bon Jovi – Wanted Dead Or Alive … duh forgot 3 links bad “Your comment is awaiting moderation”
April 4th, 2009 at 1:06 pm
km4; i would call it a “buy-in” v. a payoff, if we’re gonna keep up with the spin. sounds more wall-street’ish v. gangsta.
April 4th, 2009 at 1:13 pm
US Banking oligarchy f*cked up but Obama continues to allow his ‘financial experts’ to acquiesce to Wall St crooks demands.
The Quiet Coup
by Simon Johnson
http://www.theatlantic.com/doc/print/200905/imf-advice
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
IMO USA in addition to having most advanced economy and military also has the most advanced oligarchy so if the Obama doesn’t play harder ball with Wall St Banking oligarchy we’re on our way to becoming the world’s largest Banana Republic.
Wake up Obama … America is watching this very closely !
April 4th, 2009 at 1:15 pm
kiss theory:
1. most big banks are insolvent (not exactly a news right??)
2. most other big worldwide financials/pension funds/corporations/retired people investment etc are deeply entwined.
3.70-80% of consumer is maxed out.
4. Free market says businesses are free to lay off people….off-shore all jobs while they are pretending to cut cost….
5. more job loss….more foreclosures…more tax revenue shortage….even state/local governments are bankrupt.
6. consumers are scared shitless and have stopped buying the stuff, the one which we dont need…you see, no surprise there, but the problem is that stuff they buy…leads to their job sustainence…which they dont understand…..what a fucked up world.
given these facts….what is the solution?? Please excuse me your rants about the right thing….and being clean….give me a less shocking….solution (keep the patient alive with the hope that maybe the life threatning blood loss can be replaced by feeding him more junk ).
solution 1:
let everyone take a hair cut…..oops, all of a sudden even microsoft has no cash since all their invest went kaput….not to mention that they are not able to sell any more software because everyone has stopped buying because of the extreme shock to every one on this earth……I am citing microsoft as an example because it has no debt, around 25 billion in cash/investment….and hugely proft making company…..and hard to believe that they may have to lay off 30% of their staff because of the shock….
market falls 80%….pension funds go kaput….retirees go kaput…….
unemployment goes to 30-40% ……who needs to keep people hired when nobody is buying anything other than food and energy, right?
yes savers with millions in cash will be the king of that universe….i am a big saver, but we are a minority….something like 10%….we dont count.
if i was asked for a solution, i will be doing the exact same thing these guys are doing.
1. inflation to fight the asset deflation
2. keep the shit covered and work in small increment…..at any cost(yes AIG–>$$$–>Goldman , why care….its all electronic numbers).
3. yes the elite will again benefit, since they will corner a lot of the loot that is getting handed….but did they not always benefit…..nothing new….this time around no billion dollar capital gain and bonuses but loot the tax payer bailout money…
4. we need wage inflation to help the consumer…..so that he can continue to service his debt, witht he hope to outgrow his debt by incremental wage inflation.
ask a person on the street does he wants a job?? his answer will be yes.
ask him if private is not hiring does he want government to increase spending to help hiring, he will say yes.
but when the F*** right wing idealogy, “win the election even if the country loses” and talking the book gets in the way……and the media is not interested in too much thinking….the masses will not watch the tv, and they lose.
so tell me how you will do it? and we can start some debate……..i guess we are anonymous and we are not running for office, and we dont care about popularity every day—- we will be more honest than obama
April 4th, 2009 at 1:30 pm
franklin411 @ 12:49
Much depends, of course, upon what one means by “fix”. A short-term fix, or a long term one?
A long-term fix would mean a lot of pain for a lot of people, both inside the banking industry and outside of it. No first-term president could be expected to attempt such an undertaking.
April 4th, 2009 at 1:34 pm
km4..
you are annoyed about Summer’s making thousands for lectures/talks???? i thought billions in bonuses for failed wall street ideas were more bad??
or maybe billions in contracts without bidding was bad??
i guess you are more interested in the mole hill.
how about you think about: trillion in loss to pension fund because of the market fall….trillions in loss of consuming power….
how about this:
ask a tax payer….does he wants to be taxed 10% more (10% pay cut) so that he can keep being employed…..or he would rather prefer to lose his job and the the government should stop bailouts.
or how about this: if 20% become unemployed and sales tax goes through the floor…..how much do we lose in tax revenue??
BTW: many people have been asked to choose between 5% pay cut or some lay offs….it has been implemented in some divisions of HP, and people chose pay cut…..what a suprise.
April 4th, 2009 at 1:34 pm
BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?
WILLIAM K. BLACK: There are two reasons. One, they’re much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, 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.’ But the other element of your question is 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.
April 4th, 2009 at 1:37 pm
WILLIAM K. BLACK: 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 massive losses, and that they’re fine.
April 4th, 2009 at 1:37 pm
“techy”
this: “……..i guess we are anonymous ” should be signal, enough, as to the depth of your understanding.
no wonder you’re rationalization amounts to little more than wholesale Corruption.
to your point about MSFT, if their products were, actually, any good, People would buy them–your reductio ad absurdum fright scenerio of “if Honesty, then Economy=Food & Energy Only” is, truly, a waste of pixels..you, really, think the Forge would go OOB?
try thinking for a change, save the Intro to Agitprop-BS for your in-game chatter while maxing out your XBox scores..
April 4th, 2009 at 1:58 pm
Mark E Hoffer..
how about you come out with some substance than name calling??
how about you give some critical thinking about the problem at hand??
let me hear why the things being done are the worst solution to the given problem??
BTW MSFT has 60 billion in revenue….and around 17 billion in profits, do i need to say more about their good products…
same thing about Intel…..these companies have no competition in their core products….but what consumption of their stuff fell 50% for couple of quarters??
April 4th, 2009 at 2:11 pm
Winston Munn Says:
“Obama won the latest version of Big American Idol because he looked best in a suit, spoke best, and was considered no threat to the status quo.”
________
This does not seem to be a paradigm. Otherwise, GWB would have never gotten close to the Oval office.
April 4th, 2009 at 2:15 pm
techy Says:
April 4th, 2009 at 10:44 am
April 4th, 2009 at 11:39 am
and you want to talk about name calling?
re: substance, try answering my assertion/question: ““if Honesty, then Economy=Food & Energy Only”…you, really, think the Forge would go OOB?
http://encyclopedia2.thefreedictionary.com/forge
OOB= Out of Business.
past that, your ‘arguments’/suppositions/’proofs’ are convoluted, to the point of self-refutation.
and, to this: “let me hear why the things being done are the worst solution to the given problem??”
as, even you alluded to, above, it continues an epic Fraud, one that mangles Lives as it twists the *Truth.
April 4th, 2009 at 2:37 pm
Can someone send this post and Yevs’ to pres. Obama.
Is he another moron like Bush?
April 4th, 2009 at 2:43 pm
I just reread BR’s post about Summers. In it BR wisely focused on the most worrisome aspect.
I could care less about all the income per se. I care about the influence it buys. Which was BR’s point.
Summers is in a key position to influence American financial policy and regulatory atmosphere.
The G20 and most foreign governments feel strongly that hedge funds should be reigned in and monitored under a global umbrella intended to prevent another melt down or similar mishap. BO just told them to go fly a kite. Wonder why?
That Summers is in the key policy position he’s in is like asking the fox to watch the hen house. He has been an early and strong advocate for the financial laissez faire that got us here. He is emotionaly and financially incapable of rational thinking on the topic. Just another haywire Harvard off the cuff impulsive emotion.
There is no way he can divorce himself from his relationship with Shaw.
This is the fraud and crime against reason that’s far, far worse than BO’s empty railing against lobbyists in DC.
April 4th, 2009 at 2:44 pm
Yeah, we hate the banksters, and Summers took his cut from them. I’m hoping for Summers and Geithner to be gone soon, but who replaces them, that’s the question…
Obama is not a moron, but it’s a multi-step process to go from the status quo to the end of this particular bankster era. We don’t get there in a few months, or by pissing off the people who currently hold the financial levers. Has to be sort of an iterative process, unfortunately. Just as they didn’t gain power and stupidity overnight, it won’t go away overnight, either.
April 4th, 2009 at 3:09 pm
Machiavelli999 Says:
“Krugman, Posen, Ritholz and all the other critics never take in consideration the political realities of the situation.”
Neither did Louis XVI. Perhaps Krugman, Posen, Ritholz and all the other critics have it right. Political “realities” have a funny way of becoming insignificant, very quickly.
_____
franklin411 Says:
“Morality’s got nothing to do with it.”
Morality – more accurately, ethics – has everything to do with it. Randian ethos is what landed us in this position in the first place. Like debt, more of the same will not get us out. The Big Lie – that big boys always act best and realistically when acting only on their own best interests – needs to be confronted and backed-down at every opportunity. Nice guys don’t always finish last. Some of them kick ass and take names.
April 4th, 2009 at 3:12 pm
US Phoenix – “…sharing full disclosure with the public would do more harm than good. Trust us to do what is necessary.”
I hope that O has just been fed this line and will soon see he must relent. Surely Congress people have had an ear full from their constituents. Granted, the public was in the dark for years but 60 Minute exposes and informative blogs have done much good.
I would rather see money front loaded than this back-door business involving the FDIC where they don’t belong.
April 4th, 2009 at 3:15 pm
front-loaded for restructuring that is – not for business as usual.
April 4th, 2009 at 3:31 pm
That almost takes the cognitive out of the cognitive regulatory capture. Here are some totals I just ran:
Breakdown 1:
Distributive Shares: 3,756,126
Salary: 2,019,495
Speaking Engagements: 1,548,700
Breakdown 2:
Financial Services/Banking: 6,497,023
Academia: 586,998
Media: 135,000
Policy/Commerce: 105,300
Grand Total: 7,324,321
http://paul.kedrosky.com/archives/2009/04/its_good_to_be_4.html
April 4th, 2009 at 3:43 pm
ok so let me get this right, it is wrong to make money doing what summers did in the past??
or you guys are saying it is wrong for him to be in office because he made all the money in the past being in bed with the financials??
or is it possible that its just another way of being Lou Dobbs, “whatever you do is wrong” because its not what i like.
so lets see….i make millions playing by the same legal rules which applies to everyone, but that will disqualify me from public office??? because you guys dont trust my integrity??
so let me get this again, Paulson was corrupt because he was CEO of Goldman??
is there an conflict of interest if he was in bed with financials in the past?? “PAST”
dont you need a man to run this mess who used to be in the middle of that mess??
oh well, why do you need an enemy when…..
April 4th, 2009 at 3:49 pm
DL @ 12:42
I agree that the part where they don’t have to get things through congress now was politically smart (or at least realistic). However, nationalization via the FDIC would in all practical terms be the same. What senator would dare to say no if the FDIC came calling and said give us 500 billion or we will go bankrupt. By initially letting the FDIC borrow the money from the Fed, they can push the day of that ultimatum out to whenever it is politically most convenient (like in 16-18 month).
Letting private capital use government backing to purchase assets and either make big profits or have government pay if there are big loses, is to easy to attack and to difficult to defend, in simplistic soundbites. You are looking at endless short stories of fat cats making huge profits with government backing (OUTRAGE !!!!), or making reckless bets and being saved by government (OUTRAGE !!!!). And those stories will bite even if the economy is turned around because they are about “somebody-getting-something-out-of-my-pocket”.
April 4th, 2009 at 4:08 pm
@techy: We don’t need a man to” run this mess”. We need one to fix it.
We don’t need a man clearly invested in business as usual. We need a man invested in a new global financial order that restores public trust.
We don’t need to be the lone global country saying leave things as they are. We need to agree things need to be fixed, and then dive in with both hands to fix them.
Summers has been free to associate with whomever he chooses on whatever terms he chooses. We should be free to choose leadership more attuned to the public good.
When Summers speaks up in support of the global interest in a more rational financial order, and then takes strong action to make it happen, then we can say he has placed the common good above his own personal gain.
Until then, Summers speaks for the failed status quo, as does BO’s administration.
April 4th, 2009 at 4:22 pm
Wow USPhoenix – You are on a roll. There simply must be someone who has paid their taxes and can tell the truth willing to serve in the Treasury. The United States knows how to pull together, but not over lies and cover ups. Many would be willing to give up much under the right leadership. I truly believe that.
April 4th, 2009 at 4:45 pm
Marcus,
Now is not the time. It took 30 years of failed policies to create this mess. It’s going to take 30 more years of reinvestment in America and reform to fix it. Simplistic solutions like nationalization simply waste the political capital the President has generated.
April 4th, 2009 at 4:54 pm
yes, the men we need and men we want and men we would have if beggars could ride … it’s the way things are, dudes. get over it.
we don’t have clarity on the housing bottom, we don’t have clarity on bank collateralized loan exposure, we don’t have clarity on credit default swap entanglements, we don’t have securitized credit flows, we don’t have have consistent fed policy, we don’t have steady legislative policy, we don’t have economists’ consensus, we don’t have competent main stream media scrutiny and reporting, we don’t have steady or internationally consistent accounting rules, we don’t have a unified, informed and rational electorate, we don’t have international monetary or fiscal collaboration, we don’t have safe haven and we don’t have a magic wand … but other than that, a few good men could clean up this skank in no time!
the core problem here is simple: things have gotten too big, complex and interdependent for human comprehension and control. everyone has to pick their own stats, form their own judgments and place their own bets. summers and geithner, even if perfect men, still wouldn’t help any of us with that.
April 4th, 2009 at 5:08 pm
‘It took 30 years of failed policies to create this mess. It’s going to take 30 more years of reinvestment in America and reform to fix it’.
It is going to take first, years (20-30y?) of belt tightening and no non sense, conservative fiscal policy JUST to get rid of all the FAILED policies imbedded in our corrupt system, controlled by special interest groups and Banking Oligarchy! The day light robbery of Taxpayers should STOP first! Then you can talk about reinvestment!
April 4th, 2009 at 5:19 pm
Sunny,
To me it’s pretty simple:
1. Take a chance and invest massive amounts in education, science, and infrastructure now with an eye towards a long term structural re-centering of our economy around production, or
2. Cut spending to the bone so that our elites don’t have to sacrifice anything, and teach the rest of our population how to say “yes master” in Chinese.
April 4th, 2009 at 5:42 pm
Love him or hate him, Summers is going to prove to be a political liability for Obama. Things are going to get much worse and it so looks like Summers is bought and paid therefore Summers = Obama millstone.
I think Summers is a fool and pretty much a sack o’ shit so I’m going to be enjoying this part of the show! The parts I won’t enjoy are the billions of sad, depressing, horrible, and tragic stories that will be due to the economy going down the commode. Down the commode thanks in part to deregulation tools like Summers.
It boggles the mind that Summers is in the position he is in today after being so wrong in the past about so much that now concerns that position. Same with Blankfein, Mack, and the other banksters. Seems that Obama has no understanding that rewarding dishonest swindlers and/or dumbass schmucks is not how one promotes success.
April 4th, 2009 at 5:52 pm
There’s a saying among research scientists who apply for gov’t and industry funding: “No conflict, no interest.” In other words, if you are in demand and successful you’re going to own stock in related industry and either own your own spin-off company or do consulting for industry. Every industry is a small world and even smaller if you’re a playa.
April 4th, 2009 at 6:14 pm
Agree w Sunny45 @5:08 PM.
More interesting to me is that Barry is beginning to join the chorus of the anti-Bush/Paulson group who have been Obama-philes but who are now criticizing this administration on its bank policies. Yves Smith used the term “Big Lie” recently to describe Team Obama. Jesse at his Cafe Americain has also criticized Mr. Obama by name now. And Barry now has this harsh critique of Summers and well as Mr. Geithner’s PPIP plan.
I believe that what we are seeing are the true thought leaders, the bloggers who Barack Obama said his administration pays no attention to, one by one stating that by having Geithner and Summers as his key people and Volcker only as eye candy, Barack Obama is proving that on the financial front, there is little daylight between his policies and those of G W Bush.
The blogosphere, with Barry as a prominent member, was of course way ahead of the curve on the housing bubble and then the sad state of the economy. Except for true Party loyalists such as Brad deLong and +/- Nouriel Roubini, the independent financial blogosphere that IMO matters is now unified against the banksters + PPIP.
That is why the comments here that sure it’s OK that Summers was with D. E. Shaw miss the point. The point is that PPIP stinks, giving tens of billions of bucks to AIG’s bankster counterparties stinks, and that Barry Ritholtz has definitively joined Yves Smith, Mish, Jesse, as well as more mainstream types such as Simon Johnson and Paul Krugman in criticizing the Obama Administration for implementing these Bush policies.
I am now getting optimistic that truth and justice will ultimately prevail.
April 4th, 2009 at 7:52 pm
Summers is a buffoon, a legend in his own mind, with an ego the size of Texas and a demonstrated track record of unleashing conflict, failure and misery where ever he has been. (We’ll never know what happened at Shaw. You need an NDA just to take a crap at that place).
The “brilliance”of this incompetent clown is received wisdom within the establishment (for example, look up Robert Shiller’s fawning op-ed in last Sunday’s NYT Business section), and it speaks volumes about the rank ethical and intellectual bankruptcy among this generation of ruling elites.
That these are the people who will save the day is completely and utterly laughable.
April 4th, 2009 at 7:58 pm
“This does not seem to be a paradigm. Otherwise, GWB would have never gotten close to the Oval office.”
@ Marcus
Don’t be too sure – do you remember against whom he ran – wasn’t it the guy who was as stiff as the tin man from Oz and who said things like he had invented the internet? And wasn’t he somewhat against the status quo with his global warming ideas and green agenda?
April 4th, 2009 at 7:59 pm
That these are the people who are supposed to be “Change you can believe in” is completely and utterly laughable too!
April 4th, 2009 at 8:36 pm
There is a chance that TALF/PPIP may work in the sense that it will allow the banks to socialize their losses. I don’t think that it will; I’m pretty sure that even with govt financing PIMCO is not going to substantially increase their bid for Citi’s “losses-baked-into-the-cake” CDO portfolio. In any case, we’ll be left with even more deficit for our kids to fund. Some idiot who surprisingly has a job in banking suggested in an op-ed piece in today’s NYTimes that the bidding be opened up to the public. Talk about the blind leading the blind; you need at a minimum several analytical tools which no retail investor even knows about to know what you are buying. This is what passes for reasonable discourse these days, and it is depressing.
Geithner’s plan will likely fail, at which point Obama may get smart and replace him with Volcker or someone else who has credibility.
April 4th, 2009 at 9:12 pm
Want to know what’s really funny? Has anyone considered the fact that this is one of the few weekends this year that *doesn’t* involve some horrid financial news, or at least an FDIC bank failure announcement?
Maybe the fact that so many are on here bullshitting about Summers’ pay is proof that we’re well on our way to recovery.
April 4th, 2009 at 9:22 pm
I find it incomprehensible to read replies that suggest there are NO OTHER PEOPLE IN THE ENTIRE COUNTRY that can fill these critical posts EXCEPT the criminals that caused this mess and are responsible for the biggest transfer of wealth (from poor to wealthy, not the other way around) in history.
April 4th, 2009 at 9:25 pm
-franklin411
Who cares about what Summers was paid? Compared to the $173B of AIG losses which taxpayers backstopped, it’s a fart in a hurricane. And as Liddy told Congress, there’s $1.6 trilion left to go. We’ll be well on our way to recovery when all this toxic debt is out of the system. Reflating that debt only postponses the damage.
April 4th, 2009 at 9:49 pm
Somebody above wrote: “Maybe the fact that so many are on here bullshitting about Summers’ pay is proof that we’re well on our way to recovery.”
Yeah, the Friday employment report was so f*cking long ago. Might as well been from 1932 for all it matters.
What hoops some are willing to jump through to keep the bankers eff’d up hold over the American economy going strong. We have a perfect opportunity to pull the fangs out from the maw of the banksters and so many act as if these titans of grift are required for the running of a healthy economy instead of realizing that they are a big ass part of the problem. Since when did everybody star kissing banker ass so much? Disgraceful!
Spit and rinse guys, spit and rinse. You’ll feel better. And that goes double for Obama!
April 4th, 2009 at 9:49 pm
Who benefits from the bailout of the banks?
Their bondholders.
Who are they? How much do they have at stake? Is this information published?
Could they be huge pension funds? Leading University endowments?
All of this personalization of the problem as in Summers et al and their personal stakes may be a sideshow.
April 4th, 2009 at 10:10 pm
i dare say, we are in swallow, and you better like it, mode; not rinse and spit.
April 4th, 2009 at 10:38 pm
Karen:
Interesting analogy. I’ve been to the dentist, bever been in that situation. If it ever comes to that, I’ll bite down hard.
April 4th, 2009 at 10:39 pm
never. Never been in that situation.
April 4th, 2009 at 10:46 pm
WHY do we put up with their shit!! These guys are sweating now, time to put heat in the kitchen. If Obama is to stupid to see it or does see it and ignores it then get him out!! Enough groaning on blogs call your Senators every day, e-mail your reps get the word out, or we get eaten alive by a few who think we are just lemmings.
Look up the Prompt Correction Act! Our own gov is not following its own laws!!
Of course larry is the wrong guy so is that moron Geithner and Rubin. Check the Moyer piece http://www.pbs.org/moyers/journal/04032009/watch.html Mr. Black is right.
We MUST remove these people NOW! As Taleb says you don’t let someone who crashes the plane fly again.
April 4th, 2009 at 10:52 pm
To learn that Summers and Geithner were in it from the beginning and that AIG switched from reinsurance to CDS to keep the lie going makes me angry as hell. I think Karen is right (from TPTB viewpoint).
April 4th, 2009 at 10:53 pm
@karen: Thanks for joining us. It’s been a fun day. I plugged FNJ. No one took the bait. And I’m in overload. If I can, may be later. Better swallow and like it. Hmmmm.
April 4th, 2009 at 10:59 pm
I’ll admit that they push this rally hard enough to change the weekly trend to up. So that’s how I’m trading until I see a reversal candle. If they can continue this long enough to switch the monthly trend I’ll be in utter amazement.
April 4th, 2009 at 11:05 pm
phx, i know you did, i tried to organize some good music links, too.. some of it is unavailable unless you are 18-22 and know how to download it… nujabes for one… and the songs i’ve found are not the ones on the cd i have… fleet foxes is another, and the sound of animals fighting did a recording called “the ocean and the sun” which has some interesting songs : )
meanwhile, everyone debates that which we have no control over…
April 4th, 2009 at 11:17 pm
if monday is a down day, i’m still buying for the up trend.. sold fas on friday would buy again at 5.75 or so for a starter position…
anyone read mike santoli in barron’s this morning?.. very level headed.
“There is no lack of investors and observers who harbor no doubt that this four-week, 25% lift in the broad stock market is a doomed bear-market rally, or that the March 6 low was The Low and the bear is no more. It’s easy to admire their certainty while fearing their stridency.”
April 4th, 2009 at 11:20 pm
and, marcus, perhaps you’ve been missing out…
April 4th, 2009 at 11:32 pm
It seems that everyone forgets the law of the jungle. Those with power, money and influence do what they can to ensure that the rules benefit them. It doesn’t matter in the long run which party is in power as the rich and the powerful play both sides of the aisle. The most damaging deregulation came during the Clinton years and they knew that the Bush years would be very good to them for obvious reasons.
The players change, but the rules don’t. Few ever get indicted, much less prosecuted for their crimes which is another word for “business as usual”. We don’t have the stomach to prosecute the Bush criminals for crimes against humanity and now we are supposed to get our panties in a wad about freakin’ “conflicts of interest”? Almost the entire government and big business are walking conflicts of interest. these people exist to find ways to line their own pockets. It is difficult to find someone who is not conflicted!
The revolving door/circle jerk between government, banking, and big business is just too lucrative to have anyone investigate or effect real change. They will clean this mess up the best they can while the insiders get access to the best deals, they pass the costs onto the sheeple tax payers, shrug, and then get back to the business of filling their own coffers.
Remember-most of the players have made themselves and their supporters in government, business and the media fabulously wealthy, and they are insulated from the hardships that they produce.
The only remedy to this is to enact tax policies that will permanently and confiscate the booty from the winners, so that guys like Larry Summers can receive millions from hedge funds and investment banks, but he can only get to keep 10 cents on the dollar. Tax policy and reregulation are two things that can bring back sanity to the economy and pay down the debts.
Raising our eyebrows now at the conflicts of interest is a little like saying “I’m shocked that there is gambling going on in this establishment”!
April 4th, 2009 at 11:33 pm
Bill Black interview with Bill Moyers on much of this subject matter. Watch it….
You’ll have to get past a bit of the Bill Moyers surprised boy scout act as its kind of thick, especially at the beginning, but Bill Black is really good.
http://www.pbs.org/moyers/journal/04032009/watch.html
April 4th, 2009 at 11:51 pm
Stuart, i did hear that was a must see.. i’ll get to it. thanks…
April 4th, 2009 at 11:53 pm
So Cheney and Halliburton were somehow different than Summers and Goldman Sachs. Howzat? Oh, Obama is cool. I see.
April 4th, 2009 at 11:55 pm
karen Says:
and, marcus, perhaps you’ve been missing out…
_______
In the scenario you described, better to give than to receive ; )
April 4th, 2009 at 11:58 pm
Touché!
April 5th, 2009 at 12:04 am
Brace yourself Karen. At the end you’ve got a huge knot in your gut and a stomach full of outrage.
April 5th, 2009 at 12:13 am
Honestly Stuart, I don’t think there is any new news for me… I’ve been living, watching, and waiting for years… I’m sitting in the catbird seat, btw, Orange County, CA.
April 5th, 2009 at 2:07 am
It’s looking like there is more to this whole debacle as the months go by. When is Congress going to conduct the proper investigations to get to the bottom of these blatant conflicts of interest?
I found this very interesting:
http://www.pbs.org/moyers/journal/04032009/watch.html
April 5th, 2009 at 6:50 am
My concept at 10:16 am got buried. I’ll refresh it.
“ps – On the sync of business & politics …. slowly retract from corporate stocks and make corporations borrow like the rest of us .. Wouldn’t that return self governing?”
A headline last year “Microsoft wants Yahoo” and what happens in the markets .. Microsoft sells off while Yahoo rises. I understand why it happens BUT (imo) the structuring of the market must be a mess to see the dissolving company rise while the victor sinks.
I understand direct investing in business without the middleman bank suppling the cash. Maybe issue #d stock certificates and investors must hold for 1 quarter (90 days)? Would that return self governing sane markets? A logistcal nighmare (but sane job).
Tonight caught a mashup of segments on Fox with Glenn Beck .. presenting the ism’s we should be aware of. Things get rolling with this video clip
http://www.motherjones.com/mojo/2009/04/glenn-beck-takes-godwins-law-new-heights
then John Bolton discusses world currency and stuff
http://www.liveleak.com/view?i=e66_1238715562
at 5m:05s Bolton mentions market controls needed over the corporate situation as now. Then Rudy Giuliani gets into the mash. You’ll have to find that one.
Be in mind saturation to aquire our allegence to someone (a character) for the 2010 season of Big American Idol is already in full swing.
Remind you, I am not a market player, I am a small businessman with no other ocean to swim in.
April 5th, 2009 at 7:41 am
(sp) allegiance .. like this kids
ps – another overwelming feeling of the past 24 hours for me in this polically correct world .. Disaster Capitalism and “to many people making to many problems”.
My fear .. instead of a 9 billion population in 2015 we find a population of 3 billion due to civil unrest. WWIII by our own hands – not a government. (or absence of government)
Moyers interview was informative but from my coffee mug this am “been there done that extremely graduated” cause I’ve been hanging out here at TBP.
I heard a word that reminds me of another quote that is always relevant “Endeavor to Persever”.
April 5th, 2009 at 7:44 am
(sp) politically .. duh
April 5th, 2009 at 8:44 am
CR is commenting on Krugman this morning…I find his Come to Jesus experience very interesting…
http://www.mydesert.com/article/20090404/NEWS01/904040323/1139
Nobel Prize winner Krugman shares harsh view on economic woes
I still wondering if all this Keynes spending on the front end will make things that much worse on the back end…and the 2008 Nobel winner apparently has lost his faith too…
April 5th, 2009 at 8:54 am
techy does make an good point thought.
The reason the O admin is propping up the insolvent banksters is because they want to protect the bondholders and more importantly what those bond investments are being held for – pensions, retirement etc… The calculation must have been that collapsing the bankster institutions (aig, goldman, citi, maybe BoA) that collapsing these things would hit the bondholders so hard that the American private pension system would freeze up.
I’d love to see a technical examination of this. I can’t dismiss it out of hand. But it is the key question, did Larry Summers sell O a big line of crap or did he inadvertently tell the truth?
April 5th, 2009 at 9:10 am
I read your post and the following thought came to my mind. The Ds and Rs have become little more than puppets on the two hands of the same body. That body, like a cheap corner hooker, is available to the highest bidder without regard for safety or reputation.
April 5th, 2009 at 9:23 am
- northern
That’s exactly what the O admin is trying to do. The Lehman bankruptcy came close to causing catastrophic failure of the financial system, and they don’t want to go there again. They want to preserve the fiction that the several hundred billion of credit exposure held by the major banks as well as the $1.6 trillion of “hard-to-value” assets insured by AIG are not worth 40 cents on the dollar or in AIG’s case, nothing at all, to avoid having to close up shop. They also feel it is important to keep the zombies alive without resorting to nationalization.
Their plan may work, but it is a huge gamble that could provoke a dollar crisis and at a minimum, will thrust the burden of monetization of 25+ years of fictive cashflows onto the taxpayer. It would have made a lot more sense, in my mind, to abrogate the predatory mortgages and the CDS which should never have existed in the first place.
April 5th, 2009 at 9:59 am
Haigh @ 9:49
Yes it is unfortunate that we do have the big picture of exactly who are the ultimate owners of all the non-government bonds and CDO’s that are being discussed as ultimate victims of “letting-it-all-fall-and-clean-up/start-over” philosophies that are so popular among people with little responsibilities and brains to match. The assumptions are that some rich pig hedgefund investors would be cleaned out (and therefore now is being bailed out). What if most of the sh*t would land on teachers pensions funds, and regular peoples life insurances? Is reality that the regular taxpayers are bailing out regular taxpayers? – but the elites don’t dare to talk about it for fear of the panic?. And that fear is certainly justified, look at the panic lines at FDIC targeted banks- most people are amazingly uninformed and stupid. One thing for sure is that those responsible will not take the hit – Mozilla has already taken his $ Mozillions and is long gone.
This site have to many people who are ready to take their rage to actions, without having the slightest clue of who exactly will be hurt, and by how much, if those actions are executed. Come on people turn your freaking brains on – I know you have one?
April 5th, 2009 at 10:00 am
Sorry I meant “Yes it is unfortunate that we don’t have the ….”
April 5th, 2009 at 10:04 am
I hear the protest on Wall Street have begun. Could be a hot summer in NYC for traders.
April 5th, 2009 at 10:35 am
The enablers such as Summers, Rubin etc. thought they were doing the right thing.
They believed that the invisible hand would act as a fulcrum balancing the risk/reward equation.
They were wrong.
Perhaps it is best to have the architects dissemble the monstrosity. Who best to diffuse a bomb but the maker.
The banksters did not follow the rules either implied or explicit. Except to enrich themselves personally.
The same can be said for the rating agencies, and all the originators.
The investors were blinded by greed and incompetence. What ever happened to buyer beware.
The consumers did not act responsibly. The American Dream, Ownership Society blah, blah, blah.
The regulators were made impotent by design.
All the participants must bear some responsibility.
April 5th, 2009 at 10:38 am
Humm I just watched the Bill Black interview by Moyers.
And I think he is right.
No matter how hard it is on the bondholders, it you don’t let the truth and its consequences come out your financial system won’t work.
You can’t run capitalism on lies.
April 5th, 2009 at 10:43 am
the whole “we’re saving the “Pensions”"-cover story is a canard..
this: “What if most of the sh*t would land on teachers pensions funds, and regular peoples life insurances? Is reality that the regular taxpayers are bailing out regular taxpayers?”– is, largely, the *Reality.
it’s why the Q: who was buying this stuff?/who was ‘managing’ these fundz? is so key..
we can, either, reset this Fraudulent Financial Fantasyland now, or “thrust the burden of monetization of 25+ years of fictive cashflows onto the taxpayer.”–crabsofsteel
as anyone who can DCF will tell you, same difference. on the Finance front, but Economically, there’s all the difference in the world..
to me, we’d be much better off rebuilding from, closer to, a *real basis, than yoking the unsuspecting/*innocent/not yet born with obligations that are unexplained to protect the guilty/gullible/grossly incompetent..
April 5th, 2009 at 11:00 am
This morning on George Stephanopoulos:
Ariana Huffington used the Samuel Johnson et al “bankers-as-oligarchs” meme and brought up last week’s mark-to-market reform (prompting George S. to ask for a quick explanation for the benefit of our viewers who may not be familiar…)
David Frum used the “suicide bomber” meme to describe the banks’ negotiating position vs. taxpayers/administration.
Note that my point is not to endorse these people but merely to point out that some of the themes/memes discussed here and other financial blogs are starting to penetrate MSM.
@ MEH: In honor of Palm Sunday, here’s my Pontius Pilate question for you:
“What is Truth?” and “What is Reality?” when it comes to the Economy? Seriously.
Because the metrics/indicators and pseudo-metrics/pseudo-indicators are used to shamelessly promote ideological and wealth-distribution agendas. What are the things that everyone can/should agree on?
Without consensus on what constitutes a “healthy economy” isn’t it all a bit of a waste of time?
April 5th, 2009 at 11:09 am
Is it known for sure that Summers USED TO work for the hedge fund? Can anyone point to anything that says he quit? Is that fund one of those that will be eligible to acquire toxic assets under PPIP?
April 5th, 2009 at 11:15 am
>> I still wondering if all this Keynes spending on the front end will make things that much worse on the back end…and the 2008 Nobel winner apparently has lost his faith too…<<
That is what it is designed to do. You transfer some pain in the front end, out to be suffered later. Unfortunately by then we will probably have another Bush type republican in charge who does not understand that there are only two types of justifiable taxcuts; 1) those that are short term and used to fight a severe ressesion and 2) those that comes after a nation has payed back all of its national debt, and filled up all reserves for future liabilities, as well as 6 month of spending in a “just in case” reserve. So I don’t think the transferred pain will be payed by the generations that created it.
However, transferring some of the pain is still the least bad of our choices. If we take all the pain in one big hit there is a great risk that we will sink into the kind of economic hole that most of South America was/is stuck in for many decades. Without a strong middle class your economy simply cannot get that big (regardless of natural resources and internal investments). The people who say we should just take the big hit and get it over don’t seem to understand that if the hit is big enough it will never be over. There is no natural law that magically recover a country out of third world economic status, heck even with outside help it is extreamely hard for a country to build a middle class and a first world economy.
So we have two choices on what we hand over to the next generation. Either a big load of debt and a first world GDP to pay down the debt with, or a third world economy that has cleared its debt by defaulting on it and left everybody poor for generations.
April 5th, 2009 at 11:19 am
Enjoying the dialog. But the thread is getting pretty deep by blog standards.
BR posted a Larry Summers Part II. SO I hope we can shift this dialog over there to make it easier to keep it going.
Perceptions should be important for this. Bringing in “Outsiders” such as home-grown leaders from strong regional banks would be perceived as a “breath of fresh air” of people not yet poisoned or coopted by NYC and DC. And there could be some truth to that proposition.
April 5th, 2009 at 11:36 am
W.H. team discloses TARP firm ties
By KENNETH P. VOGEL | 4/3/09 10:49 PM EDT
Lawrence Summers, a top economic adviser to President Barack Obama, pulled in more than $2.7 million in speaking fees paid by firms at the heart of the financial crisis, including Citigroup, Goldman Sachs, JPMorgan, Merrill Lynch, Bank of America Corp. and the now-defunct Lehman Brothers.
He pulled in another $5.2 million from D.E. Shaw, a hedge fund for which he served as managing director from October 2006 until joining the administration.
Those are among the associations detailed in personal financial disclosure statements released Friday.
Thomas E. Donilon, Obama’s deputy national security adviser, was paid $3.9 million by the power law firm O’Melveny & Myers to represent clients including two firms that receieved federal bailout funds: Citigroup and Goldman Sachs. He also disclosed that he’s a member of the Trilateral Commission and sits on the steering committee of the supersecret Bilderberg group. Both groups are favorite targets of conspiracy theorists.
And White House Counsel Greg Craig earned $1.7 million in private practice representing an exiled Bolivian president, a Panamanian lawmaker wanted by the U.S. government for allegedly murdering a U.S. soldier and a tech billionaire accused of securities fraud and various sensational drug and sex crimes.
Those are among the associations detailed in personal financial disclosure statements released Friday night by the White House.
Presidential appointees are required to disclose information about their income, assets and investments, and those of their spouses and dependent children, within 60 days of starting work. And the disclosure forms filed by many appointees to top agency jobs have been available for public inspection for some time, thanks to the federal Freedom of Information Act.
But the White House is largely exempt from the act, and Obama press aides dragged their feet on reporters’ requests for the disclosure documents filed by officials in the Executive Office of the President.
Craig disclosed that his work for Williams & Connelly included representing Pedro Miguel Gonzalez Pinzon, a Panamanian lawmaker who allegedly murdered a U.S. soldier in 1992, as well as Gonzalo Sanchez de Lozada, a former Bolivian president who has lived in exile since 2003, when clashes between protesters and the Bolivian military killed an estimated 70 people and wounded hundreds more.
During the presidential campaign, Craig, then serving as a senior foreign policy adviser to Obama, drew flak for representing Sanchez de Lozada.
Craig also listed among his clients Henry Nicholas, founder of microchip maker Broadcom, who is facing securities fraud charges in an alleged stock option backdating plot. In June, the government unsealed an indictment also detailing a raft of drug and prostitution charges, which Craig called “a kitchen-sink attack on Dr. Nicholas.”
Valerie Jarrett, a senior Obama aide, reported $852,000 in salary and deferred compensation from Habitat Executive Services, a Chicago real estate development and management firm, plus nearly $350,000 in director’s fees from groups including the Federal Reserve Bank of Chicago and USG Corp.
She also indicated that she served as vice-chairwoman of the committee seeking to lure the 2016 Olympics to Chicago, which paid a public relations firm owned by Obama political guru David Axelrod and to which White House social director Desiree Rogers, another member of the Obama’s inner circle, donated more than $100,000.
Other forms showed that White House ethics lawyer Norm Eisen earned $1.3 million from the firm in which he was a partner, Zuckerman Spaeder, and press secretary Robert Gibbs earned $156,000 from Obama’s presidential campaign and also owns a pair of rental properties in Alexandria, Va., worth as much as $1 million.
April 5th, 2009 at 11:42 am
Transor,
to your Q:’s, as you know, the A:’s could turn into lengthy disquisitions. So, barring that, I think we’d be better off if *Everyone understood the Nature of our current schema of fiduciary media and Credit.
It, the current schema, is designed to obfuscate answers to: ““What is Truth?” and “What is Reality?” when it comes to the Economy?”
Simply, people need to understand that what they concieve as ‘Money’ is, currently, Debt. The Federal Reserve does nothing more the organize Debt into Currency–a, truly, malevolent act.
It turns/twists many Economic concepts, “Valuation” being one example of too many, into a cognitive Freak Show.
So, to me, the Q: “What is Money?” has to be understood as valid, and its answer agreed upon, before the others can be *Truthfully tackled.
see: “What is money? This is a question for the ages. Humanity has risen into complex society and experienced tremendous economic development and high cultural achievement through the use of money. It has foundered or even been destroyed when money has been undermined. Ignorance of the nature of money should therefore be the central economic issue for society.”
http://www.mises.org/article.aspx?Id=1251
some add’l background:
http://www.thefreemanonline.org/columns/the-constitution-and-paper-money/
April 5th, 2009 at 12:12 pm
Stuart;
I don’t quite get this. Is the fact that these people have represented clients accused (?convicted?) of doing some terrible things, somehow making them bad people? I was under the impression that the fact that even the worst scum gets a fair trial with creadible legal representation and defense, was one of the good things about this country and its constitution. Those who are standing behind this civilized first class legal system, often at risk of social oztricizing and public condemnation, are heros, right?
You are not one of those right wing traitors who are attacking our constitutional legal system, are you?
April 5th, 2009 at 12:20 pm
DeD,
cherrypick, much? though, much of the line you’re on is straight, don’t conflate these peeps w/ “John Adams, in his old age, called his defense of British soldiers in 1770 “one of the most gallant, generous, manly, and disinterested actions of my whole life, and one of the best pieces of service I ever rendered my country.” That’s quite a statement, coming as it does from perhaps the most underappreciated great man in American history. ”
http://www.law.umkc.edu/faculty/projects/ftrials/bostonmassacre/keyfigures.html
you couldn’t even find them explaining their actions, let alone the ‘important case law/ aspects thereof’ that were ‘motivating them’..
April 5th, 2009 at 12:36 pm
Mark;
The point is not how defensible those defended is; it is exactly that even the worst of the worst scum deserve a defense, or you have reduced your society as a whole. If you attack someone for defending accused (no matter how horrible the crime) you are attacking your country and its constitution.
April 5th, 2009 at 12:41 pm
DeD,
I hear you, it was what I was alluding to w/: “much of the line you’re on is straight”
though, further, I would like to see their explainations for their choice of clients. Maybe I’m too cynical, in regard to this situation, but I doubt the answer is/was much more complex than: $$
April 5th, 2009 at 1:44 pm
Does it mean they are necessarily bad people? No, absolutely not. Does it demonstrate a clear conflict of interest and shows their bias for who they believe their constituency is? Absolutely YES.
April 5th, 2009 at 1:47 pm
P.S. not right wing nor left wing, right down the middle…. BUT a major supporter of public officials upholding full transparency at all times and demonstrating they hold a clear vision that the general public is their constituency, not the financial oligarchy from which they were “educated” in and “recruited” from.
April 5th, 2009 at 2:43 pm
DeDude, If you expect the angry taxpayers to be mindful of who gets hurt when they finally say enough is enough, why should they when the hedge wizards, and bankers had little care as to who got hurt in their machinations?
April 5th, 2009 at 3:01 pm
Mark;
In a big law firm, the shuffeling of clients to individual lawyers is often dependent on who has the expertise and time to take a particular case. I am not surprised if a “political” case end up with a “political” guy. And I am certainly not the one to suggest that the big companies are taking cases without thinking about how much to be made of $$ on the client. But perhaps the pertinent character question to be asked of these people is a list of the charity (low or no yield) professionel work they have conducted throughout their career. And now its my turn to be cynical and speculative; perhaps the newspaper did ask that question and perhaps they have not cited the answer because it did not fit so well with the picture they are trying to paint (and making fun of community service has become so old hat).
Stuart;
I don’t understand how fighting for our “state of law” and our constitution, by ensuring the fair trial of even the most maligned, can be a “conflict of interest”. And if the constitution is their constituency, is that wrong? And is the fact that you have this information not a sign of “full transparency? And I will have to agree with a previous poster that those who think we can find a financial expert without connections to the financial system (and expertise to fix this mess), need to wake up. In order to know something you have to be connected- because the private sector does not have transparency or sunshine laws. We do not want Joe-the-Plumber as secretary of the treasurer even if he didn’t lie and actually had a license. We have had eight years of a “the-only- qualification- needed-is-a-bible-and-the-right-ideology” regime; it has been proven not to work (but try to explain that to the Palin supporters).
bman;
What I worry about is that the taxpayers in their lynchmob lust for revenge on “the guilty” end up hanging themselves. That’s why I call for understanding the full consequences of something before we do it. If you can show me that the people we will hurt are the same who caused the problem, then I will join the mob.
April 5th, 2009 at 3:22 pm
DeD,
w/this: “But perhaps the pertinent character question to be asked of these people is a list of the charity (low or no yield) professionel work they have conducted throughout their career. And now its my turn to be cynical and speculative; perhaps the newspaper did ask that question and perhaps they have not cited the answer because it did not fit so well with the picture they are trying to paint (and making fun of community service has become so old hat).”
is certainly fair enough, and it is, more than, possible, that the art. was ‘edited’ to fit..
though, something tells me that these ‘lawyers’ aren’t to be found doing much Pro Bono work for anything resembling a ‘noble cause’–this is EZ to look-up, btw..
April 5th, 2009 at 3:29 pm
http://www.muckety.com/OMelveny-Myers-LLP/5001425.muckety
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=White+House+Counsel+Greg+Craig
“He has represented numerous high-profile clients, including John Hinckley, Jr., who was acquitted of the attempted assassination of Ronald Reagan by reason of insanity.”
JH Jr. long-time friend of the Bush family..
yep, nice guys..
April 5th, 2009 at 3:45 pm
Mark; again not a question of whether he has done his patriotic heroic duty and defended scum, I am sure the internet can find a lot more examples. Has he done charity cases and how many and when – that will give you his character like noting else can.
April 5th, 2009 at 4:09 pm
Obama has decided to do things the Investment Bank way. Why? Damned if I know. Therefore nobody is better suited for their respective jobs than Summers, Gheitner, and Dudley.
April 5th, 2009 at 4:11 pm
Oh, and keeping Gates at Defense was perfect for the Obama agenda. And why build a wall down in Ole Mexico when we can get involved in a War. Nuke the suits and send in the troops: Blackhawk Down IV.
April 5th, 2009 at 4:14 pm
And I could care less where Summers made his speeches and what he got paid. Trivia. What are his accomplishments? Not his titles.
April 5th, 2009 at 4:27 pm
DeD,
I said as much: “is certainly fair enough, and it is, more than, possible, that the art. was ‘edited’ to fit..
though, something tells me that these ‘lawyers’ aren’t to be found doing much Pro Bono work for anything resembling a ‘noble cause’”-above..
I agree
April 27th, 2009 at 10:38 am
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