Toxic Ignorance
Among the many things I don't know is whether Obama's new bank plan makes sense or whether, as Paul Krugman writes, it's fully of "zombie ideas" designed to save the big banks with yet more profligate ponying up of other people's money. In a similar vein, James Galbraith argues today that the plan can only be defended if we have some independent idea of how much the so-called toxic assets about to be auctioned off are worth, and that one way to make more than a blue-sky guess about that is to use the experience we had with the resuscitation of the Indymac bank last year, as a sort of natural experiment, and examine its records to see how much their own toxic assets were actually worth. Such empiricism sounds eminently sensible, doesn't it? If we like "stress tests" for their empirical value, why not a canvass of just how disconnected the mortgage packages are from anything that might be considered underlying value?
It's a huge frustration in this morass that we don't have sharp, pointed hearings on how the bank collapse took place and what the options might be now. Instead, we get a lot of populist fulminating against the disgusting but puny AIG bonuses. Do we have any representatives in government who can--as Obama rightly insists we do--look forward to consider actual revamp possibilities now? Shouldn't there be Congressional hearings, pronto, including a call-on-an-expert segment where sharp and independent experts like Krugman and Galbraith pose such questions to public officials as:
1. How did we get to a global meltdown? This is not an idle matter of finger-pointing but a matter of getting public intelligence working. If the banking establishment did in fact learn from their gigantic malfeasances in putting the world in thrall to the American housing bubble, what did they learn and when did they learn it? Are there others who learned earlier? Is there really no alternative to this crowd?
2. If Citibank & Co. were left with their toxic assets, and their value was not bid up at auction, who else could take them over? Do these guys really have us over the barrel?
3. What is it that Geithner & Co. know that Paulson didn't?
4. How long, if at all, does this plan deserve a chance to show results? What's Plan B?
I don't know that Krugman's the guy, but while it may be necessary to have a bunch of financial insiders in the administration, Obama badly needs to find someone capable of thinking outside the casino.
I was vacationing on the beach with a friend's family this past week and her good-looking Ivy educated son spent the entire week sitting on the porch overlooking the ocean his twenty-five year old eyes glued not to the bikinis on the beach but to his computer going back and forth between on-line poker and e-trading. I couldn't think of a better example of what's wrong with this country. The "best and the brightest" have become financial addicts.
Maybe what Obama needs is a council of outsiders who have experience in a variety of businesses to provide input that is not just wrapped up in the whole sickness that these markets have become. We need some people at the table who have a firm grasp of the reality out there be it on the beach or in the workplace.
March 21, 2009 4:18 PM | Reply | Permalink
Great questions. I have been wondering for months where the public hearings, blue ribbon commissions and congressional investigations have been. We need an accounting if we are to know how to go forward. There have been several new laws enacted to criminalize fraud and deception in applying bailout funds, but what of the systemic deception that brought on this collapse?
March 21, 2009 6:01 PM | Reply | Permalink
First off a tiny little quibble Todd. Yes, in the big scheme of what's happening, $165M isn't a lot of money. But then again to most of us, or even collectively any 10 of us, $165M is HUGE money.
I agree there is a need for an accounting of what happened, why it happened and what caused it to happen so changes are made to how these corporations do business to make sure it never happens again. I remember in the 70's and 80's that we were told there would never be another economic crisis like the Great Depression because of the regulatory safeguards put in place in its wake. And we didn't have a problem until those regulatory safeguards were removed. So while it is important to get the economy growing again it is paramount that we, at the same time, put proper regulations in place so we don't go through, as that noted philosopher Yogi Berra once observed, deja vu all over again.
March 21, 2009 6:27 PM | Reply | Permalink
Good, count me in. That said
1. How did we get to a global meltdown?
This is known well enough if not by everyone.
1d. Is there really no alternative to this crowd?
Explain.
2. If Citibank & Co. were left with their toxic assets, and their value was not bid up at auction, who else could take them over? Do these guys really have us over the barrel?
Not important. Only if we let them.
3. What is it that Geithner & Co. know that Paulson didn't?
Fair question, besides the obvious facts developing over the past months. You might ask what if any theory differences there are (as if these people actually thought rationally and not just as firefighters using whatever heuristics are handy)?
4. How long, if at all, does this plan deserve a chance to show results? What's Plan B?
Good questions. I asked for a plan B today, too, from Krugman as well as from G.
My comment in K's blog: http://krugman.blogs.nytimes.com/2009/03/21/despair-over-financial-policy/?apage=2#comment-151271
March 21, 2009 8:10 PM | Reply | Permalink
Capitalism has evolved into a system where physical products are peripheral, at most, to trade. In fact, everything is verging on worthlessness, because the labor to produce these things has been swindled--child labor, buck-a-day labor, immigrant labor, laid-off labor, etc. Superior to the physical production, are a bunch of "capitalists," who make bets, basically without rules, which means the game is fixed for those with the capital to influence the outcome: that those with the capital can place the bets to make the market move, e.g., by shorting, flooding, buying pundits--all which influences the bets of investors with less insider access. In my gambling youth, there was a saying amongst gamblers: When the fools have learned the game, the players have all gone home. Guess what? The fools are holding the bag.
March 21, 2009 8:36 PM | Reply | Permalink
The obvious answers:
Yea, The AIG bonuses are just foam. if Obama will not try to change the general concept of Capitalism than the meltdown consequences will not be tamed.
1.
The global meltdown is connected to the fact that the capital is global- the stock money and funds are invested in stock and funds somewhere else "on the globe", spreaded: as the basis principle of spreading your investments. In general, when an economy roles its big money not on manufacturing of any-kind (be it Ideas, public services of any kind- yoga, teaching, making art..., building raccoon traps), but on accessing your "worth" by speculating false speculations than you get a reverse Domino effect of this lie. the pension funds of people are invested in such a way. That, as well as the merry-go-round of the bankers of false assessments of value in greed for bonuses. A simple lying industry. It had to collapse (as capitalism must sometime) as it actually did start to be "outed" in the past two years. What changes everything is psychology: the human psychological behavior which can be described well by the movement of fish schools. (Daniel Kahanman got the economics Nobel for this for good reasons, this time.) the fear of feeding the wheels of something which is being declared as dangerous actually stops the system. The thing is, that things where pretty shitty before that. It didn't take much of a bump in the beast's nerves to press on the poor and the middle class for them to feel too much pressure. Poverty that is, unnecessary poverty.
About learning- the Banking establishment will "learn" nothing, and must not be expected to conduct with decency. Even the twisted minded Adam Smith warned about that. ("twisted" with his Darwinist self-proclaiming postulate of human
nature.)
Only different understanding of resources use and its fair distribution (the Employee Free Choice Act is a good conceptual start, though it does not create a real difference in action from the former situation of workers-rights legally-wise.) People must not be exploited. They must get financial security for their work. Work should bare its value, any sort of work- not by status and by the few but for everyone.
Please watch Prof. Aijaz Ahmad on the subject:
http://www.youtube.com/watch?v=xiL_V5lBKfI
2.their toxic assets are not manageable because a banks assets are intertwined with the worlds' economic meltdown, and the false value of their own estimations. The lost false money hole must be filled to keep the system in balance. It would have been best to nationalize them for full control.
3. It seems that nothing. looks like a bad appointment.
4.the plan must be understood while it is planned. No time for further damage assessment. As it seems by now, there isn't much of a plan, but ornaments for one, for the next elections. there isn't plan B for reality, but being with the eyes close on what is being done, and what's not being done by the government, through civil cooperating (preferably by influential people), protesting, explaining- as in a real time of a crisis which it is, most importantly-with concrete demands.
Aren't there any socialists-economists experts in Columbia to consult and cooperate with?
Rotwang?
http://www.pww.org/
http://www.politicalaffairs.net/
And some Art. Dramatic, but justified for that matter-Corporate Cannibal/Grace Jones:
http://www.youtube.com/watch?v=FgMn2OJmx3w
March 21, 2009 8:52 PM | Reply | Permalink
I don't want Congress asking the questions of Krugman et al. I want Krugman et al asking the questions of Congress and their banker friends.
March 21, 2009 9:51 PM | Reply | Permalink
The idea behind this buying is to help banks get rid of toxic assets so they can start lending again. Great idea. I love it! Well Mr. Geithner, why stop with toxic assets on bank balance sheets? Many of us in the heartland have toxic assets in our 401(k) plans and our homes are underwater because of an illiquid and irrational market that tentatively "mispriced" my house. Please extend the same courtesy to us taxpayers -- after all it is our money. Buy back our toxic assets at premium prices as you plan to do with the asses on bank balance sheets.
With toxic assets gone from my portfolio I will be able to spend more and help the economy. What better way to stimulate the economy than give taxpayer money directly to taxpayers through a buyout of individual toxic assets at premium prices?
March 22, 2009 3:08 AM | Reply | Permalink
They won't be paying premium prices for the assets. And you ARE being helped by this plan. I think perhaps you don't understand why these assets are considered "toxic". It's not the same as having securities in your portfolio that have recently gone south. Your 401k is invested in valuable securities. They may be down, but the market has determined a current value for them, so they're not "toxic" in the sense that we're talking about here.
These mortgage-backed securities are considered toxic because no one knows what they're worth. Because mortgages were rolled into these instruments in a way that makes it impossible to determine the value based upon any "real" equity. Imagine a stock where the market cap or the P/E couldn't be determined. That's essentially what we're dealing with here. But that doesn't make them worthless. The Obama plan does what everyone is terrified to do: it releases these assets from purgatory and forces them into the marketplace where investors will assign a value to them. And that value will NOT be zero. The real brilliance of this plan is that they're doing something that everyone knows must be done sooner or later--whether we want to do it or not. Once the market starts working its magic--culling the good from the bad and finding ways to make money from these things--your 401k and the value of your house will begin to recover. And the taxpayers will make a profit.
March 22, 2009 12:17 PM | Reply | Permalink
Well, that is the difference you would like to push. The way I see it, banks got into these investments and booked profits when there was a market for them. Now that the sentiment has changed, they want to unload them onto the public. I want the same treatment applied to my assets. They were priced here when I bought them and want treasury to use MY taxes to buy back my assets at a premium price.
A scheme that takes something where "no one knows what they are worth" (read they are worthless) and assigns them a market price using taxpayer money to aid the buyers is giving money away to banks. The banks created this paper and they should have prepared themselves to the possibility that they might become worthless.
Supporters of bailouts insist that the public is dumb. We can tell when money is given away to banks as "loans" and to "price illiquid assets." Where is the end to these sweetheart deals?
March 22, 2009 1:00 PM | Reply | Permalink
I meant to say:
I want the same treatment applied to my assets. They were priced higher when I bought them and want treasury to use MY taxes to buy back my assets at a premium price.
March 22, 2009 1:04 PM | Reply | Permalink
"The way I see it, banks got into these investments and booked profits when there was a market for them. Now that the sentiment has changed, they want to unload them onto the public."
Actually, you've got it mostly backwards. In fact, the LAST thing the banks want to do is unload these things. That's the problem. The Obama plan is going to force them to sell.
The reason the banks are hanging on to these things is because they're afraid the value will rise and they'll have sold them for too cheap. This is precisely why the credit markets froze, and it's at the root of the entire problem. Think of it this way: The banks are holding a bunch of cardboard boxes. Inside many of the boxes are things of value. Unfortunately, no one can open the boxes, so no one knows what the contents of those boxes is worth. So I'm an investor, and I come along and say, "I'll give you ten bucks for that box." And the bank says, "Interesting offer, but there's a possibility that the box might be full of hundred dollar bills, so no--we're not selling." So they're hedging their bets. That's partly what this plan is designed to address. The Obama plan essentially tells banks to get real and dump these things, take their lumps and get back to business.
The part you've got wrong is that you think the banks WANT this to happen. They most certainly don't. In fact, they think they're getting screwed.
March 22, 2009 2:49 PM | Reply | Permalink
You do realize, don't you, that part of the reason banks aren't lending is because they're trying to add to their capital reserves so they can afford to hang onto these investments until the markets recover? Paul Krugman and his like-minded buddies want to nationalize the banks, partly because they can't stand the thought of anyone profiting from this disaster. But that's a stupid attitude to hold in a capitalist society. If our economic recovery isn't driven by the profit motive, it won't happen at all.
March 22, 2009 3:03 PM | Reply | Permalink
Actually, the banks are lending and lending quite a bit.
They're just not lending as much as you wish they would -- and for the sensible reason that there aren't that many borrowers out there who can meet a reasonable 3C test. Handing the banks more money or overpaying them for their garbage assets won't increase the number or quality of borrowers.
Of course if your goal is to increase lending to deadbeats, well . . . .
March 22, 2009 9:09 PM | Reply | Permalink
Ellen, respectfully, you're utterly, totally full fo shit. Seriously. Where do you come up with this nonsense? Cite some references, please. I'd love to believe you, but I suspect you're pulling your facts out of your bunghole.
March 22, 2009 10:34 PM | Reply | Permalink
Since you're joining this conversation about four months late, I suppose you ought to be given some slack.
I would suggest, though, that you read a few newspapers and blogs which provide facts and analysis of the financial crisis. To help you out, here's a short list:
here, here, here, here, here, here, here, here, here, here, here, here, here, and here.
But don't feel yourself limited by these few suggestions.
March 22, 2009 11:58 PM | Reply | Permalink
Dearest Ellen,
Since you're joining this conversation totally clueless, I suggest you drop the pretense of understanding what's going on. I'd still love to wrassle you, but I have zero respect for your opinions. But your avatar totally rocks, candypants.
March 23, 2009 12:11 AM | Reply | Permalink
Dear Ellen,
Thank you so much for the massive collection of idiotic links. I checked every single one of them out, and all I could think about while I was reading was your incredibly sexy eye avatar. Would you ever consider sharing a bottle of Chilean red and some casual but non-committal Southern style wrestling? We don't necessarily need to wear the masks...
March 23, 2009 12:21 AM | Reply | Permalink
I checked every single one of them out . . . .
Now; that did make me chuckle.
Given that your narcissistic personality permitted you only 23 minutes of research before it compelled you to reply, the idea that you could read more than one or two of the links let alone understand what you were reading was toooo funny.
March 23, 2009 12:42 PM | Reply | Permalink
Brad DeLong thinks the Geithner plan will work.
March 22, 2009 6:50 AM | Reply | Permalink
Here's DeLong's "money shot" ---
The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit.
Note: He assumes -- but nowhere actually says -- that the "undervalued assets" will be purchased at the "undervalued" price. And unless that happens (and why would banks who are carrying those assets at "overvalued" prices destroy their balance sheets by selling those assets at "undervalued" prices?) his analysis fails.
March 22, 2009 1:59 PM | Reply | Permalink
Part of his premise stinks, to my nose anyway.
http://tpmcafe.talkingpointsmemo.com/talk/blogs/eds/2009/03/sunday-salad-stiglitz-redux-wi.php
March 22, 2009 4:40 PM | Reply | Permalink
To me the only way the plan will 'work' is if we task the people who got us into this mess to re-inflate (at least partially) the housing bubble which caused all the problems to begin with...of course this time it would all be for the benefit(?) of the American taxpayers. I still would still like to know what Plan B is.
March 22, 2009 2:06 PM | Reply | Permalink
There needs to be a coalescence of progressive demands or positions on the economy. On the web, radio, etc, I see and hear tons of good suggestions (like in the excellent James Galbraith article), others about STET, taxing derivatives, a new Reconstruction Finance Corporation, and so on. Nader and Krugman and Kuttner and Galbraith and a host of other similar experts need to get together and propose, with larger progressive circles adding to or modifying such, some kind of consensus COLLECTION of proposals for progressives in this crisis.
One thing about Galbraith is how he puts what I call eco-industrialization front-and-center as key to economic recovery. He thinks in a qualitatively larger scale than the current view (I would up the ante further, and suggest we think in a much more rapid time frame than 20 years, though the WHOLE process will take even longer than that (completely revamping the entire industrial system to be as sustainable as technological advance will lmake feasible)
The idea of a progressive coalescence and organizing in many venues (local govt, churches, unions, etc) around this common PROGRESSIVE economic platform is ESSENTIAL. Without it, you just have interesting ideas from pundits and people commenting about them -- just idle chatter, with a minimum of influence, and especially a minimum of coherent systematic influence
March 22, 2009 6:56 AM | Reply | Permalink
Money quote:
The hearing ended with Kanjorski threatening to pass legislation to force Herz to loosen standards. In fact, the pressure was so intense that the FASB. The pressure was so intense that the FASB announced the new rule after only a week. The Chairman of the full committee, Barney Frank, seems to have accepted it as a foregone conclusion. This is absolutely unacceptable. Democrats pressing for this, like Paul Kanjorski and Gary Ackerman, need to stop. Go-along Democrats like Senator Christopher Dodd and Barney Frank need to stop going along. As a Democrat myself, I can complain about the Republicans all I want but the fact remains, the Democrats hold power and it is only because of pressure from Democrats that this loosening is being rushed to implementation. At the end of the day, loosening mark-to-market will only allow the fraud that is the current financial system to be perpetrated, er, I mean, perpetuated.
More:
Correctly Political Action Alert: Can We Stop The Deepening Fraud of "Unobservable Inputs"?!?
March 22, 2009 10:51 AM | Reply | Permalink
Todd, we live in a country where the markets can determine the value of sow bellies. Investors are currently investing real cash via InTrade on how long Tim Geithner will last and who will be the next American Idol winner. We've got Las Vegas, for God's sake. This plan does not need to be "defended". It needs to be implemented. The taxpayers will make money on this deal, Krugman and the rest will be dodging eggs for the next year, and the Obama administration will come out of this smelling like American Beauties.
March 22, 2009 11:59 AM | Reply | Permalink
Market players (hedge funds; banks etc) are not dumb. If they can make money, they will. They won't leave it up to the taxpayer to sneak in and take away their opportunities.
If Geithner wants to help consumers receive loans, why not help the healthy regional banks? Why not start new banks that can lend money?
Sorry, these bankers already got too much of my money and we can't let them steal more of it using new and clever schemes. These bastards minted billions of dollars in profits when everyone believed house prices can only go higher. Now that they found out house prices can go lower, they want the taxpayer to save their assets and their asses. When are we going to realize that they are screwing us?
March 22, 2009 1:30 PM | Reply | Permalink
Does it matter that they're screwing us? Seriously. Are you willing to watch the value of your retirement account continue to plummet just for a little cheap payback? This is where the Obama administration's approach diverges from the other plans that have been proposed. They're not out for revenge. They're out for recovery and correction. They realize that the very same people who are "screwing" you are the people who will drive our economic recovery. No one is going to "sneak in" and take anything from the taxpayers. The way this will work is the taxpayers will sell these securities to these greedy investors (at a profit) and capitalism will survive and life will go on. We need these people out of jail and greedy as ever, because they are the ones who will ultimately be bailing us out.
March 22, 2009 2:36 PM | Reply | Permalink
Here is a Rolling Stones article that lucidly explains what the bankers did and how they managed to get lots more EVEN AFTER we found out how they took reckless risks:
http://www.rollingstone.com/politics/story/26793903/the_big_takeover/1
March 22, 2009 1:46 PM | Reply | Permalink
Pardon me if I don't take financial advice from the Rolling Stones too seriously.
March 22, 2009 2:53 PM | Reply | Permalink
Well maybe people should...the so-called experts seem to be sans clue lately.
March 22, 2009 2:58 PM | Reply | Permalink
And I just wanted to clarify that my comment was not directed at you per se Bunnycat...but mainly at the people who are tasked to run this economy and get the mess we're in resolved.
March 22, 2009 3:05 PM | Reply | Permalink
I got that part. And I was being a wise-ass anyway. The name of the magazine, as you probably know, is "Rolling Stone". The Rolling Stones are a rock band, who, as far as I know, have never written a single article about the economy.
March 22, 2009 3:12 PM | Reply | Permalink
I wasn't gonna call you on the Rolling Stones thing...I didn't know if it was a typo or an attempted funny.
But then again the Stones have enough money to have some level knowledge on the economy, so...
March 22, 2009 6:08 PM | Reply | Permalink
They are not giving you financial advice. They are explaining what happened. It is important to understand how we got here, so we don't repeat the same mistakes. Nothing good will come out of trusting the same bad actors that already screwed us.
My 401(k) has a better chance of recovery if the economy recovers. And the economy recovers when we direct our efforts at fixing the problems and ensuring that the bad actors don't get any more of our funds. I don't care if they are punished or not; I want them to not get their hands on any more of our money because they already demonstrated that they are willing to go to great lengths to enrich themselves at the expense of the rest of society.
March 22, 2009 3:13 PM | Reply | Permalink
It was a joke, compadre. See above.
March 22, 2009 3:38 PM | Reply | Permalink
Kenneth Galbraith said about politics that it is not the art of the possible. It consists in choosing between the disastrous and the unpalatable. Seems to me that in cleaning up this financial mess we are limited to choosing between the disastrous and the unpalatable.
I don't buy the we-don't-know-what-happened line. If you understood and dealt in credit default swaps - and a lot of traders did - you know what caused this present mess. Even if you were alive and in any mortgage-related business 3 years ago you knew that 30 percent of mortgagees were not able to make their first payments. And you kept right on dealing in sub-prime mortagages?
March 22, 2009 1:50 PM | Reply | Permalink
"Even if you were alive and in any mortgage-related business 3 years ago you knew that 30 percent of mortgagees were not able to make their first payments. And you kept right on dealing in sub-prime mortagages?"
Of course you did. Because the housing market was booming and you didn't mind getting the house back if the borrower defaulted. In fact, mortgage lenders were actively looking for people who couldn't afford the house they were getting into. The whole thing was immoral as hell, but don't blame the banks. Blame greedy speculators, incompetent regulators and the banks.
The people who are really deserving of our venom are the people who were turning obscene profits flipping houses. Where the hell did they think their profits were coming from? Out of the pockets of average working Americans--that's where.
March 22, 2009 2:58 PM | Reply | Permalink
Mortgage brokers brokered mortgages only to sell them collecting a fee for every sale. I doubt that multi-home ownership was their motivation.
March 22, 2009 3:18 PM | Reply | Permalink
No, multi-home ownership was not their motivation. Getting the fee was their motivation. And either collecting the monthly mortagage payments or dumping the home for a profit in an easy market was the motivation of the mortgage lender.
March 22, 2009 3:24 PM | Reply | Permalink
Let me offer an example of what I'm talking about. A few years back (near the top of the bubble) a couple of friends bought a house on the Oregon coast. They paid $165,000 for the place, and got an incredibly bad mortgage because they owned a failing business that they had been financing with credit card debt. At the time they got the mortgage, they were about $70,000 in debt to various credit card companies, all at the default rate. They were barely making the minimum credit card payments, yet they got the mortgage. They lived in the house for about six months before they finally came to the conclusion that they were in WAY over their heads. At this point, the choice was to sell the house or default. They wisely decided to sell. The house sold for $225,000 the day it went on the market. They got four offers, all from people who had only seen the house from the outside. The bank would have been more than happy to get that house back and take the profit themselves. That's how the market was back then. The game the lenders were playing was to bet on how high the market would go. They bet wrong--everyone did--hence, the current crisis.
March 22, 2009 3:33 PM | Reply | Permalink
No, not everyone bet wrong. Not everyone bought the housing bubble, and not everyone wants to keep the bubble inflated. Not everyone thinks it's even possible to keep the housing bubble inflated, including me.
Thus, I'm inclined to think that Geithner's plan is a huge taxpayer subsidy to hedge fund managers, one that will ultimately make the Obama Presidency look bad.
Apparently, Larry Summers worked for a hedge fund after the Harvard social liberals chucked him.
Voila. Now, see there. That could also be revenge. Never underestimate the degree of schadenfreude possible amongst the so-called intelligentsia.
They're bored and not at all afraid to be pernicious. They need *something* to do.
March 22, 2009 4:54 PM | Reply | Permalink
OK, here's the question: If the economy recovers over the next year or so (as I suspect it will), and it does so because a bunch of greedy bastards (the same people who caused this disaster) find ways to make money off of the suffering of others, will that somehow diminish the recovery? Will people say, "Well, yeah--I'm fine, and my 401k is recovering, and I'll be able to retire after all, but I don't like the way we did this. I don't like the fact that AIG is profitable again."? Will that happen? Will anyone remember how we got there? Or will people just hail the resilience of the capitalist system and go back to their happy complacency?
There are no heroes or villains in a capitalist society. That's not how America works. We're a capitalism first and a democracy second, and we live and die by the value of a dollar. We love to think of ourselves as righteous, but how righteous are we, really? If we're so righteous, why do we buy houses and new cars? Why aren't we living in huts and sending our excess earnings to people who are starving to death in Africa or South America? There's a level of detachment there that approaches self-righteous hypocrisy. Get what I'm saying?
Why don't we, at the very least (and as our President Obama has suggested) give up a few hours in order to keep our neighbors employed? What's wrong with a 30-hour work week? Our house payments, that's what. Our X-Box. Our case of premium beer.
March 22, 2009 7:00 PM | Reply | Permalink
And now, for a salutary visit with Oscar Wilde ---
The cynic knows the price of everything and the value of nothing.
March 22, 2009 7:41 PM | Reply | Permalink
Gimme a break, Ellen. If you have something to say, say it. But spare us the idiotic non-sequiturs, OK? You're clearly more intelligent than this.
March 22, 2009 10:44 PM | Reply | Permalink
By the way, my wife and I didn't buy into the bubble, but I don't take any special pride in it. We started hearing all these stories about how home prices were going up, up, up, and we started panicking. We thought, "Well, if we don't buy now, we may never be able to afford a house." It's scary because we're renters and we were looking at 1500-2000 bucks a month just to rent an apartment. And our friends were telling us, "Just bite the bullet. Buy a house. You'll save on your taxes and it will work out for you in the end." So we talked to a mortgage broker and he pre-approved us for $250,000, based solely on our credit rating. We're self-employed, we didn't provide him with any tax returns or any proof of income. He just checked our credit rating. When we left his office with the letter of pre-approval, my wife said, "RUN!" It was seriously creepy. And it was then that I realized how messed up things were. But we could have bought that house. How do you decide, when houses are going for a minimum of 200 grand and an apartment is going for over a thousand a month? People who talk about "irresponsible" home buyers clearly don't understand the situation. It was ugly. But I don't blame AIG. And I don't blame people who were worried that the American Dream (and some stability in their living situation) were quickly slipping out of reach. I blame stupidity and greed. But stupidity and greed are the foundations of the American economy. So now what?
March 22, 2009 7:18 PM | Reply | Permalink
I was kind of expecting our new president to answer all four of your questions, and more. In a major "war on the financial crisis" address. After giving him a month or so to get an economic war room set up that he would have been planning since the middle of November. I also expected him to interact more, and more publicly, with international leaders on it.
I haven't see much of that happening, and have been disappointed. I don't even see a full staff at Treasury.
I must admit I did see him spend much more of his time on the economic stimulus bill, as if that was his first priority. I don't know if that was a wise decision or not, because I have not heard much from him on the financial crisis itself. It leaves me suspecting he was hoping that in itself would loosen up credit and he wouldn't have to talk about, explain and promote TARP and other similar programs.
But as Josh Marshall and others have noted many times in the last couple of weeks, what has been done has made it look like there is no one in control to many. I think that's bad for the most important factors: confidence, and transparency about what's going to be happening, so that individual people (not to mention investors and the private sector) can make decisions about what to do in their own lives. Is it any surprise people get populist anger when the president won't "own" and promote what his Treasury (and the Fed) is doing?
It is situation similar to after 9/11, when everyone (include many worldwide) was ready to adjust their lives and assist in a goal, but there was no leadership or explanation on how they could do so. TARP is still basically being executed behind closed doors, without any presidential propaganda assist.
Congressional hearings at this point, without further public clarification of Obama's own stance, would further make the president look as if he is not in control of his own administration. That may be healthy in some circumstances, but it is not healthy for economic stability in an economic crisis.
March 22, 2009 5:23 PM | Reply | Permalink
I just noticed now that Frank Rich's column today is thinking along similar lines:
The appearance has been almost as if, rather than promote and try to sell them the bank/financial bailout programs, to the public, and give them P.R. prominence, he wants to hide from them, so he can do a CYA if they don't work. The other reasons I can think of are worse: such as, he thinks the public is not intelligent enough to understand and there is no way to explain it to them, and that more staff working on it will just make it more difficult to execute in a behind-the-scenes dictorial manner.
March 22, 2009 5:50 PM | Reply | Permalink
Friedman, too: Are We Home Alone?
Where is the grownup inspirational leader we hired? One not afraid to promote his own administration's actions? Why aren't we seeing him doing things like pushing like a lion for an already decided upon Deputy Treasury Secretary appointment, and others, why isn't that important? That makes me so suspicious....It will be interesting to see if he publicly promotes investment in the new TALP as if he really believes it will work and is crucial.
March 22, 2009 6:00 PM | Reply | Permalink
But to suggest over and over again that the main duty of the government is to tell the population what to do and how to feel is hopelessly naive, the sort of thing no one over the age of 12 should believe.
John Cole on Friedman and Broder.
March 22, 2009 10:17 PM | Reply | Permalink
I think Frank Rich is way out of touch. He's arguing that Obama is "paralyzed" due to his response to the financial crisis? That's clearly not true, and it's clearly operating
WELL behind the curve. Frank's been on vacation for about four weeks, I'd say. Frank should catch up with what's been going on.
March 22, 2009 10:30 PM | Reply | Permalink
I recommend Obama appoint Irwin Mainway Treasury spokesman.
Warning: the link is to SNL's Aykroyd and Curtin and it's 44MBs.
March 22, 2009 9:45 PM | Reply | Permalink
Ellen, you have a chubbie-inducing eye avatar, but you consistently fail to provide any substance. Give us more than an AVI, OK? Let's get it on, baby.
March 22, 2009 10:49 PM | Reply | Permalink
Our government has no desire to fix the economic mess -- they just want to continue pocketing money for themselves and their friends. We the citizens cannot fix the mess, nor can we get the plutocrats off our backs without massive revolution. I'm too old, weak, and sick for revolution, so I'll just live by thrift and common sense, and try to maintain some peace of mind any way I can.
March 23, 2009 9:23 AM | Reply | Permalink
That seems odd. The reason to have an auction is to find the buyer that places the highest value on those assets.
March 23, 2009 9:55 AM | Reply | Permalink