SubscribeReally? Obama has been on the job for two months? How about we give him some time. Historically, recessions take years to get out of, not months.Okay, look. The problem isn't that he hasn't "fixed" things, the problem is that he's forking over hundreds of billion dollars to these privately-held, for-profit companies, for them to do whatever the hell they want with the money. AIG is a special case because it is actually majority owned by the government (in other words, it actually was nationalized). Yet, even at the company we did nationalize they still are paying these absurd bonuses.
Funny how there's this double standard with Democrats. Considering all the leeway Bush got for his obviously screwed up policies its incredible how little is given to Obama.
I will say that I'm generally suspicious of the motives of these types of sites, and have a feeling they're the same people who call Obama a "socialist"...If there's one thing anti-socialists love, it's nationalizing banks. Also do you have any idea who those people are? Paul Krugman's problem with Obama is that he isn't socialist enough. He's been talking about how Europe's social safety nets provide a buffer against this economic crisis (but complaining that Europe isn't doing a big enough stimulus)
In this case, I'm fairly certain Obama has been playing a game to string along the big banks and private financial institutions. Siezing the banks is almost a guaranteed next step, and now AIG has handed him the cassus belli for a war on Wallstreet. On a silver platter.Ah the old "I don't like what a politician is doing, so I'm just going to assume they are secretly planning to do what I want, and are just waiting for the right moment" argument. Yeah, that's not a very good one. It seems like they haven't taken nationalization off the table, but it's something they've said again and again that they are deeply opposed and
For the United States. We’ve debated this week what to do about U.S. banks, arguing about which unappealing options are less bad. In my view, the choice is not “nationalize vs. don’t nationalize,” but rather “keep our current partial nationalization/bottomless pit subsidy system vs. start down the road to reprivatization.I think what people want here is to take over the banks, and then have the U.S. government sell off the pieces, just as they do when the FDIC takes over a bank. No one is arguing that the U.S. government should take over the banks and run them directly for a long period of time.
If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say when confronted by the current situation of the United States: nationalize the banking system.… As soon as you reveal that the country in question is the United States, the advice has to change…
There is a growing number of protests events in virtually every area of the world, where primarily middle class anger is being vented at ruling governments for not doing enough (or for doing too much), and also aimed at what can only be identified as the non-government upper class. These are not protests about civil rights or even a religious view; these are protests of one class against another. Where does it go?maybe this belongs in the inequality thread? anyway i thought this was apropos:
[...]
This is a photo of a protest of some 100,000 people who marched on Dublin on February 21, 2009, “to vent their anger at the Irish government’s handling of the country’s recession”, according to the BBC coverage. The march was organized by the Irish Congress of Trade Unions, and the primary focus was a prospective salary cut for 350,000 public sector employees as a way to reduce government spending.
However, news and videos I’ve seen about the event make me wonder if what motivated these people was more a mood than an issue - the mood summarized by one unidentified protestor in the BBC coverage: “I’ve worked all my life, I’ve never broke the law, never walked out on strike. Instead I’ve went (sic) to work and done my job,” he said. “I’ve a mortgage to pay, I’ve children to put through school, and now I’m being told I have to take cutback, after cutback, after cutback.”
The alarming thing to me is that these are the concerns of the middle class. I do not remember protests by the middle class, especially protests that appear to be motivated more by frustration and anger than anything else in particular...
Stabilization programs in emerging markets often come down to this: the government needs to do something unpopular, e.g., reduce some subsidies, privatize an industry, or eliminate the crazy credit that goes to oligarchs - no one likes oligarchs, but their factories employ a lot of people. There is naturally resistance - pushback from legislators, riots in the streets, or oligarchs calling their friends in the US foreign policy establishment. The question becomes: does the government have the “political will” to get the job done?Now It's Official: Public Private Partnership to Overpay for Toxic Bank Assets - "This is billions to avoid price discovery, which is what it needed to assess the magnitude of the problem, attract private capital, and do triage on sick financial firms. This is simply a Japan solution with a lot of moving parts to disguise the essence of the undertaking."
[...]
It is striking that Ben Bernanke now asks whether the United States today has sufficient political will. How did we get to the point... You can point the finger at Congress. The parliamentary system in Britain and Germany means that the government can implement and innovate a bailout policy without worrying about being able to legislate enough financial support. The Obama Administration has much to worry about in this regard...
We have moved far beyond financial policy and into the kind of scandal that really gets taxpayers’ backs up. The greed of bankers slaps you in the face while the hubris of their leadership remains unchecked.
There is no sense of responsibility, no feeling of shame, no acknowledgment of any kind of mistake: read Lloyd Blankfein’s FT article again - or print it out and tape it to your wall. Because we now know, from the newly disclosed AIG counterparties list, that the wealth of Goldman Sachs insiders remains high solely because we saved their sorry bank, their failed risk management strategy, and their pretence of wisdom with our cash in mid-September.
This resentment against bankers pervades Congress, and even the Administration begins to get the message - being called “asinine” yesterday by Richard Kovacevich, the Chairman of Wells Fargo, may have helped underline to Treasury how deeply the bankers appreciate the help they have received. There can be no resolution and no moving on until there has been a proper congressional investigation, with full subpoena powers...
Ben Bernanke knows all this, at the same time as he sees our economy worsening and global storm clouds still gathering. So where will he take us... Inflation breaks the political and social logjam around banking. With some luck, it helps growth - at least in the short-term.* And of course the surviving bankers win big.
We've had a cancer, with some superficial remissions, but fundamentally, for the entire period from the 1980s to 2008, our financial system in general and our banks in particular have been broken. They have profited from allocating capital poorly, from funneling both domestic loans and an international deficit into poor investments (current consumption, luxury housing) rather than any objective that might justify arduous promises to repay...Complexity
Thanks to the cleverness of our banking system, we have a very great many lenders, both domestic and foreign, who've invested in trash but who demand to be made whole at threat of social and political upheaval. That is the failure of our banks. That they are insolvent provides us with an occasion to hold them accountable, and to reshape them, without corroding the rule of law or respect for private property.
There are profound economic problems in the United States and elsewhere that our financial system has proved adept at papering over rather than solving... the people who could never see the problems are the only ones invited to the table when the world cries out for solutions... But the temple is not sound.
The banking mess and the high unemployment rate are not the crisis, they are symptoms. This is not "dynamo trouble", it is a progressive disease, and what is failing is the morphine. Those of us who believe that financial capitalism is a good idea, that it could be the solution, not the problem, do their cause no favors by resisting radical changes to a corrupt and dysfunctional facsimile of the thing. We need to approach financial capitalism as engineers, and to largely rearchitect a crumbling design. If we don't, we may be so unfortunate as to suffer yet another superficial remission. But error accumulates, and error on the scale now perpetrated by national and international financial institutions is unlikely to be without consequence.
High up peoples’ list of culprits for the credit crunch is complexity. The accusation? That certain financial products were incomprehensible to all but a tiny few. Buyers and sellers, therefore, had no idea what they were trading. Executives devised entire strategies on businesses they did not understand. Regulators and ratings agencies flapped about in the dark.Reining In Banks - "banks have too much power - they will capture, influence, or arbitrage their way around any regulatory structures so that the next bubble, whenever and wherever it appears, will be at least as damaging as the last"
The solution is to make things simpler, right? Wrong.** For that supposes humans are opposed to complexity when in fact they create it whenever possible. Many sociologists see the process of making the simple complicated as one method social groups employ to help identify themselves. Linguists sometimes refer to “esoterogeny” where speakers add verbal tricks in order to make their language harder for outsiders to understand and to foster inclusiveness.
So why do it in finance or any other industry? By making what they do incomprehensible to everyone, bankers, management consultants, plumbers and academics protect their franchise, and therefore their earnings. Adding complexity is doubly important in industries where nothing physical is created. It is no surprise, therefore, that those earning the most money ended up in jobs that noone else could understand.
That makes a policy response pointless. If regulators tried to simplify asset backed securities, their complexity would simple take another form. Banks cannot have anyone off the street applying to trade derivatives (although research shows that random punters would be just as profitable). And dumbing down the entire banking industry would just result in a complexity bubble (and higher wages) emerging somewhere else.
Now that governments around the world have all the power – with workers from the private sector clambering to get on board – it is a fair bet that public offices will be next to pile on the gibberish. After all bureaucracy in all its numbing detail is simply another form of complexity designed to keep a frustrated public at bay.
My rosy scenario is that a better economic environment will develop, a low-debt, robust growth world, in which whatever is fragile will be allowed to break early and not late.that is all!
My nightmare scenario is that the government saves Citibank once again, as well as the other banks, and business resumes as usual. Then, the next time the system breaks, it breaks much, much bigger.
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posted by Big_B at 9:23 AM on March 17 [3 favorites has favorites]