Noam Chomsky speaks to Paul Jay on the Obama – Geithner plan. Chomsky says that “they’re simply recycling, the Bush-Paulson measures and changing them a little, but essentially the same idea: keep the institutional structure the same, try to kind of pass things up, bribe the banks and investors to help out, but avoid the measures that might get to the heart of the problem.”
Geithner-Timothy
Geithner Update – Bend Over and Say, “Uncle Sam” By Mike Whitney + Geithner Grilled
By Mike Whitney
March 24, 2009 “Information Clearing House”
Timothy Geithner refuses to take underwater banks into receivership and resolve them, but has no problem transforming the FDIC into a hedge fund. Go figure? Here’s what everyone needs to know: The US government (you) will provide up to 94 percent of the financing (low interest, of course) for dodgy mortgage-backed assets that no one in their right mind would ever buy so that wealthy and politically-connected banksters can scrub up to $1 trillion of red ink from their balance sheets. Ugh!
The so-called “private partners” in this confidence scam, will get non recourse loans, which means that if the plan backfires and they lose their skimpy 6 percent investment they can call it quits and leave the taxpayer holding the bag. ($1 trillion in potential losses!) Here’s how Paul Krugman sums it up:
“The Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. This isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.”
“Markets”? Who said anything about markets? This is corporate welfare, pure and simple.
Judgment Day for Geithner By Mike Whitney
By Mike Whitney
March 23, 2009 “Information Clearing House”
Whether he deserves it or not, Timothy Geithner has become the poster boy for everything that’s wrong with the government’s scatterbrain financial rescue plan. Geithner was in the wheelhouse at the New York Fed when Bear Stearns and Lehman Bros defaulted, and he played a central role in the $165 million AIG bonus scandal which ignited a populist firestorm across the country. Now everything even remotely connected to the bank bailout has become a source of fist-clinching rage. The mood of the country has darkened from the steady downpour of bad economic news, the sharp decline in housing prices and the steep rise in unemployment. People are angry at the government, the banks and Wall Street. Their nerves are frayed and their patience is stretched to the limit.
It is in this atmosphere of simmering public fury that Geithner will announce the details of his long-awaited plan for removing up to $1 trillion of toxic assets from the balance sheets of some of the country’s biggest banks. Information about Geithner’s “Public-Private Partnership” and the so called Term Asset-Backed Securities Loan Facility (TALF) has been spotty so far, but enough is known about the plan to predict that it will likely be the noose into which Geithner thrusts his scrawny neck bringing his dismal career at Treasury to a end. The country will not endure another pretentious-sounding banker-friendly flim flam, which is precisely what Geithner has in mind.
Bernanke’s Hammer by Cameron Salisbury
by Cameron Salisbury
Featured Writer
Dandelion Salad
Opedinfo.com
March 19, 2009
If you only have a hammer, every problem looks like a nail.
And so it is with Ben Bernanke, Timothy Geithner, Henry Paulson, the entire East Coast financial establishment, innumerable Ivy League economists including Paul Krugman, and people who really should know better, like the media, Congress and the President.
Truly mindless fuzz continues to flow out of Washington, accepted as gospel by both its inhabitants and the media. For example, there’s the idea that the worldwide financial crisis can only be solved by the same institutions and people that created it; that the banking sector needs lots and lots of additional money and political support to solve problems that trillions of dollars so far have not; that months of nonexistent positive results means only that we haven’t handed financiers sufficient loot; that the failure to bail out Lehman’s is what caused this whole mess; that reinvigorating casino capitalism is the way out of the dilemma; that public outrage shows that the rest of us just don’t get it.
Worse than senseless, the nonsense that passes for conventional wisdom in the corridor between New York and Washington, D.C., is worrisome on a number of levels.
Bernanke’s Witness Protection Program By Mike Whitney
By Mike Whitney
March 16, 2009 “Information Clearing House”
Welcome to the TALF
Fed chief Ben Bernanke’s new funding facility is a real doozy. In fact, if the Term Asset-Backed Loan Facility or TALF, which is set to launch on Thursday, doesn’t convince the American people that it’s time to take a wrecking ball to the Central Bank and start over, than nothing will. Bernanke and his co-conspirator at Treasury, Timothy Geithner, are planning to revive the shadow banking system by dumping $2 trillion into the same over-leveraged, derivatives-based garbage that blew up the financial system in the first place. All the blabbering about a “good bank-bad bank” remedy appears to have been a diversion. This is how Bloomberg sums it up:
“Geithner’s program has three main elements: Injecting fresh government capital into some of the country’s biggest financial institutions; establishing a public-private partnership to handle as much as $1 trillion of banks’ bad assets; and starting a credit facility with the Federal Reserve of as much as $1 trillion to promote lending to consumers and businesses.
The Treasury hopes to unfreeze credit markets by providing new incentives to banks and investors to resume trading in mortgage securities and other troubled assets. U.S. regulators are conducting a new series of examinations to make sure banks have enough capital to accept losses when selling these assets, while also planning to provide government financing to the investors who might buy them.” (Bloomberg News)
Financial Meltdown: Haircut Time for Bondholders by Mike Whitney
by Mike Whitney
Global Research, March 12, 2009
“The only function of economic forecasting is to make astrology look respectable.” John Kenneth Galbraith
When George Soros recently said that the financial system had “effectively disintegrated”, it caused quite a flap. But Soros was not exaggerating. The financial system has disintegrated. What we are experiencing now is just the fallout from that event. This is easier to understand by using an analogy. Imagine watching the demolition of a hundred-story skyscraper. After the explosives detonate and the building implodes, the chunks of debris and the shattered glass begin to fall to the ground below. That’s where we are right now. The financial super-structure has already been blown to bits, but a thick shower of fragments keeps raining down on earth. Rising unemployment, falling consumer confidence, severe contraction of the economy, growing pessimism; these are all the knock-on effects of a full-blown system collapse.
Take a look at this chart and you’ll see what I mean. The chart explains in simple, graphic terms everything that one needs to know about the financial crisis.
As you can see, the upper part of the graph disappears in 2008, as though it was surgically removed. That is because in 2008, the source of funding for residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), consumer asset-backed securities (which include everything from student loans, credit cards, and auto loans) and home equity loans has almost completely dried up. In fact, all that’s left of the previously vibrant credit markets, is the agency mortgage-backed securities sold through Fannie Mae and Freddie Mac which rely exclusively on government funding. Apart from government sponsored GSEs, their is no mortgage credit.
The “Geithner Put”: It’s time to break up the big banks by Mike Whitney
by Mike Whitney
Global Research, February 25, 2009
Dumping $1 trillion of toxic assets onto US taxpayers
Timothy Geithner is putting the finishing touches on a plan that will dump $1 trillion of toxic assets onto the US taxpayer. The plan, which goes by the opaque moniker the “Public-Private Investment Fund” (PPIF), is designed to provide lavish incentives to hedge funds and private equity firms to purchase bad assets from failing banks. It is a sweetheart deal that provides government financing and guarantees for illiquid mortgage-backed junk for which there is no active market. As one might expect, the charismatic President Obama has been called in to generate public support for this latest addition to the TARP bailout. In this week’s address to Congress he said:
“This administration is moving swiftly and aggressively to restore confidence, and re-start lending.
We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.”
Trouble at Treasury – Geithner gets the keys to the henhouse By Mike Whitney
By Mike Whitney
February 17, 2009 “Information Clearinghouse”
The Obama Team has a big problem on their hands; Timothy Geithner. Geithner was picked as Treasury Secretary because he is a trusted ally of the big banks and has a good grasp of the intricacies of the financial system. The problem is that Geithner can’t handle the public relations part of his job. His big debut in prime-time last Tuesday turned out to be a complete dud. He was thoroughly unconvincing and looked like a nervous teenager at a speech contest. He fizzled on stage for 25 minutes while the little red box in the corner of the TV screen–which shows the current Dow Jones Industrials–plummeted nearly 400 points. It was a total disaster and one that is sure to be repeated over and over as long as Geithner is at Treasury. Not everyone can be a charismatic orator like Obama and nothing short of a personality transplant will fix Geithner. He lacks gravitas and doesn’t inspire confidence. That’s a problem since, the administration’s main objective is to restore public confidence and get people spending again. They’re just shooting themselves in the foot by using him as their pitchman. Eventually, Geithner will either have to be tossed overboard or strapped to Obama like a papoose so he can share in the president’s popularity. Otherwise he will continue to be a millstone.
In truth, Geithner did us all a big favor on Tuesday by exposing himself as a stooge of the banking industry. Now everyone can see that the banks are working the deal from the inside. Geithner has assembled a phalanx of Wall Street flim-flam men to fill out the roster at Treasury. “His chief-of-staff is lobbyist from Goldman Sachs. The new deputy secretary of state is a former CEO of Citigroup. Another CFO from Citigroup is now assistant to the president, and deputy national security adviser for International Economic Affairs. And one of his deputies also came from Citigroup. One new member of the president’s Economic Recovery Advisory Board comes from UBS, which is currently being investigated for helping rich clients evade taxes.” The Obama White House is a beehive of big money guys and Wall Street speculators whose only goal is to nuzzle up to the public trough while strengthening their grip on political power.
Bill Moyers Journal: Simon Johnson – Geithner vs. the American Oligarchs
Bill Moyers Journal
February 13, 2009
Former chief economist of the International Monetary Fund (IMF), MIT Sloan School of Management professor and senior fellow at the Peterson Institute for International Economics, Simon Johnson examines President Obama’s plan for economic recovery.
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see
The Oligarchy’s Bailout Ball By Michael Winship – ICH
US intelligence chief: World capitalist crisis poses greatest threat by Bill Van Auken
Deficit Nonchalance – Obama’s voodoo economics By Paul Craig Roberts
Revolt is in the air by Eric Ruder
Geithner’s Debut: “Not Ready for Prime Time” By Mike Whitney
Jim Rogers: Geithner caused the crisis
Geithner’s Debut: “Not Ready for Prime Time” By Mike Whitney
By Mike Whitney
Information Clearinghouse
February 13, 2009
Tuesday was Treasury Secretary Timothy Geithner’s coming out party. He was supposed to outline Obama’s Financial Stability Plan to the Senate Banking Committee. Wall Street was looking for clarity, but it didn’t get it. Instead, they got 25 minutes of political posturing and blather. The markets went into freefall. By the end of the day, the Dow was down 382 points. It was a complete fiasco.
Geithner is a smart man. He knows what Wall Street wants. They want a plan and they want the details. They don’t want more gibberish. He knew that he’d get hammered if he didn’t produce a workable scheme for fixing the banks, but he went ahead anyway figuring he could dazzle his audience with his brilliance. It didn’t work. The markets plummeted and the pundits wrote him off as “not ready for prime time”. Now his credibility is shattered just three weeks into the new administration. Why did he do it?
Most people who’ve been following the financial crisis know what needs to be done. It’s no secret. The insolvent banks have to be nationalized. They have to be taken over by the FDIC, the shareholders have to be wiped out, bondholders have to take a haircut, management has to be replaced and the bad assets have to be written down. There’s no point in throwing public money down a rathole just to keep zombie banks on life support.
Dandelion Salad 