• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

Every one of the “Roberts Six” lied to get on the court.

Republicans are radicals, not conservatives.

A sufficient plurality of insane, greedy people can tank any democratic system ever devised, apparently.

We’re not going back!

An almost top 10,000 blog!

Jack Smith: “Why did you start campaigning in the middle of my investigation?!”

A consequence of cucumbers

“Everybody’s entitled to be an idiot.”

Bark louder, little dog.

Glad to see john eastman going through some things.

DeSantis transforms Florida into 1930s Germany with gators and theme parks.

Optimism opens the door to great things.

Roe isn’t about choice, it’s about freedom.

Wow, you are pre-disappointed. How surprising.

Fuck the extremist election deniers. What’s money for if not for keeping them out of office?

Red lights blinking on democracy’s dashboard

“I never thought they’d lock HIM up,” sobbed a distraught member of the Lock Her Up Party.

Proof that we need a blogger ethics panel.

Speaking of republicans, is there a way for a political party to declare intellectual bankruptcy?

The words do not have to be perfect.

Republicans choose power over democracy, every day.

They think we are photo bombing their nice little lives.

Technically true, but collectively nonsense

After roe, women are no longer free.

Mobile Menu

  • Winnable VA House Races
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • War in Ukraine
  • Garden Chats
  • On The Road
  • 2021-22 Fundraising!
You are here: Home / Politics / Domestic Politics / The Plan

The Plan

by John Cole|  March 23, 20098:56 am| 79 Comments

This post is in: Domestic Politics

FacebookTweetEmail

Geithner takes to the WSJ here, the NY Times has more write-up here, Krugman lets out a plaintive wail here, DeLong thinks Krugman is wrong, and the world stock market is reacting positively, which makes me think we are about to get screwed since the only thing those guys care about is a bailout with no pain involved for any of the actors.

FacebookTweetEmail
Previous Post: « I Carried This Twitter Feed In My Ass For Five Years Just So I Could Give It To You
Next Post: Along Similar Lines, If I Take A Dump And Call It Prosciutto, I Have A Tasty Sandwich »

Reader Interactions

79Comments

  1. 1.

    4tehlulz

    March 23, 2009 at 8:59 am

    And all this will be forgotten because Obama farted at a press conference or something.

  2. 2.

    Tim H.

    March 23, 2009 at 9:03 am

    which makes me think we are about to get screwed since the only thing those guys care about is a bailout with no pain involved for any of the actors.

    You got that right. And when DeLong starts saying you either follow Geithner or it’s Mad Max time you can suspect he’s full of it. "It" being his inner neoliberal.

  3. 3.

    The Moar You Know

    March 23, 2009 at 9:04 am

    which makes me think we are about to get screwed

    There’s never a bad time to screw the little people. Why not now?

  4. 4.

    Cat Lady

    March 23, 2009 at 9:08 am

    @4tehlulz:

    And all this will be forgotten because Obama farted at a press conference or something.

    Chuckling is causing the pearl clutching today.

  5. 5.

    LITBMueller

    March 23, 2009 at 9:10 am

    Never underestimate Obama! This may be a case of, "Sure! We’ll bail you all out and you may even make some money off of us! But, then, keep your damn mouths shut when we start regulating your asses! The party is over and this is your last hurrah."

    Of course, this will last until Palin gets elected and she ends all regulation…

  6. 6.

    Comrade Jake

    March 23, 2009 at 9:10 am

    Yeah, the good folks at GMA have decided that Obama laughing during his 60min interview should be the main story.

    Piles of stupid.

  7. 7.

    Karmakin

    March 23, 2009 at 9:18 am

    Errr…the bastards are not going to accept any plan that causes them any pain. At all. Because they hold all the cards right now. In fact, we dealt them to them.

    It’ll take a long time to take the cards away from them.

  8. 8.

    valdivia

    March 23, 2009 at 9:20 am

    the president sits down for a far ranging interview and answers all the questions thoroughly and what do we get. ZOMG! He chuckled in irony!

  9. 9.

    Dennis-SGMM

    March 23, 2009 at 9:21 am

    I am reminded of a line from "Austin Powers: International Man of Mystery."

    No doubt, love, but as long as people are still having promiscuous sex with many anonymous partners without protection while at the same time experimenting with mind-expanding drugs in a consequence-free environment, I’ll be sound as a pound!

  10. 10.

    Comrade Stuck

    March 23, 2009 at 9:22 am

    From Timmy boys WSJ article.

    While this crisis was caused by banks taking too much risk, the danger now is that they will take too little.

    More like, they rigged the Casino and still fucking lost their (our) shirt. Like I said before "duplicitous weasel" is our Treasury Secretary.

    I hate to start the week pissed off.

  11. 11.

    4tehlulz

    March 23, 2009 at 9:23 am

    @Cat Lady: I’m going in chronological order….

    Current: ZOMG CHUKLING
    Later Today: ZOMG HE KILLED OUR MONIEZ
    Tomorrow: ZOMG HE FARTED IN THE WHITE HOUSE – ON OUR MONIEZ

  12. 12.

    MattF

    March 23, 2009 at 9:25 am

    I have no opinions, IANAE (I Am Not An Economist), but my feeling is that we are already screwed and have been for some years now. The damage of the past eight years is massive, the choices we have are few and far between, and the price will be paid, whether we like it or not.

    Getting unscrewed may not actually be an option– and if it is, the experience is likely to be… unpleasant. As the health professionals say, "You may experience some discomfort."

  13. 13.

    Tim H.

    March 23, 2009 at 9:27 am

    It’ll take a long time to take the cards away from them.

    They can keep the cards. Pitchforks are quicker.

  14. 14.

    wilfred

    March 23, 2009 at 9:27 am

    At the core of the financing package will be $75 billion to $100 billion in capital from the existing financial bailout known as TARP, the Troubled Assets Relief Program, along with the share provided by private investors, which the government hopes will come to 5 percent or more. By leveraging this program through the Federal Deposit Insurance Corporation and the Federal Reserve, huge amounts of bad loans can be acquired.

    Uh-huh. Everything starts to look like a scam after a while; shows how corrupt the whole thing really nis.

  15. 15.

    The Other Steve

    March 23, 2009 at 9:28 am

    Apparently Obama got on 60 minutes last night and laughed about all the little people?

    I heard he slapped a few in the face too.

    Did anybody catch this? I’m getting my news filtered Erick Ericson these days so I don’t know what side is up.

  16. 16.

    Ash Can

    March 23, 2009 at 9:29 am

    @Comrade Jake:
    @valdivia:

    And people wonder why the administration’s messages aren’t getting out. It all boils down to this: If you see/hear the original speech, press conference, or interview, then great; you’ve gotten the message. If you wait to hear a summary from a secondary source, you get "Special Olympics/ironic laughter." The actual message has all but hit a dead end.

  17. 17.

    sgwhiteinfla

    March 23, 2009 at 9:30 am

    Morning Joe had 3 hours basically just about the man laughing 3 times in a 30 minute interview. Wasn’t the media saying something about petty distractions a while back wrt Rush Limbaugh. I guess they have that mentality of "Do as I say, not as I do". Highlight of the day so far was David Shrum challenging Joe Scarborough after he had intimidated Bimbo Mika all morning whenever the question of investing in healthcare came up. He made Scar just about burst a blood vessel and I was cheering him on the whole time.

  18. 18.

    Comrade Stuck

    March 23, 2009 at 9:32 am

    @Dennis-SGMM:

    Geithner — Wall Street Mini-Me

  19. 19.

    passerby

    March 23, 2009 at 9:35 am

    Steve Kroft looked uneasy at times during last night’s interview, particularly when questioning Obama about Wall Street.

    But Obama laughed and laughed. I think Obama knows something we don’t know and was laughing because he’s going to win the war on greed. I like to think he’s aware of lots and lots of fraudulent activity around this financial mess.

    He know Geithner’s role (much to the chagrin of those of us who want the "booya!" now) is to legally and methodically set up a sustainable financial system that can prevent the ripping off of taxpayers.

    Still waiting for his "trickle-up" proposal for the economy. It’s only been 2 months. I’m trying to be patient.

  20. 20.

    Face

    March 23, 2009 at 9:36 am

    I’ve basically decided that when the stock market responds favorably to a WH plan, it means all of us 99%ers not making a million a year are about to be royally, totally screwed.

    The fact the premarket jumped 2% tells me this plan will make the rich much, much richer but fuck everyone else.

    And I’m not rich.

  21. 21.

    Atanarjuat

    March 23, 2009 at 9:37 am

    As the 60 Minutes interview demonstrated with HDTV clarity, President Barack Obama laughs maniacally at the misery he’s inflicted on the country. And why wouldn’t he laugh? His socialist scheme to wreck the economy and leave us all in debt to the rest of the world is coming along nicely.

    I’m sure that once he’s collapsed America into another sloth of despair like Haiti, he’ll do just like the Duvaliers and happily exile himself to France. The Courvoisier he’ll be passing around will taste so sweet then, while the rest of us will end up laughing, too, Il Pagliacci style.

    I realize that it might be too much to hope for, but just as with the series finale episode of BSG, I’m praying that there will be some form of divine intervention to stop the Obama Onslaught. Neither Palin nor Jindal have a chance in hell, as the liberal media have successfully sandbagged their electoral prospects.

    Things are looking decidedly grim for the moment. Hope is all we have… for now.

    -Country First.

  22. 22.

    liberal

    March 23, 2009 at 9:38 am

    @The Other Steve:

    Did anybody catch this? I’m getting my news filtered Erick Ericson these days so I don’t know what side is up.

    IMHO he came off pretty well in the interview. I definitely didn’t get any impression that the laugh was due to sneering etc; it was clear that he was laughing because he knows we’re all in a pickle.

    OTOH, the Geithner plan is pure BS.

  23. 23.

    wilfred

    March 23, 2009 at 9:39 am

    So we – not TARP, not the Government, not Obama – but we the people put up 100 billion, private investors (unlike we the people who are public cash-cows) front, at best, 20 billion, witht eh rest coming from we the people, in our avatar as the Federal Reserve and fuck knows what else.

    Then what? Who gets what percentage of…what?

  24. 24.

    Dave

    March 23, 2009 at 9:39 am

    I think Delong is right in that some assets are un-naturally low in value because of risk aversion. The problem is that particular asset class makes up a small percentage of the whole.

  25. 25.

    liberal

    March 23, 2009 at 9:40 am

    @passerby:

    He know Geithner’s role (much to the chagrin of those of us who want the "booya!" now) is to legally and methodically set up a sustainable financial system that can prevent the ripping off of taxpayers.

    If that were the case, the Geithner plan wouldn’t be offering such absurdly sweet terms to the private sector investors who will aid the government in their (bogus, unworkable) price discovery operatoin.

  26. 26.

    valdivia

    March 23, 2009 at 9:41 am

    @passerby:

    Steve Kroft looked uneasy at times during last night’s interview, particularly when questioning Obama about Wall Street.

    My take of the interview was that Kroft asked some tough questions and Obama answered them thoroughly even when Kroft seemed to be pushing the Wall street line (but not in a dickish way, I really like his interview style). Obama was ironically chuckling, and when I was wathcing the interview I was taken aback when Kroft asked him why he was laughing I personally got why he was doing this (I tend to do the same when talking about a very messed situation). But I also thought Obama must have been laughing at the inanity of some of the talking points that make it to all his interviews as if he did not explain many many times what is wrong with Wall Street etc.

  27. 27.

    liberal

    March 23, 2009 at 9:44 am

    @LITBMueller:

    But, then, keep your damn mouths shut when we start regulating your asses!

    Nope. Efforts to regulate executive pay (I followed the link) are not the bulk of what "regulation" should be, going forward. (*)

    Real regulation would mean:
    * Outlawing CDSs as fraudulent insurance contracts
    * Regulating all derivatives
    * Taking moves to force as much of these contracts onto transparent exchanges in the future, instead of the current situation (contracts between two parties)
    * Reinstating Glass-Steagal
    * Heavily regulating any entity, including hedge funds, which are banks in the most general sense (i.e., borrow short and lend or invest long)
    * Cutting off from the financial system money laundering havens like Switzerland and the Carribean unless they open their banks up to inspection and regulation
    * Etc…

    Yeah, I know he can’t do it in a day, but the evidence is that the Dems are in finance’s pocket.

    ((*) I’m not against it, but it’s usually symbolic, often easily circumvented, and misses the point: if we heavily regulate as I’ve suggested, we’ll reduce the parasitic, unproductive flow of fees to the financial sector, and as a result there will be much less money out of which to pay bonuses.)

  28. 28.

    Zifnab

    March 23, 2009 at 9:47 am

    The damage of the past eight years is massive, the choices we have are few and far between, and the price will be paid, whether we like it or not.

    I can’t argue with that. I mean, I don’t really like Geitner’s plan and I agree with the Cole prognosis:

    The Illness- reckless and irresponsible betting led to huge losses
    The Diagnosis- Insufficient gambling.
    The Cure- a Trillion dollar stack of chips provided by the house.
    The Prognosis- We are so screwed.

    But the goal of the Geithner plan is to help the banks and increase the value of the mortgage-backed securities. Someone is going to profit from the deal (and it isn’t going to be the guys doing the bailing). Likewise, the asset values are going to have to go up or there’s no point in running the plan. Anything that makes the currently near-worthless CDOs look more valuable will trigger the "you’re wasting our money" reaction. But, as another blogger pointed out some months back, these assets have to be worth something. You’ve got an investment grade product that periodically spits money into your pocket. Not currently a reliable source of income, but a source of income none-the-less. There has to be a fair value that can be put on these investments, such that banks would be willing to sell them and investors would be willing to buy them.

  29. 29.

    passerby

    March 23, 2009 at 9:50 am

    @liberal:

    the Geithner plan wouldn’t be offering such absurdly sweet terms to the private sector investors

    You’re right. Nearly all of Geithner proposals appear to favor the fat cats. But I gotta conclude that Obama selected Geithner for his knowledge of the rabbits holes and that his actions serve to lure the financial wizards into tipping their hand.

    When I ask myself whether or not I believe Obama will be true to the rank and file American, the answer is yes.

    It’s chess (longterm) not checkers (immediate gratification.)

  30. 30.

    jon

    March 23, 2009 at 9:50 am

    It would be nice if the critics of this plan could come up with a better one(and nationalization is not a plan) instead of more populist raging.

  31. 31.

    The Grand Panjandrum

    March 23, 2009 at 9:51 am

    With all due respect to Paul Krugman, who is an economist and not an expert on mortgage back securities, but he is probably wrong about the value of those same securities he pins much of his argument on. Going for broke on nationalizing banks now will not pass. It would be politically impossible to get this through the Senate. And once you nationalize them it will be many years (10+) before they start being sold back to the private sector. That means Eric Cantor, John Boehner, and Mitch McConnell will hold undue leverage over our mortgage and credit cards. No thanks. I’ll take the criminals on Wall Street. Nationalization should be the very last option.

  32. 32.

    ksmiami

    March 23, 2009 at 9:54 am

    A Dear John note:

    Dude – if we don’t have a functioning banking system, we simply do not have an economy, period (unless you want to go back to bartering) and no amount of Krugman’s wailing will prove otherwise. Yes, it sucks that the money guys control everything, but that is the system everyone signed up for when we built America – see Rockefeller family, Astors, et al.

    All this impatience and finger pointing at Geithner and Summers is stupid. First they have to try something that doesn’t allow markets to go off a cliff and restores lending, then we create a new regulatory framework.

    Plus – no one seems to be pointing out that Krugman’s solution is so draconian that it WOULD cause a lot of pain in the near term and it may or may not prove to be successful. Krugman is an academic with a huge ego so he can throw bombs… I think Brad deLong is more pragmatic and less about Brad deLong.

  33. 33.

    Napoleon

    March 23, 2009 at 9:54 am

    @jon:

    nationalization is not a plan

    Actually it is a plan, and the best one available (a la, a FDIC takeover). But nice try to just define away the best plan as not a plan and leaving nothing but the plans that rape the American public for the benefit of the economic top 1% in this country.

  34. 34.

    valdivia

    March 23, 2009 at 9:54 am

    Just to get this straight–when geithner spoke last time about his plan the market went down and everyone hated it then too. now he presents something, the market is up and because of that we have to hate it. and then the market regulations plan will come out this week too and the market won’t like it and we should hate it too because Obama is destroying the hard earned gains of the last few weeks.
    since he seems to be able to do nothing right about the economy according to everyone I am going to jusge a little differently–I am going to wait to see what the actual results of the policies are before making up my mind.

  35. 35.

    passerby

    March 23, 2009 at 9:55 am

    @valdivia:

    I usually like Kroft too but, last night he was rather devoid of congeniality and all "I’m a serious and tough journalist". Kroft is seasoned interviewer and I wondered why he took that tack with Obama. It seemed unnecessary.

  36. 36.

    Svensker

    March 23, 2009 at 9:56 am

    I’m sure that once he’s collapsed America into another sloth of despair

    Is that like a bear market in a dog-eat-dog world when you get skunked?

    Or were you meaning "slough of despond?"

  37. 37.

    El Cid

    March 23, 2009 at 9:57 am

    Wait — how exactly is it that people keep referring to what the titans of Wall Street as having done with this pile of fake investments as "risk"?

    What did they risk?

    They certainly didn’t "risk" anything that had consequences for them.

    Taking "risks" with other peoples’ money in ways that you know very well you’ll never pay for is not "risk" in any normal sense.

  38. 38.

    Rick Taylor

    March 23, 2009 at 9:58 am

    I’ll just throw in one question that’s been bugging me here. One of the big questions, perhaps the big question, is how do we put a value on these toxic assets? There are reasonable arguments that some of these assets are undervalued by the market, but if that’s the case, if we’re going to buy them off the banks, how do we figure out what to pay?

    The answer from this plan, if I understand correctly, is will let private investors make those decisions. Indeed, as far as I can see, they’re the only reason they’re involved in the plan. We the taxpayers are putting up 95% of the money; if we didn’t need their guidance, why not make it 100%?

    But then the question I have is why would these private investors know what these assets were worth better than anyone else? I’d heard the whole problem was banks were holding these ridiculously complex assets, and they were afraid to lend to one another because no one knew what they were worth. So why would private investors have anymore idea than anyone else?

    Galbraith argued that before we put in another dime, we should review the loan tapes, and get an independent assessment of what these assets are worth. That certainly sounds like a good idea to me; if our ignorance is the big problem, wouldn’t the first thing to do be to dig in and estimate what the securities underlying these bonds are worth?

    Well, there’s a bit of a problem. The banks don’t have loan tapes! Via the Huffington Post

    The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation:

    "Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don’t have it and can’t provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so."

    Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files. Paper loan files are bulky, so they are photographed and the images are stored on computer tapes. Unfortunately, "most investors" (the large commercial and investment banks that purchased nonprime loans and pooled them to create financial derivatives) did not review the loan files before purchasing nonprime loans and did not even require the lender to provide loan tapes.

    Most of the big banks didn’t even bother getting documentation on the loans they were buying and there’s no way to assess their worth except to wait around and see what happens the next few years. And I thought I couldn’t still be staggered by the destructive stupidity of these huge organizations. The article argues that this means that realistic "stress tests" are impossible.

    The rest of the article above is well worth reading. It says in 2004 the FBI warned that there was epidemic fraud in the mortgage market. The whole thing is worht reading.

  39. 39.

    robertdsc

    March 23, 2009 at 9:58 am

    At this point, the blizzard of info and spin has whitened me out. I can’t make heads or tails of any of this so I’m in shutdown mode.

  40. 40.

    Dennis-SGMM

    March 23, 2009 at 10:00 am

    I am confused as to the exact meaning of the word "assets" in all of the pieces written for or against the Geithner plan. If these assets are the inverted pyramid of derivatives resting on very few tangible assets then, yes, I’d say we’re fucked. To me, that’s like being asked to make good the year 1636 prices for tulip bulbs in the year 1638.

  41. 41.

    passerby

    March 23, 2009 at 10:01 am

    @Zifnab:

    There has to be a fair value that can be put on these investments, such that banks would be willing to sell them and investors would be willing to buy them.

    But this, I think is the whole problem. These so-called "assets" aren’t worth the paper they are printed on. When a gambler loses, his money (value) evaporates.

  42. 42.

    valdivia

    March 23, 2009 at 10:01 am

    @passerby:
    I got a bit of that when he was talking about Wall street but I also noted that he was not doing it in the tone of a Wolf Blitzer, or John King or MTP Gregogry (who I loathe). I like that Obama told him—these wall Street people think they can continue to act as if the crisis isn’t here, they need a reality check.

  43. 43.

    ksmiami

    March 23, 2009 at 10:05 am

    If you want to find out what is in the packages, then you probably need to get the Feds to investigate every single Moody’s and S&P transaction / recommendation for the past 6 years…

  44. 44.

    Rick Taylor

    March 23, 2009 at 10:06 am

    @Zifnab:

    There has to be a fair value that can be put on these investments, such that banks would be willing to sell them and investors would be willing to buy them.

    Just to nit-pick, but there doesn’t. It might be that the fair-market value for these investments is below what is necessary to keep the banks solvent, and so below what they’d be willing to sell them for. The article I linked to above argues there was huge amounts of fraud, and that has to be factored in along with the prospects for the housing market. No one knows for sure, and what is galling is that it seems banks have made it impossible to know for sure, by not keeping records.

    I think there’s an argument to be made that current market mechanisms undervalue these assets, while Geitner’s plan if I understand it seems to be designed to overvalue them (by artificially limiting their downside risk. I’ve seen other proposals to attempt to find a market for these securities that don’t involve this feature, but whether they’d work or not I have no idea.

  45. 45.

    joe from Lowell

    March 23, 2009 at 10:06 am

    since the only thing those guys care about is a bailout with no pain involved for any of the actors.

    So suddenly John’s down with the magical thinking, that attributed fluctuations in the Dow Jones to the words of political figures.

    I didn’t buy that nonsense when the Dow went through a bad run in February and early March, when the wingnuts were crowing about Obama driving the market down (neither did John Cole, btw), so I’m certainly not going to buy into it now.

    The DJIA had a fantastic week last week, in response to…uh…what are those things called again? Oh, right, actual economic indicators, such as the big banks becoming profitable. I’m not going to launch myself into Fox News fantasyland and start attributing every movement in the Dow to the latest administration press release now.

  46. 46.

    Xenos

    March 23, 2009 at 10:07 am

    The plan sucks so much that I have to wonder if it is just a stalking horse for a politically unpalatable Plan B. That might not be giving Obama or Volker too much credit, but Turbo Tax Timmy does not strike me as a deep enough thinker to pull off such a feint.

    Too much information, too much obfuscation, too much stress for me at this point. I have long ago given up on thinking I can ever get enough truth to know what to do with this mess.

  47. 47.

    kay

    March 23, 2009 at 10:08 am

    @Atanarjuat:

    As the 60 Minutes interview demonstrated with HDTV clarity, President Barack Obama laughs maniacally at the misery he’s inflicted on the country. And why wouldn’t he laugh? His socialist scheme to wreck the economy and leave us all in debt to the rest of the world is coming along nicely.

    I’m actually following this. First conservatives were wailing because he wasn’t addressing the REAL PROBLEM, which was foreclosures. Then he did that. Then the REAL PROBLEM was no plan for banks. Then he did that. Now the REAL PROBLEM is his budget, which will BANKRUPT THE COUNTRY.
    Just cut to the chase. Whatever the solution, you oppose. Release a blanket statement, and we can get on with our lives.
    It can be a short statement: "no".

  48. 48.

    passerby

    March 23, 2009 at 10:08 am

    @valdivia:

    I also noted that he was not doing it in the tone of a Wolf Blitzer, or John King or MTP Gregogry (who I loathe).

    Agreed. He wasn’t assholic about it. I guess I’m saying that he lacked warmth.

  49. 49.

    OC

    March 23, 2009 at 10:09 am

    I have to agree with Valdivia. We need to sit down, take a Xanax, and wait and see how this turns out. It’s pointless to doom this to failure before they’ve had a chance to implement the plan. Having said that I understand the concern about the plan (although I think Krugman has gone into drama queen mode here.) We are in such a hole that there is no easy solution. That doesn’t mean Geithner’s got the right solution. But I don’t see a point in proclaiming we’re all screwed or this a total taxpayer ripoff. The truth is we just don’t know yet. Let’s give this some time.

  50. 50.

    mr. whipple

    March 23, 2009 at 10:10 am

    There are reasonable arguments that some of these assets are undervalued by the market, but if that’s the case, if we’re going to buy them off the banks, how do we figure out what to pay?

    I have the same questions. Krugman et al seem to argue on one hand that the assets are worthless, but on the other they claim no one knows what’s in them.

    And if the banks were nationalized, I would think the gvt would hold these assets for a period of time and sell them at a loss(if they were worthless) or at a gain as they’ve regained value over time. But isn’t this exactly what the banks are arguing, that the value of these assets is temporailly depressed because of market conditions? How can you argue that the stuff is really crap and it’s best to buy it outright via nationalization, but then turn around and say that over time the value might increase?

  51. 51.

    John Cole

    March 23, 2009 at 10:11 am

    @joe from Lowell: Nonsense about me buying into the magical thinking:

    Wall Street may have panned the broad outlines of the Obama administration’s plan to fix the financial system when the proposal was sketched out six weeks ago, but on Monday, investors seemed to be warming up to its finer points.

    Stock markets in New York opened higher, and most markets in Europe were higher as the Treasury Department began to release details of a public-private partnership to purchase troubled assets from banks. Shares in Asia also closed higher.

    There.

  52. 52.

    joe from Lowell

    March 23, 2009 at 10:13 am

    Run everybody! Or maybe trot. Or walk.

    Anyway, move, everybody! It’s the Sloth of Despair!

    He’s very slowly, unenthusiastically coming this way!

  53. 53.

    joe from Lowell

    March 23, 2009 at 10:18 am

    It can’t be magical thinking because it’s in the New York Times’ Business Section?

    Really?

    I would draw the opposite conclusion.

    If today’s rise in the Dow represented a dramatic shift – if it had been dropping for a couple of weeks, and then suddenly turned around after this plan came out, and did so in the absence of any other news, actual economic-performance news, that would tend to rally the markets – I’d consider that to be the likely cause.

    What we have instead is the continuation of a rally that had been going on for days before this plan was ever released.

  54. 54.

    Tom Levenson

    March 23, 2009 at 10:22 am

    we are about to get screwed since the only thing those guys care about is a bailout with no pain involved for any of the actors.

    Yeah but … this assumes a level of concerted intelligence on the part of the Wall St. junta not in evidence. I remember a book on the Latin American debt crisis of the sixties (remember that?…bubbles and bad bankers are with us always, just like the poor they help create…) that began with a quote I’ve never been able to find again that said something along the lines that those who see bankers’ conspiracies everywhere do to much credit to bankers.

    Oh no, said the author that book: They aren’t smart enough to conspire; they are just dumb enough to repeat the same actions expecting different outcomes. (See Greenspan, Alan: "we’ve entered a new productity paradigm" — very loosly paraphrased, that.)

  55. 55.

    Rick Taylor

    March 23, 2009 at 10:31 am

    @Atanarjuat:
    As the 60 Minutes interview demonstrated with HDTV clarity,

    President Barack Obama laughs maniacally at the misery he’s inflicted on the country. And why wouldn’t he laugh? His socialist scheme to wreck the economy and leave us all in debt to the rest of the world is coming along nicely.

    The last I recall, you were telling me you were pleasantly pleased at how moderate Obama had turned out to be, and were laughing at us liberals for being taken in. Now it looks like he’s a soc ialist again. Could you make up your mind one way or the other please?

  56. 56.

    Svensker

    March 23, 2009 at 10:31 am

    @joe from Lowell:

    LOL

  57. 57.

    valdivia

    March 23, 2009 at 10:32 am

    @Tom Levenson:

    not to be a pedantic know-it-all but the debt crisis in Latin America took place in the 80s not the 60s.

    And your mention of it leads me to explain why I take a very skeptical view of anything economists say is ‘the magic bullet’–the same ‘experts’ that are telling us now we have to nationalize our banks are the same ‘experts’ that told Latin America they had to privatize and liberalize everything to get out of the crisis. All economists see a crisis as an opportunity to put their models to work without any thought that real economies are not one-size fits all. The US is not Sweden just like Chile and Argentina are not Mexico.

  58. 58.

    Machina

    March 23, 2009 at 10:37 am

    @Atanarjuat:

    Neither Palin nor Jindal have a chance in hell, as the liberal media have successfully sandbagged their electoral prospects

    Palin and Jindal sandbagged Palin and Jindal’s chances.

    And OHNOES, he laughed! He’s human. Who hasn’t laughed when faced with extremely daunting tasks and having to make some decisions contrary to the majority (and perhaps your own long-term agenda)?

    Its just so ridiculous. Nothing substantive to offer, nothing substantive to put forth in the form of counter-argument, so bash him on the tedious and the inane (teleprompters, an unfortunate joke and a laugh).

  59. 59.

    TheHatOnMyCat

    March 23, 2009 at 10:41 am

    Who elected Krugman, and why does anyone care what he thinks at this point? It’s obvious that he isn’t out to actually help anybody or add any value to any process. He is about as useful to progress as Rush Limbaugh is useful to the GOP comeback.

    If I were Obama, I’d go after the smug motherfucker at this point.

  60. 60.

    Montysano (All Hail Marx & Lennon)

    March 23, 2009 at 10:44 am

    @Dennis-SGMM:

    I am confused as to the exact meaning of the word "assets" in all of the pieces written for or against the Geithner plan. If these assets are the inverted pyramid of derivatives resting on very few tangible assets then, yes, I’d say we’re fucked.

    Excellent question. I have no idea what the answer is. In my mind, as asset is a "thing", while CDS and other derivatives are "not a thing", i.e. their value is entirely notional and based on some other occurrence.

    Anyone? Bueller?

  61. 61.

    Elie

    March 23, 2009 at 10:47 am

    KSMiami @ 32 —

    Agree completely (for what its worth — I am an economic know nothing but I try hard)

    I have to say again, thank you to all the people who comment here and write in complete sentences, generally without invective and with respect for the point of view of others. This is my favorite site and I have actually stopped going by quite a few of the progressive left blogosphere anymore — Hope this stays that way

  62. 62.

    ksmiami

    March 23, 2009 at 10:59 am

    Elie – I think that is the point – no one KNOWS everything – that unraveling this is going to take time, brains and effort and in the meantime people have to work and eat and live so how do you operate on the patient while keeping him alive and even cognizant at the same time? These guys have a hard hard line to walk and having worked with the Resolution Trust Company back in the 90s, this is a hundred times bigger than that so let’s hope for the best and offer Constructive criticism when warranted.

  63. 63.

    ksmiami

    March 23, 2009 at 11:00 am

    ps our tv broke a week ago and I am tempted to donate it to the store… I get all my info from the internets anyway

  64. 64.

    Atanarjuat

    March 23, 2009 at 11:07 am

    @Rick Taylor:

    The last I recall, you were telling me you were pleasantly pleased at how moderate Obama had turned out to be, and were laughing at us liberals for being taken in. Now it looks like he’s a soc ialist again. Could you make up your mind one way or the other please?

    As new information comes in, Rick, one’s view on certain matters can change accordingly. I suspect you already know this.

    For myself, I’ve since learned that Obama is very much a wily, unctuous chameleon who, in the end, seems to stand for nothing except furthering his socialist, wealth-redistributing plans (exactly as he promised during the election) — and yet I’m the one who’s being inconsistent?

    Liberal, please.

    -A

  65. 65.

    liberal

    March 23, 2009 at 11:14 am

    @mr. whipple:

    And if the banks were nationalized, I would think the gvt would hold these assets for a period of time and sell them at a loss(if they were worthless) or at a gain as they’ve regained value over time.

    Yes, there would be losses. The point, however, is to recapitalize the bank, and then pass as much of the losses onto the stockholders and bondholders, rather than the taxpayers.

  66. 66.

    liberal

    March 23, 2009 at 11:15 am

    @OC:

    But I don’t see a point in proclaiming we’re all screwed or this a total taxpayer ripoff. The truth is we just don’t know yet. Let’s give this some time.

    What? You can look at the terms and see it’s a gigantic taxpayer ripoff.

  67. 67.

    liberal

    March 23, 2009 at 11:19 am

    @Napoleon:

    Actually it is a plan, and the best one available (a la, a FDIC takeover). But nice try to just define away the best plan as not a plan and leaving nothing but the plans that rape the American public for the benefit of the economic top 1% in this country.

    I don’t get the sympathy in the BJ comment sections for taxpayer rape either, and the nonsense peddled against seizing the large insolvent zombie banks.

    My best guess is that it’s an unwillingness to brook criticism of Obama, combined with some stupidity, but I’m not sure.

  68. 68.

    liberal

    March 23, 2009 at 11:22 am

    @ksmiami:

    I think Brad deLong is more pragmatic and less about Brad deLong.

    Garbage. DeLong has long been noted as having a distasteful affinity for neoliberal policies. He was also in the Clinton Treasury Dept, IIRC, so he might have social connections to the people there now.

    I personally wouldn’t trust DeLong on anything, given his dishonest comment section policy (deletes anything he disagrees strongly with).

  69. 69.

    liberal

    March 23, 2009 at 11:23 am

    @jon:

    It would be nice if the critics of this plan could come up with a better one(and nationalization is not a plan) instead of more populist raging.

    LOL! Sure, we can pick a plan, but we’re not allowed to pick the one plan that (a) has some past history of working, (b) has some chance of being equitable.

  70. 70.

    TheHatOnMyCat

    March 23, 2009 at 11:24 am

    You can look at the terms and see it’s a gigantic taxpayer ripoff.

    That’s why it has always been called a "bailout" and not an "investment in better living."

    It is what it is, and always has been. There are only two things that I can see the government can throw at the problem, control (takeover, nationalization) and money. The other alternative is the shutdown of the existing financial infrastructure. The latter approach, which is the equivalent of doing little or nothing, creates a complete credit and capital stoppage for small business, and something like a ten point jump in unemployment in short order.

    If money gets the thing turned around (not permanently fixed, just turned around) faster, then I say spend the money. The cost of not doing so will exceed the cost of spending the money.

  71. 71.

    liberal

    March 23, 2009 at 11:24 am

    @The Grand Panjandrum:

    Going for broke on nationalizing banks now will not pass. It would be politically impossible to get this through the Senate.

    And you know this how?

  72. 72.

    passerby

    March 23, 2009 at 11:24 am

    @ksmiami:

    I get all my info from the internets anyway

    Me too. TVwise I got a converter box for the HD switch and hooked it up to my antenna and I still can’t get CBS or FOX channels. [Shrugs] I’ll worry about upgrading when football season comes around, that’s the only thing it’s good for.

    I am a dinosaur.

  73. 73.

    4tehlulz

    March 23, 2009 at 11:29 am

    I suspect Kevin Drum may be on to something:

    Legally, I’m not sure Obama has the statutory authority to take over a big bank. He may well need congressional authorization of some kind first. And even if he doesn’t, does anyone really think it would be wise to go down this road without broad congressional support anyway? I don’t. Like it or not, there’s only one way to get this support: show that (a) one or more of the big banks really is insolvent and (b) every other option for rescuing them has been exhausted. Geithner’s plan does both. If it works — well and good. But if it fails — if nobody is willing to participate, or if the auction demonstrates that the market price for toxic assets really is accurate — then banks will be forced to mark their assets to those prices. Plug in those marks to Geithner’s stress tests and it’s likely to prove to everyone’s satisfaction that some of our big banks really are insolvent. At that point, even skeptics will be forced to accept nationalization as the only remaining alternative.

  74. 74.

    liberal

    March 23, 2009 at 11:31 am

    @passerby:

    But I gotta conclude that Obama selected Geithner for his knowledge of the rabbits holes and that his actions serve to lure the financial wizards into tipping their hand.

    But there’s no evidence of that. What we do know is that the Fed failed to see the housing bubble for what it was when Geithner had a high-level position there. (IIRC head of NY Fed?)

    Christ, I saw the housing bubble, years ago, by reading Dean Baker’s blog and thinking out the arguments for myself.

    It’s chess (longterm) not checkers (immediate gratification.)

    I don’t understand this common insistence that Obama is some kind of supergenius chess player. Yes, Obama is smart. Yes, I voted for him in both the primaries and the election (and donated a huge sum of cash in both). But the Geithner plan is, ipso facto, an outrageous giveaway.

  75. 75.

    liberal

    March 23, 2009 at 11:41 am

    @4tehlulz:

    I suspect Kevin Drum may be on to something:

    I disagree. Geithner’s statements and his history suggest he’s doing what he’s doing, not to pave the way for nationalization if it’s necessary, but because he’s still looking out for the banks’ interests, not the taxpayers’ interests.

  76. 76.

    ksmiami

    March 23, 2009 at 11:43 am

    Liberal:

    Yawn – Not once has Krugman proved any sort of political acumen – right now I want to go for what is possible, not the plan that will send everyone running for the fire exits. DeLong gets this and i am not sure that Krugman does. Again, how do we operate on a patient (the economy) while keeping it alive and awake at the same time. Viewed through this prism, I just don’t see nationalization as a pragmatic solution AND a lot of the so called toxic assets will hold value at some point. It IS real dirt after all

  77. 77.

    gregt

    March 23, 2009 at 2:09 pm

    @liberal: @liberal:

    Geithner’s statements and his history suggest he’s doing what he’s doing, not to pave the way for nationalization if it’s necessary, but because he’s still looking out for the banks’ interests, not the taxpayers’ interests.

    I don’t think it really matters what Geithner’s inner motivation is. The fact is, the FDIC only has authority to take over institutions that are FDIC-insured. And almost all of the trouble here is in the shadow banking system (not covered at all) and in multi-nationals (only the US branch could be nationalized).

    Which means nationalization, or any sort of government control, is only an option if (a) the firms in question agree to such a handover, or (b) Congress passes a law of some sort giving the executive additional authority. (And in the multi-national case, probably only if there is international agreement, something analogous to Besel II.)

    None of that is going to happen any time soon, and the people involved in any such decision certainly don’t seem ready to do anything like it right now. They’re mainly just sniping from the sidelines.

    So if the Geithner plan succeeds, all well and good, and if it fails, at that point we have the stress tests and the auctioning of assets accomplished, and everyone will have much better visibility about how much these instruments are really worth and how much trouble each institution is in.

    In short, Geithner or something like it looks to me to be the only way to get there from here.

  78. 78.

    D-Chance.

    March 23, 2009 at 3:36 pm

    S&P sur-800… Goldilocks is back!

  79. 79.

    passerby

    March 23, 2009 at 7:06 pm

    @liberal:

    But I gotta conclude that Obama selected Geithner for his knowledge of the rabbits holes and that his actions serve to lure the financial wizards into tipping their hand.

    But there’s no evidence of that.

    …in the corporate media.

    liberal, what I consider first and foremost when pondering something I hear from the media is:

    1) they sensationalize the news to draw an audience,

    2) they only report and discuss according to what their corporate masters allow them to, some topics are taboo,

    3) they don’t have access to the inner circles where strategies, both financial and political, are being hammered out.

    And since I don’t have access to the inner circle, I’m left to assume that there are goings on by the administration that are aimed at wresting power from the fat cats so that the American economy isn’t being held hostage by a few people (that was never the intent of The Consitution).

    Yeah, I’m only guessing at what may be happening and, of course, I could be wrong about the specifics but I see the end result as favorable to The People and go further to guess that some will go to jail behind all these elaborate financial schemes.

    First its necessary for us to realize how we’re being screwed by the insurance companies and banks, then we have to vote in better representation instead of lobby-owned representatives.

    Stock up on popcorn.

Comments are closed.

Primary Sidebar

VA Purple House Delegates

Donate

Political Action

Postcard Writing Information

Recent Comments

  • JeanneT on On The Road – Albatrossity – Ramsey Canyon Sanctuary – 1 (Oct 2, 2023 @ 8:36am)
  • Soprano2 on Monday Morning Open Thread: Nice News to Start the Week (Oct 2, 2023 @ 8:35am)
  • Joey Maloney on Monday Morning Open Thread: Nice News to Start the Week (Oct 2, 2023 @ 8:35am)
  • Tony Jay on Monday Morning Open Thread: Nice News to Start the Week (Oct 2, 2023 @ 8:34am)
  • Scout211 on Monday Morning Open Thread: Nice News to Start the Week (Oct 2, 2023 @ 8:33am)

🎈Keep Balloon Juice Ad Free

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year
View by Past Author

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
We All Need A Little Kindness
What Has Biden Done for You Lately?

Balloon Juice Meetups!

All Meetups
Talk of Meetups – Meetup Planning

Fundraising 2023-24

Wis*Dems Supreme Court + SD-8

Calling All Jackals

Site Feedback
Nominate a Rotating Tag
Submit Photos to On the Road
Balloon Juice Mailing List Signup
Balloon Juice Anniversary (All Links)
Balloon Juice Anniversary (All Posts)

Twitter / Spoutible

Balloon Juice (Spoutible)
WaterGirl (Spoutible)
TaMara (Spoutible)
John Cole
DougJ (aka NYT Pitchbot)
Betty Cracker
Tom Levenson
TaMara
David Anderson
Major Major Major Major
ActualCitizensUnited

Join the Fight!

Join the Fight Signup Form
All Join the Fight Posts

Balloon Juice for Ukraine

Donate

Cole & Friends Learn Español

Introductory Post
Cole & Friends Learn Español

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • YouTube
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2023 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!