Obama is not as smart as he thinks he is, that's for sure. He knows fuck-all about economics and finance. His great talent for picking good people also failed him or, rather, was sacrificed to his obsession with kissing the ring of every power center in Washington, including the Clintons, which he did by filling his economic team with Clinton retreads.

Barack needs someone to tell him that the people who created this mess, which includes Summers and Geithner, are not the ones to rely on for advice now. Their motivation is to prove themselves right, not do the right thing.

This situation reminds me of the Churchill quote: 'You can always count on Americans [in this case, Team Obama] to do the right thing - after they've tried everything else.'

Of course, we're only in the first inning here, and Obama has shown flexibility. So my fingers are crossed.

So, just so I understand you: the best way to fix the banking system is to...weaken the largest banks? And not only weaken them, but also arbitrarily force a couple into bankruptcy so they can be nationalized and auctioned off? I'm guessing it doesn't really matter if we kill off a solvent or insolvent bank, right? So long as the example is made.

I wonder, wouldn't it be easier (and cheaper!) to just summarily execute a couple dozen top management guys instead? I mean, following your logic, that would get credit flowing again in no time!

Obama said that he would filibuster the FISA Bill, then he didn't.

Obama says "nobody is above the law" buts he wants to move on, doing nothing about the law breaking - so Obama will not address the torture of the Bush Administration. Obama talks about the shame of Wall Street bankers, but it's the same story. Obama won't do anything. So by now we know that Obama is all talk and no do, and yet we're all about to hand him this huge stimulus bill - it's won't do any good because Obama can't stand up to the thugs on Wall Street.

Obama said a depression won't "happen on his watch" but he keeps not doing anything that he says he is going to do.

It's looking bad, it's looking real bad. We need to put back food for families because we going into a depression and these poeple in those towns where the lay-offs are bad, can't get enough food to eat. Obama isn't going to stop these depression. Obama can't say no to the Wall Street mafia, he won't do anything, and Obama has no problem telling Americans he'll fix it, but he not fixing anything.

Banks that are too big to fail are too big. Period.

What is needed is quite simple. Wipe out shareholders, nationalize them, and break these monopolies apart.

If there are institutions that are absolutely critical for the proper functioning of society that the bankruptcy of any one of them will lead to the collapse of the nation, then those institutions are too important and/or too big to be in the hands of a few private individuals that don't have to answer to the public.

This should be like a bandaid; just pull the damn thing off in one swipe. This slow killing of the banks is only going to prolong the pain.

"The Citigroup bailout was a good deal for Citi shareholders (who wouldn’t appreciate a big transfer from the taxpayer during this holiday season?) and a great deal for Citigroup management. But it also has three global implications that perhaps have not yet been fully thought through."
-Simon Johnson, Dec. 2008

Where was the outrage two months ago?Everyone is in punitive mode - kill all the bankers. No one mentions the Boards of Directors. These men and women serve their masters, who theoretically serve the shareholders and bondholders and employees and customers. Punish everybody? It's happening.

There is a lot to praise in the Geithner plan, and I believe the critics are far too harsh in claiming there are no specifics. $100 billion in TALF to be leveraged to $1 trillion for education, credit card and auto loans, for example. This has got to help.

Geithner was forced to take the middle road because of the opposition of Republicans and the parade of know-nothings on television spewing nonsense. "The public" knows nothing, absolutely nothing, about the financial crisis, as do many "experts" and if politicians are going to determine policy because of ignorami, we are in worse trouble than a mere financial crisis. We all know that.

The greatest mistake in the current financial debate is trying to link the value of all assets to the "market price" as if the market price is always right. The market price can't be trusted if there is no market, if paper and assets aren't liquid and don't trade. Nobel Prize winners and academics can be wrong, and frequently are.

Since the taxpayers are going to take possession of the toxic paper the banks are holding, should not the executives who's bonuses were enlarged by the initial purchase of these losing investments be forced to give back that portion of their bonuses connected to this toxic waste?

heh heh heh

Unless and until these banks' economic and political influence declines, we are stuck with too many people who know exactly what they can get away with because their organizations are "too big to fail."

Simon Johnson is the first person I've seen in print who understands the primacy of the political struggle here -- instead of treating this as some sort of technocratic exercise to be worked out by the "experts."

My working assumption, bolstered by something I picked up from a friend in the industry, is that Geithner/Summers et. al. have concluded that effective nationalization (i.e. Johnson's "scaled-up FDIC-type procedure) would be an unacceptable blow to the prestige of the US financial system and leave the government permanently or semi-permanently emeshed in the business of running banks.

Obama hinted as much yesterday when he complained that those favoring the Swedish model (full nationalization followed by reprivatization) were ignoring the fact that Sweden was dealing with a total of five banks.

But the real issue isn't number, it's scale. In other words, when Sweden nationalized its banks, it changed some of the players. But if the US or the UK nationalize their banks, it will change the entire game in ways that won't be easy to unwind.

Another friend, who covered the 1997-98 Asian crisis as a financial journalist, also argues that in the end, no matter how much a nationalizing government promises to "clean house," the big banks ultimately end up back in the hands of the same guys who blew them up -- the skills and insider intellectual capital required to run a major financial institution (even recklessly and incompetently) not being in great supply. So what's the point of going through an elaborate "scaled-up FDIC-type procedure" to end up more or less where we are now?

I don't think I entirely agree with that argument: I think it can be useful, if only for deterrence sake, to take a bunch of greedy bankers out and shoot them (or at least, ruin their careers) as a warning to the rest.

But breaking their power entirely? It may not be possible.

Please tell me that you are not so stupid to believe this garbage:

"So how do you get message across? Obviously, we need the comprehensive stress test immediately and it has to be transparent and very tough. And this is where David Axelrod and Rahm Emanuel have apparently been exactly right in the past 10 days. According to press reports (NYT yesterday and WSJ last week), both have pushed for tougher symbolic and substantive actions that would hurt bankers' pocketbooks and weaken the largest banks."

rahm emanuel being tough on wall street? what a bunch of complete nonsense. but you know, some anonymous chicken**** white house official that won't give their names out say they say so, so I guess so, huh?

But somehow rahmbo, who takes great pride in never losing a fight goes down with a whimper. could he be taking a dive?

"For reasons that are not obvious, Axelrod and Emanuel have not prevailed on the degree of toughness towards the American Banking Oligarchy. But this may change. Let us hope it is soon."

keep hoping mate, something tells me rahm will keep on trying reeeeeeeal hard, but somwhow won't be able to quite get it done. at least that's what anonymous white house officials will say so it'll have to be true, right.

I can't believe people still fall for this nonsense or know and think that we'll keep falling for it.

WAAAAAAAAAAKKKKKKKEEEEEE UUUUPPPPPP!!!!!!!!

Z