This kind of talk pisses me off:
Treasury Secretary Timothy Geithner warned that the financial markets would view a Senate rejection of Ben Bernanke’s renomination as “very troubling” but said he’s sure the embattled Federal Reserve chairman will prevail.
“We’re very confident that the chairman will be reconfirmed by the Senate, and we think it’s very important he be reconfirmed by the Senate,” Geithner said Friday in an interview at the Treasury for POLITICO’s new video series, “Inside Obama’s Washington,” debuting Monday.
“He’s done a remarkable job of helping steer this economy out of the great recession. And I think he’ll play a very important role in helping in the success of our efforts to try to make sure we are bringing this economy back to durable growth.”
Asked about possible market reaction to a defeat, Geithner said: “I think the markets would view that as a very troubling thing to the economy as a whole. But, as I said, I don’t think they should be uncertain. I think they should be confident because we are very confident he will be reconfirmed.”
It’s of a piece with the idea that all the great geniuses will go Galt if we cut their bonuses (and then our economy will collapse) and the notion that we should just leave everything to very serious GOP daddies. Worse than that, I find this kind of threatening language offensive. It’s not that different than Bush/Cheney implying we’d all be killed by jihadists if they weren’t given complete control of the country.
Joe Beese
The good news: Obama begins to fight!
The bad news: For a Bush appointee’s job.
aimai
Correct: when markets routinely have selloffs or “take their earnings” in my favorite MarketSuckUPWatch ™ phrase its apparently none of our business, nothing to see here, but when the markets tremble for fear that someone who gives a flying fuck about unemployment might rear his head into our airspace all of a sudden we are supposed to be gaming the market by pacifying its overlords? Fuck geithner. He should be fired for this remark, as well as the previous one about “putting politics ahead of policy.”
aimai
Maude
Heard on Bloomberg radio this morning that other countries would worry about the US being unstable if Ben was rejected. It stinks, but those banker types think like that. At least he isn’t Greenspan.
henqiguai
Interesting. I thought he was simply describing the idiotic bed-wetting behavior of the markets, banks included, if they were suddenly presented with change. Not like that’s any sort of revelation. Then again, I haven’t yet had a chance to read the entire article, just your excerpt.
Keith
Government official finds something “troubling”…film at 11.
Alan
If the investment banks don’t get what they want they’ll sink the market. Not a big deal to them though … they make money which ever the direction the market takes.
Until their heads are on pikes I accept them as my overlords.
bob h
I have some sympathy for Bernanke. The most important thing a Fed chairman can do on behalf of jobs is to keep interest rates low, and he certainly has done that. The problem is that the main beneficiaries have been the banks who are getting free profits from the policy. I’m not aware that he really has any other job-creation tools.
geg6
This is nothing but threats from the investment banks. And the fact that it’s Geithner out there passing on and supporting their threats is just infuriating.
This fucker needs to go, right along with Ben “I studied the Great Depression so I could disregard its lessons” Bernanke. Obama has plenty of good people who would be excellent SoTs. He doesn’t need this weasel. And I’m damn sure the American people don’t need him.
Chad N Freude
Simon Johnson begs to differ with Mr. Geithner.
Ana Gama
I wonder what Geithner thinks the market would think if he himself got a sudden hackering for spending more time with his family?
Alex S.
When is the next recess? I think it’s time to make some appointments (new FED chair, treasury secretary, about 100 judges, ambassadors, top-level staffers).
Although, I think Bernanke is ok-ish. But he doesn’t seem to care about the job market in the slightest. And he wants to keep inflation close to 0% which I think is not a necessity.
valdivia
I am with Ezra on this.
Ripley
You’re either with us, or you’re with the
terroristsanti-capitalists.C Liss
I guarantee if Obama comes down hard on the banks, their traders will short the crap out of the market in retaliation and to get people to change their minds. They will create another stock market crash to prove that regulating or taxing them causes economic hardship for everyone.
Karmakin
What everybody is saying is exactly correct.
This “Great Recession” has been basically been a temper tantrum thrown by the money class because something didn’t go their way. The underlying message here, is that if they don’t get what they want, then they’ll throw another tantrum and that’s bad.
The problem is that at some point, we’ll have to stop kicking the can of dealing with these assholes down the road, and actually bring them to heel.
Remember, we’re on the brink of probably the biggest mass retirement in modern economic history. The unfortunate reality is that right now, messing with the markets is seen as about as much of a third rail as messing with social security.
That’s the problem.
Napoleon
@bob h:
That is not true and in fact it is the opposite. That is the whole critic of Helicopter Ben from the left. Check out K-Thug’s blog archives.
CynDee
@geg6 and DougJ:
You are so right. Now let’s flood Obama’s website with this truth.
bayville
Seriously, between Geithner and Jim Cramer there is little difference in the accuracy of their economic prognostications. But Geithner’s continuing role in the decline of the overall global economy and, more specifically, the virtual elimination of the American Middle Class, cannot be overstated.
As to this post, I concur with Atrios’ take wholeheartedly.
valdivia
@Chad N Freude:
Not to pick a fight, but Johnson is one of my pet peeves. I still do not get why so many people think he is the person we should be listening to. Dani Rodrik says it all for me about Johnson. I think he is right and I trust Rodrik much much more.
neill
Yeah, and the Banksters are also hoping Helicopter Ben will do something about the deficit…
and Ben’s so worried, like Timmy and Larry, that this social security stuff and Medicare are really tearing into the financial institutions’ profits and bonuses…we must cap it, maybe we do need death panels, or just fucking concentration camps, who knows?
The god damn corporations have no use for humanity any more — especially Timmy and Ben’s beloved “markets” — so let’s just get rid of the people we don’t need any way we can.
Maybe that fucking monster Lt Gov of South Carolina can consult for Obama’s Stepford Economics Team…
Why oh why
What should piss you off is Obama deciding to keep Bernanke at the Fed. Once that decision was made, what was Geithner going to say? That the Fed chairman did a poor job during the crisis, and that his obsession with inflation would hurt future growth?
There are plenty of reasons to bash Geithner, but this is not one of them.
Mnemosyne
I’m going to go with a possibly offensive metaphor here:
The banksters are standing at the front of an airliner with boxcutters trying to get us to fly into a skyscraper because otherwise Ayn Rand’s philosophy will be proven wrong. We’re trying to figure out how to get control of the plane back from them without having to ditch the airliner in an open field and kill everyone on board.
Sure, I may be an asshole for putting it that way, but does anyone think I’m wrong?
geg6
@Mnemosyne:
No, I think it’s rather an apt metaphor.
So when do we start shouting “Let’s roll!”?
wilfred
It’s completely different, actually. The jihadists are a mirage wrapped in bullshit but the bankers and their cronies in government can manipulate the economy as they wish. If Geitner and his pals don’t get what they want they make bad things happen.
They really do have that kind of power. Of course the best thing to do would be to change the circumstances that give them that power, but…
Zifnab
John Galts? More like Chicken Littles.
“If we do not renominate Ben Bernanke, then the sky will surely fall! Surely fall!1!”
If Ben gets the boot, they’ll find another Ivy League professor with strong ties to the financial sector to take his place. He’ll be mildly more left or right than his predecessor, and he’ll be pulling from the same general bag of tricks.
The idea that the economy is such a finely tuned machine that the Fed Chairman could make or break it simply by name recognition is absurd. If the marketeers did decide to panic and flee, they’d leave a giant pile of stocks on the table for a new batch of entrepreneurs to scoop back up again.
For people vested in the ultimate wisdom and benevolence of capitalism, they sure have a low opinion of it’s operators.
I’d recite the old saw about speculators and investors generally not liking risk, instability, and change. But the last ten years of CDO madness makes me think even that bit of common wisdom in completely out the window.
Sly
When Dean pushed through reforms of Vermont’s health insurance regulations, a lot of the big companies that abused the framework told him “Do this and we’ll leave.” Companies like Aetna and Nationwide. It was based, in large part, on their objections to community rating and guaranteed issue.
He did it anyway, and they did leave. Vermont BCBS (which is one of the last few non-profit BCBSs in the country) went from facing bankruptcy to becoming financially solvent again after years of being gamed out of the system by its for-profit competitors. And since those reforms passed, Vermont has basically been in constant competition with Hawaii over which state covers the most people.
Just thought I’d throw that out there.
debbie
It may be an annoying statement, but that doesn’t make it wrong. The legislators who are so against his renomination would be better put to speed up financial reform.
Getting rid of Bernancke will do nothing to improve Goldman Sachs’ behavior. And if you’re going to get rid of everyone who was responsible for this disaster we’re in, this country would be as barren as The Road.
Brian J
This is what I find so irritating about those who follow the market’s every up and down. They talk about it like it’s a child who is constantly coddled and needs to have every allergy, achievement, and movement tracked, or a pet that cannot be spoken to, looked at, or touched.
It might not be the message that would resonate so easily, but why don’t we call their bluff and see what happens? Robust financial markets seem to exist in lots of countries where there’s less of “free market” spirit than there is in the U.S. There are also plenty of smart people around the world who would love a chance to work in the U.S. for a lot less money than the current crop of investment bankers are getting. Would we really so much worse off if things were scaled back and we simply had to replace some of what we have now with more foreign control and/or foreign workers?
Brian J
@Zifnab:
I don’t know if that’s the case. From what I understand, the rest of the committee members are the problem, since they are concerned more with the threat of alleged inflation and decisions tend to reflect group think. Bernanke may be a symptom of the problem, but he’s probably far from the only alleged problem.
valdivia
@debbie:
Excellent point. Instead of yelling about Bernanke why not get the strongest financial reform package and the jobs bill out there?
danimal
@Zifnab: This.
I’m agnostic about Bernanke, but I think his renomination is (EDIT: not) nearly important as his supporters and detractors imply.
bayville
@debbie:
It’s called accountability. Bernancke’s tenure has been a failure. Period. He should not be rewarded with a new six-year term.
Future policy, involving the likes of GS, BofA, etc. depends on the Treasury Dept. and Congress. That is why Geithner should have never been appointed and should be replaced post haste. Ufortunately this won’t happen.
Ironically, the argument Geithner makes in support of Bernancke is the same argument those who supported Geithner said when he was nominated for SecTreasury. Remember, Geithner was the only person who understood TARP – which was and remains patently ridiculous.
Ella in NM
Why is it that Don Henley always comes to mind when I read about these folks?
“You live
in a house of mirrors
Reflecting your splendid isolation
You have so much of everything
Except for true consideration
The way you dance
The way you walk
The way you drive
The way you talk
The way you eat
The way you drink
The way you act
The way that you don’t think
It’s like there’s
Nobody else in the world but you
Nobody else in the world
Nobody else in the world but you
In case you haven’t noticed
There’s lots of other people here, too
Hey now, did your momma teach you anything?
Some things still got to be respected
Is it a sign of the times, or is it just your callous heart?
How did you get so disconnected?
The way you push
The way you shove
The way you hate
The way you love
The lies you spin
The scenes you make
The grief you give
The space you take
It’s like there’s
Nobody else in the world but you
Nobody else in the world
Nobody else in the world but you
In case you haven’t noticed
There’s lots of other people here, too
And now it’s time you did a little giving, baby
The world is not your plaything, no, no, no
Nobody else in the world but you
Nobody else in the world
Nobody else in the world but you
In case you haven’t noticed
There’s lots of other people here
Nobody else in the world but you
Nobody else in the world
It’s like there’s nobody else in the world but you
In case you haven’t noticed there are lots of other people here, too
Cathie from Canada
Shorter Geithner: Nice little economy you’ve got here…be a shame if something were to happen to it.
Sly
@Brian J:
That’s not really the question. The question is do these large financial firms remove anything from the system if they get up and leave?
The answer is no. At least not anything that we’d miss, like their expertise at shoveling risk on to other people.
Financial systems exist to allocate capital. They take it from investors and give it to people who need it. Investors make money from the interest and the middlemen basically take their cut. No one is talking about removing capital, just making it safer to move it from point A to point B. The issue is that when that transaction is made safer, the middleman loses a portion of their cut. Something that will, obviously, upset them. The question is how to deal with the resulting elitism and bluster.
This video may be instructive.
arguingwithsignposts
Don’t let the door hit you in the ass on the way out. I’m sick of this financial blackmail from people who make more in a year than I’ll see in a lifetime.
Brian J
@Sly:
In a lot of ways, it is the question. One of the arguments from the financial firms seems to be that they and only a few others like them possess the ability to do what they do, so in order to have them keep doing that, we need to put up with the practices that are of questionable value. That’s bullshit, of course. One way to call them on this would be to let other people from other countries, who would probably be thrilled to work here, do the job.
It’s also important to point out that I don’t think anybody is calling for an outright ban on a lot of these practices. The point, either implicitly or explicitly, is that firms that are taking massive risks shouldn’t enjoy government guarantees for free. If they wish to throw caution to the wing, they should be able to, but they need to realize we won’t be there to pick up the pieces.
rootless_e
@Chad N Freude:
But let’s game it out. Suppose Bernanke cannot be confirmed. Then Obama has to nominate someone else. And who could he nominate that would (a) not be absolutely pukescent and at the same time (b) get confirmed rapidly?
Brian J
@danimal:
It’s not the end of the world one way or another, but it’s frustrating to a lot of people. For one thing, while it’s probably not right to call Bernanke incompetent, perfectly valid questions exist about why he and others weren’t on top of the problems in the housing market and in the markets for financial instruments. But perhaps more importantly, while he did some good things in order to pull us back from the cliff, he seems amazingly complacent right now. Instead of pulling out all the stops in order to jump start employment, even at the risk of an extra percentage point of inflation, he suggested we need to cut social insurance in order to trim the deficits. I don’t understand all of the technical stuff, but there are things that the Fed could be doing but isn’t doing in order to help employment and overall growth. That’s just nuts, I think.
jenniebee
@arguingwithsignposts: It’s like we’re the natives in an H. Rider Haggard novel. Strange White Gods warn: confirm Bernanke or we will make the Sun disappear!
Zifnab
@rootless_e:
In the current Senate? No one, obviously. The Republicans would turn it into another “We Hate Everything Obama Does” fest.
In that sense, there’s political calculus that says you just keep Bernanke because he’s at least been benign. He’s not some radicalized GOP nutbag, and he’s not a giant hole in management like the head of TSA (which, thanks to DeMint, remains empty even AFTER the Christmas Day bombing attempt – seriously, how was he not scourged from office for that bullshit?).
The Republicans are going to keep hitting the national infrastructure until the whole thing comes tumbling down, then blame the Democrats at the center of the rubble. Frankly, I don’t see the bother in firing Bernanke, because he’s never going to get replaced.
Citizen_X
Well, isn’t that precious, Timmeh? But I’ll have to go along with what DeGaulle said: The world’s graveyards are full of irreplaceable men.
beltane
@Sly: The insurance companies that left were the ones that no one in their right mind would want to do business with. If the bankers threaten to leave, I say go for it and tell them to take their 21% interest credit cards with them.
patrick
i have pretty much had it with the republicans creating a failed /fill in your policy/, but then it is too dangerous to change the /fill in your policy or policy maker/.
The president ran on change, let’s change something.
Corner Stone
@Zifnab:
Easy – he won that fight.
Cat
Man @Cathie from Canada: Beat me to it. :-0
Sly
@Brian J:
Or let the untold thousands of middle rank financial analysts who live and work in America take their places. Investment banking isn’t exactly a genteel business. If Brian Moynihan won’t be going back to making what his predecessors made as CEO of Bank of America and he leaves as a result, there are dozens of Corporate VPs ready and willing to replace him. If Bank of America decides to call it a day altogether, there are smaller firms ready and willing to take its place.
There are outright bans on some practices and limitations on others. A lot of predatory lending practices are gone in the House bill, and it gives regulators the ability to ban compensation mechanisms that they find incentives an inordinate amount of risk taking. Things like swaps become heavily regulated. And the CPA has pretty expansive authority over a sector of the economy that, unlike any other, has little to no consumer protection mechanisms.
So yeah, people have been calling for outright bans and those bans are part of the legislation, along with provisions that allow the government to wind down institutions that are systemic risks to the overall economy.
valdivia
I think that having a position unfilled in the Fed will simply make the Obama cannot govern, dems are terrible meme the fodder the Reps would kill for. Why else have they left half the admin without their appointees? To point and yell–they cant govern. This is what it is all about.
Rick Taylor
Dean Baker on Bernanke:
__
Brian J
@Sly:
Yup.
Well, yes, there are bans on some practices, as there should be, but what I was getting at was that nobody seems to be saying that we should do away with derivatives altogether, or something like that.
rootless_e
@Zifnab:
What I particularly dislike about all these “fire so-and-so” bits of advice from “progressives” is that the obvious result is
1. News coverage like “Bowing to Republican criticism of ethical failures, the increasingly defensive and in disarray Obama administration withdrew the nomination of xxxxx and went back to look for a more credible candidate ”
2. opportunities for more grandstanding in senate hearings and so on
And so on.
Where is step 3, profit, in this scenario?
WereBear
Recess appointment and be done with it. Obama worked for a year to get “I told you so” cred.
Now is the time to use it.
IndieTarheel
All this leaves me extremely frustrated. Everything coming out of these guys mouths (even by proxy) indicates that they are holding the system at gunpoint: “Pay the ransom, or else!” But if they get what they want, the system eventually collapses anyway.
__
Am I missing something here?
jenniebee
@rootless_e: the whole problem with the Democratic party is that we think like that – in reaction to what Republicans will say and the reality they’ll create – instead of taking action and creating our own reality. If you plaster yourself against the ropes on the theory that that’s where they’ll have you anyway, then you’re a permanent minority party, no matter how many people vote for you and how many seats you have.
Unfortunately, that’s how Dems roll.
rootless_e
@jenniebee: @jenniebee:
I don’t see it. I think the problem is a refusal to think out a strategy instead of bouncing from crisis to crisis – on grounds chosen by the opposition. I don’t like Bernanke, but I don’t see anyone propose a series of steps in which Obama failing to get Bernanke confirmed leads to a win.
On the other hand, I think a recess appointment of a TSA chief and a direct attack on Jim DeMint would be a serious win. In fact, I think an across the board series of recess appointments and other moves to counter Senatorial foot dragging would be great.
rootless_e
If Obama announced a bunch of recess appointments, the easy lead, which a good PR effort will seed will be
“Impatient with republican obstructions in the Senate and with demands for special treatment by Democratic Senators, President Obama announced a serious of recess appointments by saying “We will not let the people’s business be held hostage to short sighted and partisan political demands” “
Fwiffo
There’s a term I’ve used in IT; perhaps it’s used elsewhere — “Truck Number”. It’s the number of people on your team who would have to be hit by a truck in order to throw your project into chaos. For example, if your project would collapse if just one person were hit by a truck, you have a truck number of one. That’s one argument for having at least two people involved in all the key parts of even a small project, if it’s of any importance. The odds of two people getting hit by a truck are astronomically small unless the team is huge, so a truck number of two is quite robust. A truck number of zero indicates that the project is already fucked.
What they’re saying is that the economy has a truck number of one. Forget Senate confirmation – what if Ben is hit by a truck? Or falls out of his Helicopter?
bcinaz
This has got to be the heart of the argument Geitner and Summers have been pushing to keep the President from going after the financial sector for real.
President Obama is not an idiot, yet, all his moves have been aimed at preserving the framework that created the economic crisis. I don’t think he is in thrall to Goldman Sachs, however, I do think he fears shocking the markets and wiping out whats left of our 401ks and IRAs. And I think he believes this because two people he trusted to fix this mess told him that’s what would happen.
Hopefully, Paul Volcker and Elizabeth Warren will have more opportunities to present their arguments in person and not through the Lawrence Summers filter.
bcinaz
Also – is it not possible that if financial markets were re-re-re-regulated and some one else was the Fed Chair, the markets might respond more favorably, not less?
Brachiator
@valdivia:
RE: It may be an annoying statement, but that doesn’t make it wrong. The legislators who are so against his renomination would be better put to speed up financial reform.
Great points. The attacks on and defense of Bernanke is more political kabuki, meant to deflect attention from Congress’ refusal to engage in meaningful financial market reform.
The other, bigger problem, is that neither the president nor the Congress appear to have much of a clue about stimulating the economy, which is a separate issue from keeping financial markets stable.
Worst of all, the Beltway crowd (and their critics like Krugman and others) seem to be stuck in old ways of thinking that don’t have much to do with anything that people not in the Village care about.
It’s sad to see that Obama’s people are getting sucked in as well.
catclub
Geithner said: “He’s done a remarkable job of helping steer this economy out of the great recession.”
He also did a bang up job steering it into the great recession.
And another thing. The markets went up last monday on expectation of Scott Brown’s election – remember that?
Why didn’t they go down on the realization that he got elected? Oh, they went down because Obama surprised them
with new draconian regulation, which Geithner is now
softpeddling.
The world has the memory of a gerbil on speed.
Elie
@valdivia:
I agree as well. Thanks for the link, though it provides nothing but more worries
Elie
@rootless_e:
You make some good points. Somehow, this WH has to get off of its back and in some sort of control of its message and priorities. Right now it is a rudderless ship heading for rocks…I am not happy to say or see that, but that is what it appears to me right now…
Chad N Freude
@Zifnab: This is a point I hadn’t considered, and you’re right. I found an item yesterday or today (sorry, no link) saying that there were something like 177 pending appointments with senatorial holds. It’s another weapon in the Arsenal of Evil. So keeping Bernanke might be the best and only thing to do.
Chad N Freude
@Chad N Freude: The article I referred to also said that held-up ambassadorial appointments cause ill feelings in the countries where we haven’t yet posted new ambassadors.
debbie
@valdivia:
I doubt that Bernancke would argue with that — unlike any number of Republicans.
@bayville:
Like I said, if you get rid of everyone who had a role, you’d have very little left. Like Obama, Bernancke inherited a lot of the problems; he seems to me to be someone much less doctrinaire than most of the people getting all the ink these days. I may agree with much of Paul Krugman, but I don’t recall that he’s ever admitted to being wrong about much of anything.
catclub
Debbie @ 66
He seems less doctrinaire only because you have not been paying attention.
Bernanke will do anything to keep inflation low, but for full
employment – not so much.
That is a definition of a doctrinaire inflation fighter, not a Fed chief who has dual responsibilities that include ensuring FULL EMPLOYMENT.
Sentient Puddle
@catclub: Um…the Federal Reserve has, at best, a very tangential interest in unemployment. What they do certainly will touch upon employment levels in some capacity, but if your top goal is to reduce unemployment, the Federal Reserve is pretty far down on the list of where you should be focusing your efforts.
Brachiator
@Chad N Freude:
This sounds much like the stuff that plagued the Clinton administration. And didn’t the appointee for TSA withdraw in part because of irrelevant political grandstanding by the GOP.
I can understand the need for diplomacy when dealing with the Republicans, but shouldn’t the Democrats also promise payback if the GOP continues to be un-cooperative?
liberty60
@Maude:
Funny how we never heard that other countries might think we were unstable if we invaded two nations, sent missiles and drones into two others, threatened yet another, stretching out military to the breaking point, for a full decade.
Has the Moustache of Understanding told those other countries to Suck. On, This. yet?
catclub
Sentient @ 68
How tangential is this? (Wikipedia + FRB docs and FAQ)
“Its duties today, according to official Federal Reserve documentation, fall into four general areas:[6]
1. Conducting the nation’s monetary policy by influencing monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
“the Federal Reserve is pretty far down on the list of where you should be focusing your efforts.”
That is because it is headed by a doctrinaire inflation fighter.
Which was my point.
Cheers.