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More On The Geithner Plan

By Big Tent Democrat, Section Economy
Posted on Mon Mar 30, 2009 at 04:29:53 PM EST
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I will bore you to tears, but this time using Robert Kuttner:

At a recent conference of the New America Foundation, economist and Obama adviser Laura Tyson, an in exchange with me, defended the administration's approach on the premise that there was no way that Congress would legislate the one to two trillion dollars in public funds that will be needed to make this rescue work. So, in Tyson's view, there was no alternative other than having Treasury contrive its own plan, using the Fed as an all purpose source of unlegislated financing.

[More...]

I think this is exactly backwards. . . . [I]f the White House had proposed a more progressive approach to the whole financial rescue--taking failed banks into receivership, involving Congress in the program design, doing comprehensive government audits of bank balance sheets before rather than after the fact, and forcing bank shareholders and bondholders rather than taxpayers to take more of the hit --Congress might well have provided at least some of the funds, leaving the Fed to provide the rest.

(Emphasis supplied.) But Krugman Kuttner always hated Obama so this is wrong.

Speaking for me only

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    More On The Geithner Plan | 77 comments (77 topical)

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    Leave (5.00 / 8) (#3)
    by TeresaInSnow2 on Mon Mar 30, 2009 at 04:46:36 PM EST
    the Masters of the Obama Universe allooooooone!

    Wonder if Tom Wolfe (5.00 / 1) (#7)
    by oculus on Mon Mar 30, 2009 at 04:57:12 PM EST
    Is hard at work on his novel re this debacle?

    Parent
    Every second ... (5.00 / 2) (#32)
    by Robot Porter on Mon Mar 30, 2009 at 06:48:18 PM EST
    is waffle time!

    Parent
    For some reason... (5.00 / 5) (#8)
    by lambert on Mon Mar 30, 2009 at 04:58:41 PM EST
    ... it's very difficult to make the connection between the single issues and the financial collapse as such. As if tossing trillions of dollars into an enormous hole didn't affect every other choice that we made!

    Merkel is Skeptical (5.00 / 2) (#18)
    by squeaky on Mon Mar 30, 2009 at 06:02:19 PM EST
    German Chancellor Angela Merkel and her Finance Minister, Peer Steinbrück, have spent months saying they will never let irresponsible German banks off the hook by taking their toxic assets and putting them into some sort of government-backed bad bank.

    [snip]

    In a speech to German bankers last week Merkel said her opposition to a bad bank was based on a need for fairness in resolving the crisis.

    "Politically we have to be careful that in the spirit of justice we don't reach a point where the taxpayer bears the bad risks and the privately functioning banks in the end have all the good opportunities," Merkel said.

    The Chancellor remains skeptical of the American initiative.

    Time

    You know what? (none / 0) (#19)
    by Big Tent Democrat on Mon Mar 30, 2009 at 06:04:50 PM EST
    She is wrong.

    The trick is SHARED SACRIFICE.

    Parent

    Shared sacrifice? (5.00 / 3) (#67)
    by masslib on Mon Mar 30, 2009 at 10:44:57 PM EST
    Eat dust.  The American people have "sacrificed" for over thirty years, I see no reason they need more sacrifice.  Indeed, right now, they need help, not sacrifice.  I mean, for gawd's sake, 10% of the population owns 80% of the financial assets.  If the average Joe keeps sharing the sacrifice they will eventually run out of anything to sacrifice.  

    Parent
    Elections In 6 Months (none / 0) (#22)
    by squeaky on Mon Mar 30, 2009 at 06:19:47 PM EST
    Merkel seems to be taking the position that the taxpayers should be insulated from the banks poor decisions, and the shareholders should bear the burden.

    Must have something to do with the fact that the taxpayers in Germany are going to be voting in 6 months and there are many more of them than there are bank shareholders.

    Parent

    That's (5.00 / 5) (#25)
    by Ga6thDem on Mon Mar 30, 2009 at 06:31:43 PM EST
    what happens in countries where the elected officials actually fear the voters.

    Parent
    Really? (5.00 / 2) (#33)
    by squeaky on Mon Mar 30, 2009 at 06:49:20 PM EST
    Considering that BushCo made it impossibly easy for any dem to win in '08, do you really think that this Gaulener plan would be floated if Obama were up for reelection in 6 months? I don't.

    He is banking on this plan working so that in 2012 he will have shown a turnaround. He has breathing room that Merkel does not.

    Parent

    He's apparenlty (none / 0) (#50)
    by Ga6thDem on Mon Mar 30, 2009 at 07:55:16 PM EST
    throwing a wad of money in desperation or that's at least what I seem to get getting from you and the hope that the populace has short memories.

    Parent
    Desperation? Short Memories? (none / 0) (#52)
    by squeaky on Mon Mar 30, 2009 at 08:07:41 PM EST
    What are you talking about?  The bottom line is that Obama's economic plan fails voters will not have to remember anything.  They will vote accordingly.

    If the economy turns around Obama will get the credit and voters will register their appreciation in the voting booth.

    As far as desperation goes, BushCo intentionally gutted the treasury at the expense of taxpayers and the profit of his cronies. Obama does not seem remotely desperate. His measures are conservative in desperate times. A desperate man would be more prone to take the risks that BTD, or Krugman has proposed.

    Parent

    No (5.00 / 3) (#58)
    by Ga6thDem on Mon Mar 30, 2009 at 08:25:44 PM EST
    a brave man would propose what Krugman proposed. A coward would propose protecting the masters of the universe. The Geither plan is just the Paulson plan with a few details changed. IMO, it's pure stupidity to propose the exact same plan that didn't work previously.

    Parent
    Perhaps a better way to put it (5.00 / 3) (#37)
    by Cream City on Mon Mar 30, 2009 at 06:58:07 PM EST
    would be when pols fear the voters.

    This still is the honeymoon, the first 100 days, etc.  Time enough ahead, when the 2010 elections loom, for the Dems to pull back and be pols acting from fear.  This is the time for audacity . . . and by that, I don't mean just firing the head of GM.


    Parent

    Yeah (5.00 / 1) (#40)
    by squeaky on Mon Mar 30, 2009 at 07:02:18 PM EST
    Although telling em what they want to hear, does not always yield the best results either. Promises promises... and even worse if the promises are bad ideas, like "Read my lips, I will never raise taxes.. "

    Not that I know how Obama would have been able to pull it off, getting two trillion from congress in the beginning, I tend to agree that Obama had the best chances of doing something outrageously daring (fdr style) in the very beginning.

    We'll see.

    Parent

    Despair (5.00 / 3) (#41)
    by Munibond on Mon Mar 30, 2009 at 07:13:04 PM EST
    When Kuttner says "What we have is something perilously close to a dictatorship of the Fed and the Treasury, acting in the interests of Wall Street" I start thinking that it is just hopeless and I should try to get into reality tv like Jeralyn.

    End run around Congress? (4.25 / 4) (#45)
    by joanneleon on Mon Mar 30, 2009 at 07:41:22 PM EST
    We keep hearing about these expanded capabilities (or "tools") of the Federal Reserve, and now the FDIC.  Shouldn't this require some kind of permission from Congress?  Congress is supposed to be the keeper of the national purse.

    How does the Fed get additional authority and capabilities?  Is it simply a matter of their board voting and it magically makes it so?  The Fed scares me.  A lot.  I'm starting to agree with the factions that want the Fed to be seriously reined in, replaced by a different entity, or perhaps abolished.

    And instead of reining in the Fed, it seems like they are becoming the be all and end all, the all powerful giant that can do anything with an unlimited source of money.  How many times can Bernanke expand?

    And FDIC?  Who expands their authority and responsibilities?

    And... (none / 0) (#1)
    by NYShooter on Mon Mar 30, 2009 at 04:36:41 PM EST
    "forcing bank shareholders and bondholders rather than taxpayers to take more of the hit"

    AND....Executives & employees

    And... (3.50 / 2) (#11)
    by Farmboy on Mon Mar 30, 2009 at 05:33:16 PM EST
    folks with savings/checking accounts in those banks.

    Oh, yeah, FDIC will take care of all the regular folks so we won't feel any hit.  Go ahead, then. Pull the switch and force the banks into receivership.  Just let me get my mattress stuffed before you do.

    Parent

    What a hoot! (none / 0) (#21)
    by dallas on Mon Mar 30, 2009 at 06:12:46 PM EST
    Even with that dudes plan the taxpayer is gong to take a hit. Except the hit won't be spread across a bunch of nameless people. Instead it will be John's 401k that drops like a rock. And Sally's teacher pension fund. And Bill and Sue's self-employed Roth or Keogh.

    Stock market is still floundering on news. Dropped 3% today. Can you imagine what would happen to it if the gov stepped in and made corporate bank bonds virtually worthless? You think bad assets messed every thing up just wait until you see good long term assets go sour at government decree. You know people don't much like what is going on with their tax dollars already. They don't like that their investments are already down. Wait until you start hitting them again with their own personal investments by government decree.

    And stocks? Like I was saying yesterday. If you artificially drop the value of bank stocks what happens to all the other stocks? yup they drop like a rock too. So everyone who has a retirement plan or individual stocks takes a hit. As will the companies themselves that issued the stocks. Every employee who participates in the employee stock purchase plan. Every employee who gets a stock bonus instead of cash.

    I'd like to sit down with some of these people who never mention what happens to the stock market and it's huge affect on all Americans about that. I wonder what they would say? probably nothing because they wouldn't know what to say. They would be embarrassed for not even thinking of something so simple. You know it is like they don't even pay attention to how the market works. Like they have no clue that because today when auto and bank stocks fell so did the majority of other stocks. Where do these people come from? Why do people listen to them?

    Parent

    so what you are saying is that the (none / 0) (#30)
    by of1000Kings on Mon Mar 30, 2009 at 06:46:32 PM EST
    current system of investment really isn't working well...

    I agree...

    Parent

    Nope didn't say that at all (none / 0) (#47)
    by dallas on Mon Mar 30, 2009 at 07:46:07 PM EST


    Parent
    My gawd (none / 0) (#31)
    by Steve M on Mon Mar 30, 2009 at 06:46:56 PM EST
    how many times must we hear from this same commentor under different names?  He makes a mockery of the banning process.

    Parent
    He';s avoided personal attacks this time (none / 0) (#34)
    by Big Tent Democrat on Mon Mar 30, 2009 at 06:52:19 PM EST
    An improvement at least.

    I'm inclined to let him stay. He is easy enough to debunk.

    Parent

    Well (none / 0) (#36)
    by Steve M on Mon Mar 30, 2009 at 06:54:34 PM EST
    You are the boss.  I suspect he will not behave for long.

    Parent
    My suspicion as well (none / 0) (#38)
    by Big Tent Democrat on Mon Mar 30, 2009 at 06:58:36 PM EST
    No warnings this time.

    First time and he;s gone again, of course certain to reappear under a new nom de guerre.

    Parent

    Well bud (none / 0) (#49)
    by dallas on Mon Mar 30, 2009 at 07:52:42 PM EST
    I don't know what is up with your comment. It's not like I'm the only one who feels as I do. In fact the entire gov feels like I do. They just are not saying all the things I do with good reason. It's not a picture they want in peoples minds.

    But I guess on the plus side you didn't disagree with a thing I said which is par around here so far. It is hard to disagree with the reality of things if peoples actions killed the stock market which they would. Got many stocks Steve M?

    Parent

    None of your business (5.00 / 1) (#66)
    by Steve M on Mon Mar 30, 2009 at 10:38:14 PM EST
    and as usual, I disagree with about everything you said.

    Parent
    Well thanks bud for answering my question (none / 0) (#74)
    by dallas on Tue Mar 31, 2009 at 11:29:51 AM EST
    even if you didn't intend to. If you disagree with everything I said then you disagree that the market dropped 3% yesterday. And you disagree that if bank stocks drop, for example, then other unrelated stocks drop to.

    Parent
    ehhh, the way I see it is if the stock market (none / 0) (#69)
    by of1000Kings on Mon Mar 30, 2009 at 11:06:44 PM EST
    totally fell apart then eventually (after much sacrifice) prices of all goods and services would fall...

    it would work out in the long term...but no one cares about the long term anymore...the definition of sacrifice has been lost (ironic right, in a Christian society)...

    Parent

    Well bud I don't know (none / 0) (#75)
    by dallas on Tue Mar 31, 2009 at 11:35:21 AM EST
    what you base that on. Prices are not exclusively tied to the stock market. In fact there are a whole lot of other factors that affect prices before the stock market does. Like inflation, deflation, stagnation, recessions, etc, which are not really  exclusively tied to the stock market either. Thought you might want to know that.

    Parent
    always hated Obama (none / 0) (#2)
    by Capt Howdy on Mon Mar 30, 2009 at 04:39:51 PM EST
    you sure getting a lot of mileage out of that one.
    did someone say Krugman hated Obama?  cause I dont think he actually did.
    did he?
    Those of an Orangish inclination (5.00 / 6) (#4)
    by Cream City on Mon Mar 30, 2009 at 04:53:01 PM EST
    said so during the campaign and since, just to mention one site.

    Parent
    It was a classic! (5.00 / 1) (#6)
    by lambert on Mon Mar 30, 2009 at 04:55:35 PM EST
    Link here. Teh stupid! It b-u-u-u-r-r-r-r-n-s!

    Parent
    From (5.00 / 6) (#44)
    by Warren Terrer on Mon Mar 30, 2009 at 07:28:16 PM EST
    eurointelligence.com :

    We have noticed that the US blogging community is a lot more positive about the Geithner plan than the Paulson plan, even though they are essentially the same plan minus some insignificant details, such as who is in charge of the bidding process. So in our view the reactions to the Geithner plan are very a good metric of the partisanship in the US blogging community. Some bloggers like Krugman, Johnson and Naked Capitalism have  remained consistent throughout. Some of the others are merely telling us that they are Democrats, right or wrong.

    That precisely sums up my impression of the situation.

    Parent

    Along with that (5.00 / 5) (#51)
    by joanneleon on Mon Mar 30, 2009 at 08:06:24 PM EST
    you've got a whole faction who says that anything related to TARP is entirely the fault of Bush and Paulson, and that it was done before Obama was elected therefore he need take no responsibility for it.  They forget that Nancy Pelosi and Barney Frank sold it and finally got it through the House where a bipartisan group of senators were waiting for it.  They also forget the much awaited and much publicized speech by Sen. Obama on the floor of the Senate, also selling it, and the numerous ways that he sold it on the campaign trail.  They also forget the outright refusal of the Congressional Dems to consider alternate ideas being proposed by various economists and by other Democrats in Congress, saying that there was no time to do so.

    Parent
    Maybe not But didn't (5.00 / 1) (#5)
    by oculus on Mon Mar 30, 2009 at 04:54:29 PM EST
    Obama say he would listeb to economists who had good ideas?    

    Parent
    He did (none / 0) (#16)
    by CoralGables on Mon Mar 30, 2009 at 05:52:41 PM EST
    and at the time Krugman said he had nothing to offer because he had neither the time nor the staff to come up with meaningful suggestions.

    Parent
    Hmm (5.00 / 1) (#17)
    by Big Tent Democrat on Mon Mar 30, 2009 at 05:55:39 PM EST
    I think you are misstating what was said by both Obama and Krugman.

    Parent
    Blackberry is a (5.00 / 1) (#20)
    by oculus on Mon Mar 30, 2009 at 06:07:49 PM EST
    Poor device for google research. Later.

    Parent
    Obama's words (5.00 / 1) (#23)
    by CoralGables on Mon Mar 30, 2009 at 06:25:33 PM EST
    dealt with the economy in general and not the banking situation specifically:

    "If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we're going to do it."


    Parent

    Which really just seems ... (5.00 / 3) (#27)
    by Robot Porter on Mon Mar 30, 2009 at 06:37:57 PM EST
    like a smart-ass way of saying that Krugman has no good ideas.

    Parent
    Yes (none / 0) (#29)
    by squeaky on Mon Mar 30, 2009 at 06:44:46 PM EST
    And Krugman responded, if I had a staff... etc.

    But Krugman also responded here and here.

    As regards specifics:

    As some of us worry that the Obama team isn't showing the audacity we hoped for, and try to chivvy BHO into doing more for the economy, one demand that I've been getting is for specifics -- what, exactly, should they do differently?

    [snip]

    I'm not going to specify a list of infrastructure projects, because I and my one-eighth of an assistant can't sit down with state and local officials across the country to assess their proposals.

    Krugman

    And FWIW there is this from Dec 22:

    When master economist, columnist, and plain ole intellectual (so few left these days) Paul Krugman was asked this morning* about whether or not he was "in communications" with the Obama administration regarding the economy, he declared: "Yes... I am.. And that's all I care to talk about."

    Politico

    Parent

    Yes. (5.00 / 4) (#9)
    by inclusiveheart on Mon Mar 30, 2009 at 05:13:50 PM EST
    It is standard orange procedure to point out (erroneously of course) that Krugman's candidate was Hillary Clinton when ever and wherever he is cited over there on the economy now.  Typically no substantive answer to his views are offered; and at this point, it doesn't even matter if Krugman is praising Obama as he did on the budget proposal.  The sound of one knee jerking gets really loud when Krugman's name appears over there regardless.

    Parent
    He had serious misgivings (5.00 / 0) (#63)
    by cal1942 on Mon Mar 30, 2009 at 10:06:51 PM EST
    about Obama as many of us did and still do.

    Parent
    Over on Huffington there is an article (none / 0) (#14)
    by tigercourse on Mon Mar 30, 2009 at 05:45:42 PM EST
    equating krugman and Limbaugh. 9 out of 10 of the commenters seem to agree with it. It's nuts.

    Parent
    Unbelievable (5.00 / 6) (#39)
    by Dr Molly on Mon Mar 30, 2009 at 06:59:06 PM EST
    I still maintain there is something scary about Obama's true believers that is the mirror image of Bush's true believers.

    Anyway, Krugman is a true progressive compared to the orange brigade and arianna.

    Parent

    There is a mirror image between (none / 0) (#70)
    by AX10 on Mon Mar 30, 2009 at 11:24:23 PM EST
    Bush's core of "true believers" and Obama's core of "true believers".

    Both are equally disturbing.
    I had and still have disagreements with Hillary.
    At least I have the balls to admit it unlike these weaklings.

    Parent

    Wasn't Huffington Post, (5.00 / 1) (#68)
    by cal1942 on Mon Mar 30, 2009 at 10:49:29 PM EST
    for the most part, in the bag for Obama during the primaries?

    Parent
    I saw that (none / 0) (#26)
    by nycstray on Mon Mar 30, 2009 at 06:35:55 PM EST
    and decided it would be best if I didn't click n' read it!!

    Parent
    equating Krugman with Limbaugh... (none / 0) (#35)
    by Dadler on Mon Mar 30, 2009 at 06:52:40 PM EST
    ...is like equating a functioning intellect with a grain of sand stuck in a piece of doglog I accidentally stepped on yesterday.

    Parent
    This sucks? (none / 0) (#10)
    by Radix on Mon Mar 30, 2009 at 05:22:54 PM EST
    It all boils down to whether or not the US government could come up with a valid position to abrogate, or lessen, the Bond Holders' dept or not. We know there's a moral, ethical, argument for modification. Now is there a constitutional basis for their interference in legal contracts between investor and Enterprise. It's clear shame isn't going to work.

    Negotiations (5.00 / 1) (#15)
    by Big Tent Democrat on Mon Mar 30, 2009 at 05:49:47 PM EST
    No bailout if no modifications.

    Like for GM's bondholders. what party of that do you not understand?

    As for the Constitution, the Takings Clause would be your argument and it would be a dead loser.

    The impairment prohibition applies only to the States.

    Parent

    So how much (none / 0) (#24)
    by dallas on Mon Mar 30, 2009 at 06:29:34 PM EST
    would you give bud up if you were a bondholder? 25%? 50%? More?

    Considering that if the bondholders refused to give up anything and that Obama let GM go belly up, and that the bondholders would be first or second in line with the bankruptcy court when the pieces were sold off what would you do as a bondholder? Let it die? What would you do if you were Obama? Let GM die?

    Parent

    Whatever it is (5.00 / 2) (#28)
    by Big Tent Democrat on Mon Mar 30, 2009 at 06:39:35 PM EST
    it is more than zero.

    Wich is what by rights they should be getting.

    These companies are insolvent. they have nothing.

    Bud.

    Parent

    True. (5.00 / 2) (#57)
    by AX10 on Mon Mar 30, 2009 at 08:19:42 PM EST
    Investors should not be protected in these situations.  Millions of people lost alot of money in their 401k's and pension funds.  The government has done little to help them, yet we are concerned about institutional and wealthy investors.
    The double standard lives yet again.

    Parent
    Alrighty. You didn't really answer my question (none / 0) (#46)
    by dallas on Mon Mar 30, 2009 at 07:43:11 PM EST
    Oh well.

    But they do have assets bud. Just Plant and Equipment is worth 42B book. Cash, inventory and receivables another 41B as of 12/08. When considering their payables and short term debt the bond holders may do better at auction than negotiating. And if so that puts them in the catbird seat. With short term debt, which probably is the bulk of the bonds, at about 16B the bondholders would have to take less than 50% to make any difference. Heck they would do better at auction.

    So Obama would have to pull the rug on GM and add 240,000 employees to the unemployment lines, plus the foreclosures they represent, plus retirement benefits out the window, and wipeout any stocks on the market with hopes for recovery, etc, or come up with some cash to keep it all alive.

    I don't know bud. Negotiating with bond holders doesn't look too good if they can get more at auction. I suppose if those same bondholders held large blocks of stock too that may sway them to give more, but then again considering what the stock is worth today maybe not.

    Bottom line is 240,000 people with jobs and millions more who work for suppliers and millions more who hold stock are relying on Obama to keep it all alive. If he doesn't he save a few billion but kills a huge part of the economy which could have a omino effect from Seattle to Key Largo for decades.

    I'm thinking that his tough talk just fizzled out bud.

    Parent

    then let a bankrupotcy court sor t it out (none / 0) (#65)
    by Big Tent Democrat on Mon Mar 30, 2009 at 10:13:33 PM EST
    Oh wait . . .

    Parent
    I'm not sure I understand (none / 0) (#76)
    by dallas on Tue Mar 31, 2009 at 11:42:05 AM EST
    what you are saying. Do you favor bankruptcy or not? I can't quite figure out what the "Oh wait . . . " means.

    Parent
    Since thet law is setteled on this. (none / 0) (#42)
    by Radix on Mon Mar 30, 2009 at 07:16:08 PM EST
    Then apparently the Prez doesn't feel like doing it that way. Which bites.

    Parent
    the law is settled on what? (none / 0) (#43)
    by Big Tent Democrat on Mon Mar 30, 2009 at 07:22:27 PM EST
    Negotiations?

    Do you have a clue what you are talking about?

    Parent

    Responding to your (none / 0) (#48)
    by Radix on Mon Mar 30, 2009 at 07:50:32 PM EST
    statement concerning the "Takings Clause" law being settled on the issue of forcing GM's Bondholders to take less money for their bonds.

    Since the Law on this issue had been settled, it's fare to conclude it's the Prez who doesn't want the Bondholders to take a haircut.

    Parent

    Well, we're told they have been studying (none / 0) (#12)
    by Cream City on Mon Mar 30, 2009 at 05:43:54 PM EST
    FDR, and he did have a way of doing things that he deemed were necessary -- if only to boggle Congress and others -- ruled unconstitutional . . . later.

    If so, I wish that other lessons from FDR were being heeded, so I wouldn't bet on that reason.

    Parent

    Is there a specific (none / 0) (#64)
    by joanneleon on Mon Mar 30, 2009 at 10:06:55 PM EST
    reason for your downrating my comment?  I'd be interested in hearing the feedback rather than just getting the rating.  Constructive criticism is good, IMHO.  I learn from it.

    Parent
    Negotiations with GM Bondholders... (none / 0) (#13)
    by santarita on Mon Mar 30, 2009 at 05:45:22 PM EST
    could offer a glimpse of the negotiations to come  with various unsecured creditors of the large banks.  

    The government's increasingly tough stance  with GM could be a warning shot across the bow of the problem banks.

    As (none / 0) (#53)
    by Alien Abductee on Mon Mar 30, 2009 at 08:11:03 PM EST
    Andrew Leonard says, it's very possible that the big reckoning is still coming:

    There are a few brave, or perhaps foolhardy, analysts who are willing to argue that the administration's approach to the banking sector could actually be preparation for the ultimate endgame of nationalization or government-expedited bankruptcy restructuring, rather than the free pass to the banks it currently appears to be.

    In this scenario the ongoing stress tests, in conjunction with the price discovery mechanism for toxic mortgage-backed securities that is at the heart of of the Geithner plan to fix banking balance sheets, will reveal once and for all which banks are truly insolvent and cannot survive in their current form. Having established that beyond a doubt -- much as the government's analysis of G.M. and Chrysler's situation has established pretty conclusively that they cannot continue as currently structured -- there will be no other alternative than a government takeover.

    They can hardly be blind to the parallels with the auto industry and how it looks to keep bailing one out and not the other. They may even be counting on it. Laugh all you want about 11 dimensional chess - the rising public outrage against more bailouts could be what they want when "stress testing" and price discovery show just who's insolvent. Without the help of a firestorm from the public and especially the left the entire public discourse would be pretty much OMG, Obama the Socialist is taking over the banks!! Instead it will be OMG, what took them so long?!!

    Umm (5.00 / 1) (#54)
    by Big Tent Democrat on Mon Mar 30, 2009 at 08:13:46 PM EST
    After the trillion is gone, not much to do.

    Parent
    It would be ironic (none / 0) (#56)
    by Alien Abductee on Mon Mar 30, 2009 at 08:19:14 PM EST
    if the nonsense coming from the right about Obama and "socialism" ends up producing an actual social democratic populist backlash. That would be worth a trillion, easy...

    Parent
    Every month the cost gets bigger (none / 0) (#55)
    by Jlvngstn on Mon Mar 30, 2009 at 08:17:27 PM EST
    because every month we lose another 600k jobs.  Here is what Obama is thinking:

    We should be maxed out at job loss by the end of the year, settling in around another 4.25mm for the year.

    although i simply have no confidence that they factored in the major impending losses in commercial real estate.  Nor did they use a calculator for the airlines and hotels upcoming disasters.  

    It can go deeper and it will go deeper.  

    Perhaps Obama and team do not recall that Bill Clinton had the tech boom, and Ronald Reagan simply doubled down on military spending.

    Where is the next boom coming from our dear leader?  

    You have all your chips down on health care reform, and you drew a 2-7 off suit....

     

    It's scary (none / 0) (#59)
    by Ga6thDem on Mon Mar 30, 2009 at 08:30:19 PM EST
    and you're right about all the other industries that are just waiting to go down.

    I keep telling myself to look at the glass half full thing and remember that while 1/3 of the people didn't have jobs during the great depression there were 2/3 that did.

    Parent

    we still are not higher in UE (4.00 / 1) (#60)
    by Jlvngstn on Mon Mar 30, 2009 at 08:37:40 PM EST
    than in the 1980's so there is my half full glass.  But the 3.5mm saved or created jobs is pure horsepucky and my guess is Cassano is in charge of tallying those numbers.

    we have comments like this from Obama:

    "we will let our auto industry simply vanish"

    what the hell does that mean?

    as if capitalism wouldn't find a way to make cars if people wanted to buy them.

    Seriously, what the heck does that mean? Are there a large contingent of americans who are afraid Obama is going to copperfield the auto industry?  I know we elected Dubya twice but seriously, this kind of rhetoric is right up there with Dubyas.

    Wait, glass half full:

    Thank you or great democratic party for not allowing our auto industry to vanish.  I will send another $100 to your party.

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    Yeah (5.00 / 2) (#61)
    by Ga6thDem on Mon Mar 30, 2009 at 08:48:51 PM EST
    I feel the same way you do. It's why I'm no longer a Dem. The party just doesn't represent the middle class anymore. It represents the same people that the GOP represents: the ones who have the money.

    Parent
    Well (5.00 / 1) (#62)
    by Ga6thDem on Mon Mar 30, 2009 at 08:51:27 PM EST
    we here in the "conservative" south have record unemployment numbers not seens since the Great Depression. There are areas that have 20% unemployment here in GA. SC is the worst but almost all the states in the south are in the top. I wouldn't be suprised to find out that we have 15% unemployment by the end of this year.

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    The way the numbers is calculated has been fudged (none / 0) (#71)
    by Romberry on Tue Mar 31, 2009 at 12:12:18 AM EST
    Whatever the unemployment rate is at the moment, the one thing it isn't is the rate that is being reported out of Washington.

    For your perusal: Shadow Stats Alternate Data with unemployment derived using pre-Clinton era methods of calculation.

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    that is a very interesting site (none / 0) (#72)
    by DFLer on Tue Mar 31, 2009 at 08:47:59 AM EST
    Now I need to read through some of the explanations on how the various data and stats were arrived at, but it seems legit, heh?

    thanks

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    Yes, it is legit. (none / 0) (#77)
    by Romberry on Wed Apr 01, 2009 at 12:46:52 AM EST
    ShadowStats is very open about how they get their numbers. It is as legit as it gets if you want to compare current "official numbers" to historical numbers. In every case, the way things are reported now is designed to return more favorable (lower unemployment, higher GDP, higher growth, lower inflation) results.

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    underemployment et al (none / 0) (#73)
    by Jlvngstn on Tue Mar 31, 2009 at 08:51:16 AM EST
    I have discussed this in several postings, and the underemployment (people taking part time jobs because they cannot find fte) is considerably high, 15 million to 18 million depending on who you believe.

    Truth be told, the number is almost irrelevant in the bigger picture.

    The bigger picture is that in the 1980's we increased real military spending by 39%, as a share of GNP it went from 5.2 to 6.6%.

    During the Clinton years we had the benefit of the tech boom.

    We are not going to increase defense by 40%, we do not have a technology boom to look forward to, and we have heard almost nothing relative to government investment in green tech.

    Unemployment cycles this way, it is the root of capitalism.  Shakes out the weaker companies and forces innovation and ideation.

    What is insane is that the gov't has done very little to buffer this as it relates to the middle class.

    In the past 2 years we have committed almost 2.5 trillion to the economy and roughly 15% toward job creation.  85% has been committed to the stabilization of the markets to spur lending and bailout bad investments.

    The building is on fire and the Obama administration has all of the hoses on the part of the bldg that has the propane pumps storage room.  Unfortunately, the other side of the bldg is made of dry rotting wood and he has two guys with buckets dousing it.

    The "be patient" is horsepucky.  Obama has been in office 60 days, the oval office that is.  Last september when Kuttner, Reich and others were saying we needed to address job loss quickly Obama and every other democrat did NOTHING.

    Obama has been in office for 2 years and 60 days.  Let us not forget how the democrats and republicans cashed their paychecks and did nothing while the economy rotted away.

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    More On The Geithner Plan | 77 comments (77 topical)

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