That 2005 Bankruptcy Bill (for those with a sense of humor, it is noted in the comments the full name of the bill was The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005), ostensibly to “reform” the system and something I have bitched about forever, just keeps getting better and better:
But it turns out that one of the features of the 2005 Bankruptcy bill was to put derivative counter parties at the front of the line ahead of other creditors in bankruptcy proceedings. Actually, from what I can tell, they don’t just go to the head of the line. They got to skip the line entirely. As the Financial Times noted last fall, “the 2005 changes made clear that certain derivatives and financial transactions were exempt from provisions in the bankruptcy code that freeze a failed company’s assets until a court decides how to apportion them among creditors.” As the article notes, ironically, this provision which Wall Street pushed for and got to protect investment banks actually ended up hastening the collapse of Lehman and Bear Stearns last year.
I’m going to get an ulcer if I keep reading about the current financial meltdown. Meanwhile, Geithner still keeps coming up with new ways to keep the Wall Street boys out of harms way. Apparently the newest plan involves asking the folks who got us into this mess to take a bunchy of risky bets that… involve no risk for the betters. Only this time it will work.
And if you aren’t completely convinced we are totally screwed, then read this.
At this point, I have absolutely no confidence in Geithner. None. I have yet to see one person give any evidence that he has any idea what to do, or any willingness to do what needs to be done. All I have seen is ass-covering and bad ideas. Admitted, I am no financial wizard and never came up with my own clever scheme to bilk millions out of their savings through a series of risky financial choices that would make me rich no matter what (also, I’m not a sociopath, so I am not cut out for high finance), so maybe I am just no seeing the genius in all of this, but so far, it just looks like the looting is continuing under the cover of chaos.
Napoleon
Nor I – I think he can already be judged a failure.
DougJ
I’m scared shitless about Geithner’s so-called plans.
But I don’t think he can be judged a failure yet.
Andrew
I think we basically need to bring in smart people from completely different fields to deconstruct this mess. Everyone in finance is fundamentally corrupted.
Get some physicists and computer science professors and civil engineers, all folks who understand systems and numbers, and let them start tearing everything apart.
Napoleon
Irony Alert – The full name of the 2005 Bankruptcy Act:
Karmakin
Failure? I dunno.
Personally, I think he’s doing all that he can do in a world that won’t take the DOW Jones average off the damn screen. I don’t think people understand quite yet how much the old status quo has failed.
Brandon T
I dunno, he may be incompetent, but I’m not sure a competent person would fair much better under the circumstances.
We need to nationalize the banks, but to begin with the very legality of taking over what are actually multinational corporations that involve a lot more than just banking is sort of questionable to begin with (as is the complexity of how we wind down the corporation when it has its fingers in so many things–people have actually noted lately that Glass-Steagall was probably good just because it decreased the complexity of banks). Moreover, we have a cadre of Santelli style peeved multimillionaire investors, who have an outsized voice in govt and are demanding their investment value be preserved. Finally, we have trillions of dollars in pension funds of average people that stand to totally collapse when we nationalize the banks.
So basically we have a situation where the solution is likely to inflict a lot of direct pain, and make things worse in the short run (although better in the middle-term). This is exactly the type of decisions that politicians avoid with their lives. This probably has something to do with why it’s so hard to find people willing/able to take jobs in Treasury.
Anton Sirius
@Andrew:
Spot on. Obama’s one big swing-and-a-miss so far is thinking that people from inside the system are capable of reforming the system.
Lev
I’ve not been impressed so far. Dammit, this is why I was hoping Obama would pick Larry Summers! He might still.
Comrade Stuck
I commented once on another blog when he was chosen, that he struck me as a "duplicitous weasel" and that is what he has turned out to be IMO. The few times I’ve heard him talk, I haven’t understood a word he said. He reminds me of the double talking Morticai Jones played by George C. Scott (rip) in The Flim Flam Man. And thus far remains one of Obama’s biggest mistake among few mistakes, albeit however, one that has the potential to sink his presnitcy.
Dennis-SGMM
Does it put me in with the tinfoil hat crowd to believe that the derivatives holders suspected that eventually the whole house of cards would collapse and so they lobbied for this provision to make certain that they’d be able to seize whatever was left?
John S.
Add my voice to the chorus.
Everything he has done thus far leaves me with the impression that he is a smug and insular man whose only real concern is bailing out his friends and making sure he still gets an invitation to the Hamptons this summer. What he did with Citibank alone (converting the preferred stock on the day when Citi stock just happened to be extremely high) stinks to high heaven.
I really do get the feeling that he is not going to be a long-term presence in the Obama administration. I have no doubt Obama has his eye on him, and Geithner can only get away with "Trust me, it will work eventually!" for so long.
Ricky Bobby
Patience my son.
After the last eight years of outright abuse the financial markets and banking system is like a gangrape victim, never mind humpty dumpty. Calming all the shit down and even knowing where to BEGIN is a tough call.
Running around like a spazz who just snorted his weekly dose of ritalin will only compound the mistakes of not knowing by rushing blindly to judgement. That is what got us into Iraq.
Geithner is no messiah, but we don’t need to throw anyone under the bus just yet either.
John Cole
@Dennis-SGMM: No. It means you have a pulse.
El Tiburon
So, is this good for John McCain?
John S.
@Lev:
Jesus, man, I hope this is snark. Summers and Geithner are a brain trust.
John Cole
@Ricky Bobby: All I said is I have no confidence in him. And I don’t. That doesn’t mean he will be a failure. It doesn’t mean he should be canned.
It does mean that right now I have no confidence in him whatsoever.
Fwiffo
Geithner should resign. I am not even kidding.
Furthermore, "nationalization" isn’t fucking voodoo. The FDIC does all the time; several times each Friday lately. Obama needs to summon up the audacity to do what everyone with a brain agrees is the right thing.
Brick Oven Bill
There is no need to understand finance to understand Geithner. All you need to know about Geithner is that his father was his best man at his wedding, and that nobody in his industry wants to work for him. If you watched him walking around at the inauguration lunch alone with a cell phone on CSPAN, or interacting with his wife at the table, those would be two more datapoints.
The next question to ask: why was Geithner selected to own the printing presses?
This is why I believe that the President is being used, and probably does not understand it yet. Geithner is probably not in on the deal either.
Punchy
By and large, that’s this blog’s major constituents. There’s a LOT of smart fuckers here.
passerby
I haven’t given up on Geithner yet but I’m gettin’ there.
One of his selected deputies that just decline the position use to be at the SEC !?! of all places. Are they waiting to see how much $$$ they can funnel down the black hole of banking before they take a stand and say "enough !" ?
Are they setting some kind of legal trap for these greedy bastar…er…I mean bankers?
Dobbs was wondering why there was no Treasury official at one of the hearings recently. The Treasury is so conspicuously no where in these matters.
I’m dying to know What The Fuck is going on.
Alan
I’m sure Geithner will do a great job. It’s not like he’s from NYC where he’d been schmoozed by investment banking types. I’m sure he was far away from that kind of activity.
Perry Como
Bring back Volcker. And prosecute the execs at AIG for fraud.
Comrade Stuck
@Ricky Bobby:
Maybe, and I don’t have a clue whether his plans will work, though as noted in the post, they seem to be overly weighted to protecting the people who caused this mess in the first place. My problem is with his communication skill, or lack therof that most believe is absolutely necessary for success in his particular job. This is not a job Obama or any of us can afford fail in, and I would be glad to be the one to throw Mr Geihtner under the bus before it gets to that point.
Comrade Stuck
So I guess the edit function is Kaput.
John S.
And yet, this tells us absolutely nothing about the man – particularly with respect to his business leanings – other than that he is very close with his father (oh, the horror!).
This says an awful lot about the tortured way your mind works, BOB.
matt
Seems to me the right approach would be for there to be a blogosphere mass stink-fest about this and pressure for Congress to revoke it. There’s no reason to allow this to remain on the books as law.
KLG
You are joking, right?
"Get some physicists and computer science professors…" Add mathematicians and you have the group of people who largely got us into this freakin’ mess to begin with. LTCM anyone?
Yeah, there are a lot of smart f****** here. So what? Both Ted Bundy and Ted Kaczynski were smart.
Paul L.
So you believe the Consensus?
Or does reading about the current financial meltdown cause the bacterium?
colleeniem
Hey John et al,
Did anybody else listen to the Wide World of Money/This American Life this weekend?
I’m sure I could be wrong, and I get a troubled feeling from Geithner too, but was a good bit in that podcast/episode about what kind of organizational structure would have to ready to go to immediately in order to nationalize (which I think will probably come down to). The fact that we were just lamenting that the Treasury does not have its deputies in place is a huge part of the uncertainty and capability of Treasury.
Also, and I hate to admit it, but the ethical standards seem to be goat-roping Obama. That and/or the folks that are competent enough to know what needs to be done are so unsure about the situation they don’t want to be part of it. All speculation on my part.
Good lord I’m depressed.
I can haz pet pics?
zmulls
I am not usually on the spelling/typo police, but you typed
I believe you meant bettors, as in people who make a bet. It’s just amusing that you used the word betters, as in people who are better than you and me, because our betters seem to have different rules applied to them.
Bill White
Given those bankruptcy law provisions, it will take new legislation to unwind the credit default swap fiasco. Also, since most banks are multi-national corporations, nationalization is not a result easily accomplished.
Geithner may well be a disaster however until Obama gathers enough information to learn where the sword needs to be swung to chop open the financial Gordian knot we humans have assembled, there is no one else who wouldn’t be a disaster.
Perhaps an Act of Congress to give derivative debt the lowest priority in a US bankruptcy court. Then Chapter 11 then banks, but NOT before that legislation is passed and signed into law.
Martin
Maybe he should wonder why the GOP is holding up confirmation of Obama’s economic advisors instead. Treasury is still trying to staff out and is clearly totally overwhelmed. If they spent all their time at hearings, they’d never have time to do anything else. A lot of these people have been in the job for 5 weeks. They’re still trying to sort out the last administration, let alone fix this unholy mess.
Personally, I’d ask Obama to hire Warren Buffet to come in with his team to help out. Warren doesn’t always get it right, but he’s as upfront about when he gets it wrong as anyone in the industry. I know there’s a million reasons why this can’t happen, but really, it should.
AhabTRuler
@Punchy: How many people here hold post-graduate degrees? It seems like a great many.
Xanthippas
Huh?
colleeniem
Fwiffo @17,
From what I understand, the banks that need to be nationalized are the big motherfuckers, right? And from what I was gathering, in order not to create a big freaking panic, they all have to be done AT THE SAME TIME?
At least, this is what I have gathered from the source of my last post. Feel free to correct me if I’m wrong. I’m certainly no expert.
Comrade Stuck
@matt:
There are a lot of dems who have a ton of problems with the odious Bankruptcy Bill, beyong the one Cole states. I suspect we will see vaunted efforts in the near future to amend it away from what is a bill that created a kind of minimum security debtors prison for a lot of people who either lost their job, got and sick and were sunk by medical bills, or were flim flammed by unscrupulous lenders of all kinds. They can leave the provisions that addressed the small problem of bankruptcy abusers (about 5% of bankruptcies) but shitcan the rest of it via amendment. A repeal would be better , but they don’t have the votes for that, yet.
Xanthippas
Try to figure out what you want to argue about. I know it means you have to sacrifice one of the two supposedly clever points you want to make, but such is the price of coherent discourse.
Napoleon
. . . and for all we know it was just after he beat cancer, or lost his wife or some other event that caused Geither to bypass his best friend so as to honor his dad.
Seperately I checked the bankruptcy code (specidically in 11 USC 5XX part of it) and swaps/derivatives ect, can liquidate outside of bankruptcy but I don’t think it is as bad as it sounds. It is not as if they can randomly go and seize some asset of the company. It doesn’t nearly do the damage as the provisions that were aimed directly at consumers. Still it shows, you get the shaft if you are an average joe but listened to if you have money.
Rick Taylor
Far from being too radical, this administration hasn’t been radical enough regarding the banks (in my opinion).
It’s like a Ponzi scheme. The banks invested in risky derivatives. People kept buying the paper, keeping the value up. Now they’re looking for the government to keep the scheme going by being the buyer of last resort.
Or maybe not; maybe Geitner is right and these pieces of paper really are worth more than the market says, and buying them up, we’ll save the market, and make money at the same time.
One thing I’m sure of though. I never wanted to invest in risky derivatives. I prefer conservative investments; I’m not even in the stock market. The one excuse these companies had for taking on so much insane risk was it was their money and they’re risk. I don’t see why I and every American taxpayer should now be forced to invest heavily in mortgage derivatives.
Dennis-SGMM
@John Cole:
Thank you. The last administration left me very, very suspicious.
A question for the smart fuckers mentioned by Punchy: If the purpose of a bankruptcy is to provide for orderly liquidation or reorganization how is this purpose advanced if derivatives counter parties are empowered to swarm a company like a school of Piranha before a court is allowed to take over the bankruptcy process?
South of I-10
Prior to retirement, my Dad’s practice was mainly bankruptcy law. He was completely disgusted with the changes to the law. He told me at the time the law was passed that foreclosures were going to skyrocket, as the changes made it easier to walk away from your house than from your credit card debt. We never even got around to derivatives. These people are actually evil, aren’t they? We are so screwed.
NonyNony
@passerby:
WTF is going on is actually painfully easy to see. Geithner is, as all Treasury Secretaries in my lifetime have been, a creature of Wall Street. His classmates have jobs running top-level firms. His friends are in high-level positions at various banks and investment companies.
The people he knows and empathizes with are all on "The Street" – and so he’s trying to minimize their pain as much as possible. This is exactly the same thing Henry Paulson was doing – trying to create a soft landing for his friends. The problem is that it’s a really goddamn terrible way to do what’s best for the country.
I don’t know what the solution is, actually. Despite what some folks seem to think, a lot of "smart people" are smart in their domain and not so smart out of it. So pulling in a bunch of physicists and computer scientists isn’t going to lead to better decisions – they don’t have the domain knowledge. (A few good sociologists and psychologists in a few key areas might help a bit, but they’d have to be really GOOD or have done their research in the sociology of high finance. Yeah, that’ll give you a lot of folks to choose from). You need people who understand the system in order to fix the system. But most of the people who actually understand the system have too many personal connections to people on the inside to make the tough choices that may very well utterly ruin friends and colleagues that they’ve worked with for decades. And the folks who understand the system but don’t have those personal connections are going to be people who have studied the system from the outside (i.e. academics) and would be derided as "pointy-headed academics" who just don’t "get" the reality and confidence would dwindle in them pretty quickly as well.
It’s tough. Honestly at this point I think the inevitable outcome is things are going to get worse and eventually they’ll get bad enough that ruining a few old friends who are going to get ruined anyway will be a small price to pay to get the system working again. And that’s the rosiest scenario I can come up with right now given the circumstances…
4tehlulz
@Dennis-SGMM: BECAUSE SHUT UP THAT’S WHY
Brick Oven Bill
I can envision a scenario, where my 2:1 handicap bet that the birth certificate isnât there pays off, and that the power structure is in possession of the Columbia records and is extorting money from the President.
This is a completely plausible theory, regardless of your party affiliation.
Violet
I’ve not been following the Geithner stuff very closely, but I’ve seen him on TV here or there and from the very beginning – back during TaxGate – he always seemed like he was hiding something. He’s someone I instinctively don’t trust. That’s all from body language, tone of voice, choice of words, etc.
I was surprised when President Obama stuck with him despite the whole tax mess. Not so much because of the tax thing, but because of the other stuff. I figured the tax thing would give Obama the cover he needed to get rid of Geithner easily.
The tax problems seem to be a window on Geithner’s moral and ethical beliefs: do what you think you can get away with. If you’re caught, apologize poorly, come up with a lame excuse, blame others, and make minimal restitution. Nowhere in any of these actions did I see a semblance of taking responsibility.
So it surprises me little that he’s doing a poor job. In the past, protecting your fat cat friends on Wall St. might have been just fine. Well, okay, it wasn’t fine, but no one was paying attention then. But these days the position demands someone whose ethical belief sytem and behavior is beyond question. I’m not sure that person exists, if they also must have the right experience.
Comrade Stuck
@South of I-10:
This is true. The bill was literally written by the Credit Card Industry, or so went the scuttlebut.
Comrade Stuck
Question
Has everyone lost the edit function on comments?
Dennis-SGMM
@Comrade Stuck:
I did.
NonyNony
@Brick Oven Bill:
Columbia Records is extorting money from the President? How is this supposed to be parsed?
I think you need to check the thickness of your tinfoil, BOB. Oh and make sure you get REAL tin to make your hat – the aluminum stuff they sell these days only works to focus the mind control radiation into the brain more efficiently. Those damn Council on Foreign Relations and Reptoids are crafty buggers.
Dennis-SGMM
@Brick Oven Bill:
I envision a scenario where a long black limousine pulls up, the door opens and there’s Angelina Jolie begging me to take her.
Punchy
Oh fuck off. Thanks for such the apros pos analogy.
srv
Man, am I tired of all the whiny dems here who have already got their Obama-hate on. I thought we had to wait a year or so?
It’s only been a little over a month. Probably still trying to find the light switches.
passerby
@Dennis-SGMM:
As an occasional tin-foil hat wearer I say so what if it did.
That’s how they roll Dennis, welcome to the plantation.
As Napoleon points out, the actual name of the law was:
"The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005"
With the Bush administration, it was safe to assume that whatever title a law was given, the effect and purpose of the law was to effect the opposite action. Like "The Clean Air Act". So much free-wheeling pollution happened behind that law.
Comrade Stuck
@Dennis-SGMM:
Thanks!. I installed the new firefox last night and wasn’t sure if it might have been that.
Brick Oven Bill
I come back to my recommendation of appointing Sully Sullenberger in place of Geithner. Sully had taken out a book on professional ethics from the library that was in the cargo hold. He called the library up and apologized for the book, which was destroyed. I do not know if they asked him to pay for it, I doubt it.
I would support a referendum vote to turn the entire country over to Dictator Sullenberger for a six month period, with the option of a six-month extension, grantable by the Chairman of the Joint Chiefs of Staff. Sully is cool under pressure, highly skilled, a popular leader, and ethical. He would clear many things up, I suspect.
Snail
I love John, Doug and Tim, but Brick Oven Bill is the greatest thing to ever happen to this blog. His insane non sequiturs genuinely bring a smile to my face.
John Cole
@Snail: Believe it or not, but Tim would agree with you.
South of I-10
@Comrade Stuck: I know. Also according to my Dad, 95% of the people considering bankruptcy were not people who had frivolously run up credit cards, but were people who had come upon hard times – lost a job, medical emergency, etc. He decided to retire when the new law went into effect.
AhabTExpropriator
I guess my question is not whether we can recover from this, but rather whether we deserve to? And I know "Deserve’s got nothin’ to do with it," but still and all…
Miriam
Is anyone else scared to death, or am I the only one?
AhabTExpropriator
@Miriam: You are definitely not the only one.
Gang Green
Judge assails cases doubting Obama’s citizenship
WASHINGTON (AP) â A federal judge on Thursday threw out a lawsuit questioning President Barack Obama’s citizenship, lambasting the case as a waste of the court’s time and suggesting the plaintiff’s attorney may have to compensate the president’s lawyer.
In an argument popular on the Internet and taken seriously practically nowhere else, Obama’s critics argue he is ineligible to be president because he is not a "natural-born citizen" as the Constitution requires.
In response last summer, Obama’s campaign posted his Hawaiian birth certificate on its Web site. But the lawsuit argues it is a fake and that Obama was actually born in his father’s homeland of Kenya, even though Hawaiian officials have said the document is authentic.
"This case, if it were allowed to proceed, would deserve mention in one of those books that seek to prove that the law is foolish or that America has too many lawyers with not enough to do," U.S. District Judge James Robertson said in his written opinion.
The lawsuit didn’t even use Obama’s legal name but called him "Barry Soetoro," the name he went by while attending elementary school in Indonesia. It’s one of many that has been filed claiming Obama is ineligible to serve as president.
Robertson ordered plaintiff’s attorney John Hemenway of Colorado Springs, Colo., to show why he hasn’t violated court rules barring frivolous and harassing cases and shouldn’t have to pay Obama’s attorney, Bob Bauer, for his time arguing that the case should be thrown out.
Copyright © 2009 The Associated Press. All rights reserved.
Mnemosyne
I have a feeling that your definition of "plausible" is slightly different than the one those of us living on Planet Earth have.
By the way, I haven’t seen you post the link to your long-form birth certificate yet — did I miss it?
KG
The more I read about the financial crisis, the more I wish we could appoint Tyler Durden to head the treasury department. Too bad Tyler Durden is a figment of the imagination of a fictional character.
Rick Taylor
Lincoln fired his generals until he found one that would fight. Time for Obama to find a new general.
Mnemosyne
I also love how BOB advocates changing our entire legal system so that a defendant is forced to prove that s/he didn’t do something rather than the prosecution/plaintiff being forced to prove that the defendant did do something.
It sounds awfully … French, doesn’t it?
Church Lady
But….but…but.. whatever happened to "HE’S THE ONLY GUY THAT CAN DO THE JOB?" As I recall, the White House pushed really, really hard for Geithner’s confirmation, even though he was a tax cheat. To now question the Geithner appointment is to question Obama’s judgment. You know that is not allowed.
To those of us on the dark side of our forties, given the devastation of our retirement funds, we can now look forward to a future of cardboard housing and Alpo. Oh, and if you were saving for your kid’s college education in a 529 plan, well, working for a few years before heading off to college never hurt anyone.
South of I-10
@Miriam: I alternate between scared to death and pissed off.
gwangung
That may STILL be true.
Which goes to show how frakked we are…..
Church Lady
@gwangung: Truer words may never have been spoken.
Fwiffo
From the TPM Post:
God we’re so fucked.
J. Michael Neal
John, I don’t think you understand the implications of what Josh’s correspondent said. I’m trying to read the relevant section of the bankruptcy code (Section 365: Executory contracts and unexpired leases), and it’s near impenetrable. So, I’m not sure his, or my, interpretation is correct.
My interpretation is that there isn’t a damned thing we can do about these contracts. If AIG were to declare bankruptcy, the credit default swaps dragging them down would get all of the assets of AIG before any other creditors get anything. This would include all of the assets that would go to pay off insurance policies that anyone holds with AIG. Any attempt to default on the swaps would destroy the whole company, including the parts that are still profitable. All insurance policies with AIG would get wiped out.
What this would mean is that the people being bailed out just got pushed back a step. A few days ago, with the help of correspondents, Josh Marshall figured out that it isn’t AIG itself that’s being bailed out. It’s the counter-parties to the credit default swaps, since AIG is bankrupt. Under the interpretation I now have, it’s really everyone who has an insurance contract that’s getting bailed out, because, if the government doesn’t pony up enough money to cover the swaps, it’s the policyholders that get the shaft.
I think that there is a real possibility that this is the hang up over nationalization, too. We all acknowledge that nationalization would essentially be a euphemism for receivership. At a minimum, this would lead to endless court cases launched by the derivative counter-parties to the effect that they still come ahead of everyone else, and the government, by taking over the company, still have to pay out on the contracts.
If this is correct, the Treasury is over a barrel. No matter what happens, we have to bail out the derivative counter-parties. There is no way to escape that, except, maybe, through litigation that will last a decade. Given that, it isn’t worth the bother of torching the companies. All that does is add to the cost.
If this is right, then Geithner is doing the right thing. Yes, it means that we are shoveling huge piles of money at people that are basically crooks, but they got the right to those huge piles of money back in 2005, not because of any decision anyone is making now. It’s already lost.
Napoleon
@Gang Green:
But for the fact I have used my screen name for over 10 year, I would start posting under that name to see who gets it.
John S.
I would support a referendum vote to turn your household over to Dictator Sullenberger for an indefinite period to satisfy your freakish desire for a strong, authoritarian daddy figure (even after 8 years of satiation) without burdening the rest of the country with your odd psychological s.
It would clear many things up, I suspect.
Paul L.
@Gang Green:
Clinton Appointee.
No doubt the stress of the ruling may cause a ulcer.
John S.
*odd psychological proclivities
Damn lack of edit.
Church Lady
Given that my retired parents have a couple annuities with some subsidiary of AIG, and they rely on that income, if AIG goes down, they are pretty much screwed. There are probably quite a few of us with parents in this position. Not pretty, any way you look at it.
Napoleon
@J. Michael Neal:
The relevent section is in the 500 series, not the 300 series. I saw nothing in there saying they could seize assets, only unwind the contract w/o violating the stay, but admittedly I skimmed it.
Xanthippas
@Comrade Stuck:
I use Chrome and it isn’t working for me either.
passerby
@Bill White:
I like this idea especially when we consider that they’re being bailed out by tax payers while raising interest rates with reckless abandon. We’re screwed coming and going.
The whole system can be considered organized crime–with the US Congress complicit. So it’s incumbent on us to stay on Congress’s collective ass.
Napoleon
@J. Michael Neal:
Look at 11 U.S.C. 555, 556, 559 and 560
The Grand Panjandrum
I have little faith in Geithner as well. Sure he’s a very bright guy. So what. Many of the smartest people at my department at grad school never made it through. Being the smartest doesn’t guarantee results. It only means you have the aptitude to do the work. Sadly, Geithner appears to be overly impressed with his friends on Wall Street.
My fear is that this is not one of Obama’s rope-a-dope tricks. I fear Geithner may be absolutely wrong for this job during the current crisis. But only time will tell. Unfortunately it is going to be one expensive lesson learned if he is the wrong guy.
South of I-10
@passerby: You just reminded me that I have yet to draft my email to Congress and the President regarding raising interest rates. I think I may do that now while I have a little free time.
Church Lady
The Bankruptcy Bill of 2005 needed four Senate Democrats in order to pass. It got 18. Among them were Max Baucus, Joe Biden, Harry Reid and Debbie Stabenow. I wonder how many of them regret their vote, particularly Stabenow?
John S.
Who was later appointed to the FISA court by then Chief Justice William Rehnquist – who was a noted liberal.
Do you ever tire of being a completed vapid and superficial twat, Paul?
rock
If you confine your options those laid out by the bankruptcy law, that is perhaps true.
But, in a time when pension plans routinely cut promised benefits retirees (United, etc.) I find it hard to stomach that the U.S. taxpayer has to funnel money a bunch of people essentially committing fraud. Throwing up our hands and saying "They Won" is simply unacceptable. Challenge the constitutionality of law on some grounds. Challenge the applicability of the law to this instance in which a firm was committing fraud on a massive scale. Create a new law in which a type of bankruptcy exists in which the government can triage this mess properly without paying the CDS holders first and only.
The fact that nothing as radical as any of this seems to be planned is a sign to me of a fundamental failure on the part of the Administration. Geithner is propping up a system that is bankrupt both morally and financially.
Les Miserable Fulcanelli
Well I guess this would explain Wall Street’s reserved but pleased reaction to Geithner’s nomination last fall, and as for his "lone wolf" persona… While I too share the opinion of many here that he’s begining to look like Obama’s first big mistake, the fact that he’s a loner suggests the he’s a nerdy, number-cruching prick as opposed to "one of the boys" that all of these financial whiz-kidz would love to work for in a cushy, solid, well paid Federal job in these risky financial times.
I’ll take the nerdy, number-crunching prick over "one of the boys" anyday but I really hope he knows where his frickin’ bread is buttered. Rope is cheap these days.
passerby
And now, congress has approved to loan $500 Billion to FDIC. I’ll bet manufacturing money presses is a shovel ready industry.
Somethings gotta give y’all. This is just madness.
As someone else on this site pointed out some time ago, this problem is like a serpent swallowing its own tail.
Josh Hueco
This was starting to get depressing. But then DSM-IV Bill comes in to provide some much-needed laughs. Thank you, DSM-IV Bill.
Don
I think it was Bilmon over on Daily Kos (it gives me the jeebies to link there but his stuff is bang-on fan-fucking-tastic) or one of his commenters who floated the suggestion that the most pivotal reason we keep shoring up these banks is because of all the foreign investors who could lose their shirts and be destabilized if we don’t.
It’s heartbreaking to watch countries like Somalia spiral the drain and tear themselves apart. If it happens to countries with big stockpiles of weapons… heartbreaking isn’t the word that comes to mind. Keeping the house of cards upright might be a survival move.
gopher2b
The man is a disaster. I’ve been saying that for weeks/months. Fox, henhouse, blah, blah, blah.
Gang Green
@Mnemosyne:
That crap about "a completely plausible theory" is part of BOB’s original post.
I wanted to edit, but alas…
I’m not a Birther. See BOB and Paul L. and Atashit for that.
gwangung
Is it bad when faced with deflation?
gopher2b
@Church Lady:
Reminds me of a guy who came to my office a few years back to try and sell me annuity life insurance. Dude wanted something like $2000 a month and I would get double/triple (don’t remember) that back many years from now. He said it was guaranteed. I said, what if your relatively large insurance company goes bankrupt. He said that would never happen. I then ended the meeting.
Wall Street owns Congress. Period.
mandarama, Eager Minion
BOB@13:
BOB, your spoof-fu is strong and I enjoy your comments. (Not enough to subscribe to your newsletter, however.) But you’ve brought this up a couple of times now. I believe you’re trying to suggest that Geithner was forced to draft his father into wedding duty because he has no friends or allies? Ergo, he is too unpleasant a person to serve in his position? We wouldn’t want to dance at his wedding? We’re surprised anyone married him? Come on, lots of people have married Rush Limbaugh.
My husband is possibly the greatest guy on earth. When we got married, he ASKED HIS DAD to be his best man as a thank-you for being a great role model and friend. It isn’t because he’s a friendless prat.
And even if your odd observation did compute–who cares if Geithner’s a prat? We’re not going to his wedding. We just have a job for him to do. I can see everyone’s points about how he seems lame so far. But I also know that every time I’ve been anxious about one of Obama’s tactics, I’ve turned out to be wrong. Time goes by and the purpose becomes clear. I know we don’t have a ton of time here, but I’m still willing to wait this one out a bit.
gopher2b
@mandarama, Eager Minion:
Guys often ask their father/brothers to be best man because the have so many "best" friends its the path of least resistance. I doubt this was Geitner’s problem (unless he got married after he became NY Fed…then he probably had a couple thousand best "friends")
Alan
Let’s add some sobering Robert Reich to the mix:
Comrade Stuck
@Xanthippas:
Must be Cole running another perfessor experiment and making us speil write and stuff, so maybe we quit mocking his spelling challengement/
Cris
That doesn’t sound plausible. If you had followed it with "This is a completely plausible theory," though, I would be convinced.
binzinerator
@Andrew:
We basically need to send in Tenguphule with large supply of bullets, a number of very sharp axes, several hundred yards of stout rope, various lethal intravenous agents and at least one garrote.
Or a guillotine. One big ass guillotine that can do half a dozen bankers at a whack, with an even bigger-ass basket underneath it.
Look at the economic upsides to this, there will be many jobs created for the selling of refreshments, programs, T-shirts and other commemorative items, plus a possible whole new market for past-date produce and recycled construction materials like bricks to throw at the condemned.
To be sure, none of this will solve the financial mess but neither will Geithner and at least siccing TenguPhule on all the banker bastards will at least give us some satisfaction. Likely a great deal of satisfaction, actually.
Catsy
I don’t see Geithner lasting out the year.
Look, President Obama’s as capable of making mistakes as anyone else, but he’s no dummy. I was willing to give Geithner the benefit of the doubt, since Obama’s judgment so far has proved pretty sound. So far, this guy has been nothing but a parade of failure and patently transparent attempts to protect the people who fucked up the worst at the expense of taxpayers. That can’t last.
I don’t think we’ll see him depart anytime in the near-future, because Obama is not the kind of leader who makes decisions based on the news cycle or other transient factors. I think there are likely some very frank conversations happening in between Obama and Geithner, and once it’s clear to Obama that Geithner is a fuckup and a tool, he’ll get the heave-ho.
I haven’t heard anyone actually defending Geithner, though. He sucks.
ksmiami
As has been alluded to, I don’t think the media has done a good job, or rather any job of covering who owns these policies and how devastating the global financial network has been to individual citizens and our own national security. We can’t nationalize businesses that are spread out far across the globe without triggering massive instability and possibly global warfare and if we have to shovel tons of money to prevent wwIII, it is worth it to prevent millions of dead people. Money can be printed, dead is dead. As a student of history, though, I still say we are going to have problems with a lot of the up and coming nations that tasted a little bit of upward mobility only to have it pulled away.
We are screwed, but the good news is maybe we can start making stuff again
gopher2b
@ksmiami:
The dollar is the strongest currency in the world right now. We’re not going to manufacture anything. China is the only way out of this. They will emerge from this devasting recession stronger than any anyone. At this point, people should just hope that world wars don’t break out (Middle East, Ukraine vs. Russia, China vs. Everyone, Venezuela troubles, Africa anarchy).
Mnemosyne
Did I mix up you quoting BOB for a post by him? I’m posting at work, so that may have happened. Sorry, if so.
Comrade Stuck
We don’t need to manufacture anything. The sockalist writing is on the wall. Communist China goes full capitalist and with a few other countries do all the manufacturing. Our government collects taxes on all the stores selling China stuff, which are mostly called Walmart, takes those taxes and divies them out in never ending stimulus payments (cough) so we can buy more Chinese products and the worm keeps turning./ And since we won’t be making military hardware anymore, China will provide it at discount prices, and arm our military with the latest Sherman Tanks, Kentucky Longrifles, and Mig 4’s.
gwangung
I think we should hope and pray that Geithner IS a fuckup and a tool.
The alternative may be that Geithner actually is doing the best that anyone can do….
Cris
You fell victim to the notorious "line breaks cause blockquotes to terminate" havoc that John’s blog software wreaks.
gopher2b
I doubt that given his "plan" thus far is little better than what I imagine a couple economic majors at an Ivy League or good state school could throw together over a weekend.
Student A: "Hmmm…how do we fix this capital problem."
Student B: "I know, we bring in private capital."
Student C: "Good idea."
Student A: "Yeah, but how."
Student C: "We encourage them."
Student B: "Fucking genius. We’re so getting an B+"
HyperIon
@Dennis-SGMM:
I don’t know if that happened but I’d like to propose that before a congress critter can vote on a bill, s/he has to take (and pass) a quiz on the subject matter. These guys passing bills they have not read and understood is utter bullshit.
mannemalon
I found this comment at Krugman’s blog to be interesting:
Thoughts?