Responsible critics

I like to read Michael Scherer because he provides such a clear view of how our national media thinks. Today he has a simplistic, if relatively inoffensive, piece about how Obama has to reassure everyone that things are okay if our economy is going to recover. I don’t necessarily disagree. Here’s a snippet of his last paragraph:

He will, over time, have to find a way to calm the markets, address the concerns of his responsible critics, and then use these successes to assure consumers everywhere that better days do, in fact, lie ahead, a claim that virtually every economist would endorse, though many disagree on the timing.

I think that the notion of “responsible critics” is very important to our national media. There’s an idea that there will be some kind of sensible give-and-take between Republicans and Democrats and that the job of the journalists is to referee this give-and-take. In a more perfect world, this might work very well.

The trouble is that there are no “responsible critics” in the Republican party. All Congressional Republicans offer now is warmed-over Hooverism, at best. On the subject of the banking crisis, for example, there are three alternatives, as I see it: do nothing and let the banks fail on their own, keep bailing the banks out, or nationalize the banks. The problem here is that while the first alternative is completely insane, “let them fail” seems to be the new Republican mantra.

What’s so damaging here is that all the time spent on the let-them-failsters is time that could be spent arguing the merits of nationalization. Similarly, the argument about the stimulus package could have been about whether or not to make it bigger as opposed to about whether “porkulus” was a good description or not and whether or not the Republicans were now back in the saddle again. With health care, we could be arguing about single-payer versus mandates instead of listening to one side compare government health care to Das Kapital.

The list goes on and on, of course. And it’s not clear what we can do about it. David Gregory is never going to have a round table discussion featuring Dean Baker, Paul Krugman, and someone from the Treasury Department. At best, we’d get Krugman, a Treasury guy, Amity Shlaes, and George Will. And the media is never going to press Republicans on the idiocy of their so-called plans.

So, while the country is facing all sorts of important decision, the media is going to pit the rantings of Galttards against the sane (if often flawed!) plans of the Obama administration. There will be no — zero, zip, zilch — responsible criticism of Obama in the media, even though there is plenty of solid responsible criticism of Obama out there.

If a system collapses in the woods, and no Republican hears it, does it make a sound?






83 replies
  1. 1
    The Other Steve says:

    If you haven’t learned by now. Republicans are all about perception rather than substance.

    When McCain and Shelby come on and say "Let them fail", they are referring to nationalization. But they don’t want to say nationalization because their stupid base is trained to know that is a bad word.

    You could take a nationalization strategy brand it as the "Let Them Fail Invement Act" and the republicans would vote for it. They are that stupid.

  2. 2
    Comrade Stuck says:

    You could take a nationalization strategy brand it as the "Let Them Fail Invement Act" and the republicans would vote for it. They are that stupid.

    Certainly stupid, yes. But as every lizard brain will ponder, "How do I best eat that Bug?" and become powerful and strong.

    GOP -party of Zen hell.

  3. 3
    gbear says:

    If a republican stands in the woods, and there is no one to point at, does he have a life?

  4. 4
    Incertus says:

    Galttards is pretty good, though not as good as Randroid, I think. The big problem is that bad as the Gallards are, the so-called moderates in the party are no better. David Brooks, it should be remembered, only looks sane by comparison, not by any realistic measure of sanity on his own. So who, on the right, is going to be able to lead the conversation?

  5. 5
    Brachiator says:

    The trouble is that there are no “responsible critics” in the Republican party. All Congressional Republicans offer now is warmed-over Hooverism, at best. On the subject of the banking crisis, there are three alternatives I see it: do nothing and let the banks fail on their own, keep bailing the banks out, or nationalize the banks. The problem here is that the first alternative is completely insane, but “let them fail” seems to be the new Republican mantra.

    Last night’s episode of "Sixty Minutes" (available on the Net or on iTunes) featured a story about FDIC officials taking over a bank. Government officials found a buyer for the bank after the take over, which happened one day as soon as the bank closed. No depositor lost a dime. No bank employee lost a job.

    So let’s play "let ’em fail" poker with the GOP morons. I want to see the Republican Party formally call for the abolition of the FDIC and federal insurance of people’s bank accounts. I want to see them call for the abolition of any governmental effort to keep banks running.

    I’m sure that there is someone at Reason Magazine who can explain why deposit insurance is a bad idea and is doing harm to financial markets and would back any GOP proposal in this regard.

    Otherwise, these people should just STFU.

  6. 6
    Robin G. says:

    I think we should be careful not to underestimate the populist appeal of "let them fail." There’s a lot of people who don’t understand what that means — they hear it and think, "Yeah, I’m sick of giving tax money to wealthy CEOs, let the bastards sink!" That’s of course a totally seperate issue from what happens if the BANKS fail, but a lot of people don’t know that. These aren’t stupid people necessarily — it comes from the fact that the economic crisis is so complex and multifaceted that unless you are paying very close attention, you don’t really know what the hell is going on. What you DO know is that you can’t pay your mortgage and the robber barons are still billionaires. Hence the appeal of the unexplained phrase "let them fail."

    It’s what the GOP is good at — unexplained catchphrases that work like Rorschach tests. The Dems should have responses ready.

  7. 7
    cleek says:

    The trouble is that there are no “responsible critics” in the Republican party.

    oh now. don’t be so cynical.

    tpm: "We will lose on legislation. But we will win the message war every day, and every week, until November 2010," said Rep. Patrick McHenry, R-N.C., an outspoken conservative who has participated on the GOP message teams. "Our goal is to bring down approval numbers for [Speaker Nancy] Pelosi and for House Democrats. That will take repetition. This is a marathon, not a sprint."

  8. 8
    JenJen says:

    Galttards!! Is that new? I like.

  9. 9
    Josh Hueco says:

    Hoisted by their own galttards.

  10. 10
    Ailuridae says:

    DougJ,

    Nice piece. Long ago I stopped thinking anyone serious could think the media had a liberal bias. Then, wrongly, I thought the media had a bias towards Republicans. i don’t think that’s it, though. I think the media is constantly trapped in a situation of pursuing a false middle because they want to believe both sides have legitimate honest viewpoints. Sadly, in the case of Republicans, their views, if honest, are batshit crazy.

    BTW, this piece needs a quick edit – typos and such and also some extra wording.

    On the subject of the banking crisis, for example, there are three alternatives I see it: do nothing and let the banks fail on their own, keep bailing the banks out, or nationalize the banks (which may involve some form of bailing out and/or organized bankruptcy as well).

    Pretty sure removing the bolded it makes the much more sense.

  11. 11
    John Cole says:

    @Brachiator: I say this as someone who is myself in recovery:

    WHO GIVES TWO HOOTS IN HELL WHAT THE FOLKS AT REASON MAGAZINE THINK?

    Seriously. Matt Welch is now chanting socialism with the best of them. The prescription drug plan was a number of things, including a horrid waste of money, a compete give-away to big pharm, and much more, but it was not socialism. They have all lost their damned minds.

    Screw them.

  12. 12
    R-Jud says:

    @cleek:

    "We will lose on legislation. But we will win the message war every day, and every week, until November 2010," said Rep. Patrick McHenry, R-N.C., an outspoken conservative who has participated on the GOP message teams. "Our goal is to bring down approval numbers for [Speaker Nancy] Pelosi and for House Democrats. That will take repetition. This is a marathon, not a sprint."

    Ah yes. Country First.

  13. 13

    If a system collapses in the woods, and no Republican hears it, does it make a sound?

    Only if Rush tells them it made a sound.

  14. 14
    Comrade Stuck says:

    @Robin G.:

    I never underestimate the power of the RWNM that is still relevant. Though it seems Obama is doing OK with reality checks, and the public is giving him some time, at least via the polls. So right now the GOP is somewhat thwarted in their neverending war with inane "catchphrases". It will be a race between some improvement to come about and levels of American patience, which historically, could be fit in a thimble.

    On a happier note. Opening day in 23 days!

  15. 15
    Calming Influence says:

    Since journalism as practiced in the U.S. has devolved into "he said/she said" idiocy, Responsible Critics of "The sky is blue" are the ones saying "No, the sky is {insert any color other than blue here}."

  16. 16
    DougJ says:

    I think we should be careful not to underestimate the populist appeal of “let them fail.”

    I’m not underestimating it. I think it’s very real. And I understand its philosophical appeal.

    I have no special desire to prop the banks up, personally, except for the fact that if we let them go under in a “free market” way (as opposed to under government auspices), we may all lose our jobs.

  17. 17
    Paul L. says:

    . All Congressional Republicans offer now is warmed-over Hooverism, at best. … The problem here is that the first alternative is completely insane, but “let them fail” seems to be the new Republican mantra.

    The Rightwing view of Herbert Hoover is someone who could not keep his fingers out of micromanaging the economy.
    You will need to edit the wiki Herbert Hoover entry.

    Hoover tried to combat the Depression with volunteer efforts and government action, none of which produced economic recovery during his term.

    Perhaps you should use laissez-faire instead of Hooverism?
    Laissez-faire is a term used to describe a policy of allowing events to take their own course.
    Can you show me where Hoover was laissez-faire?

    Long before he entered politics he denounced laissez-faire thinking.[19] As Commerce Secretary he had taken an active pro-regulation stance. As President, he helped push tariff and farm subsidy bills through Congress.

  18. 18
    JenJen says:

    Speaking of "responsible critics," Norah O’Donnell is on MSNBC talking about Michelle Obama’s sleeveless dresses and toned arms.

  19. 19
    Comrade Stuck says:

    The Rightwing view of Herbert Hoover is someone who could not keep his fingers out of micromanaging the economy.

    Of course it is. It’s why they’re crazy as shithouse rats.

  20. 20
    jenniebee says:

    The Republican Congressional Delegation are all, to a man, attempting to provide cover for The Comedian, whose destructive philosophies would otherwise stand out so far from the norm as to make him detectable.

    It’s for national security, d00dz! Going Full Metal Bugfuck is the only way for us to survive this global economic crisis brought on by unchallenged and unfettered capitalism keep the commies from winning Viet Nam!

  21. 21
    NonyNony says:

    @Brachiator:

    Last night’s episode of "Sixty Minutes" (available on the Net or on iTunes) featured a story about FDIC officials taking over a bank. Government officials found a buyer for the bank after the take over, which happened one day as soon as the bank closed. No depositor lost a dime. No bank employee lost a job.

    For small local banks, this is easy stuff. The FDIC comes in, audits the books, figures out what the bank is really worth, and finds a buyer. Owning a small bank is actually not a bad investment, as long as you’re not the kind of idiot who thinks that the bank should be giving you a double digit ROI every year. Banks can make a lot of money – in small amounts over a long period of time. Anyone who says otherwise is selling you a bridge in San Fran or something. Anyway, that means that finding a buyer for an FDIC-held bank usually isn’t too difficult because smart capitalists know that in the long term it will pay out.

    For a bank like Citi? Yeah, none of that stuff is easy. Let’s start with the fact that Citi is a multi-national corporation and the jurisdictional issues of nationalizing a corporation with such a world-wide disbursement would be a messy piece of diplomatic dancing. And that’s before we start getting into figuring out what Citi is "actually worth" and then breaking the company up into small pieces to sell off because selling it off as a single large entity would just be setting us up to do it all over again down the road a few years.

    I’m not saying that putting Citi into receivership isn’t the right thing to do – I think eventually it will be the ONLY thing we can do – but let’s not kid ourselves about with analogies to how the FDIC does day-to-day business right now. At the very minimum, the FDIC is going to need to staff up extensively to be able to handle it, and it will need to be very careful that in doing so it doesn’t neglect the many smaller banks that need to be taken over, cleaned up, and resold.

  22. 22
    Rick Taylor says:

    The problem here is that the first alternative is completely insane, but “let them fail” seems to be the new Republican mantra.

    And just to add they’re only pushing this is as a solution because they’re out of power so they can propose whatever they think will damage Democrats most without worrying about consequences. If McCain were President, he’d be shoring up the banks just as Bush did.

  23. 23
    The Moar You Know says:

    All Congressional Republicans offer now is warmed-over Hooverism, at best.

    No need to slander Hoover so – at least he tried.

  24. 24
    TheHatOnMyCat says:

    I think we should be careful not to underestimate

    I think we need to be more careful not to overestimate it.

    In any case, the ultimate remedy is nationalization, and it remains to be seen whether we are headed there.

    The Republicans are working on their new paradigm, which is basically Bitch Here, Bitch Now.

    I am one who doesn’t see it working. I see support for a long term and methodical and bold approach to problem solving firming up, not weakening.

    The more we wring our hands over the baying hyenas, the more they will bay. Fuck em.

  25. 25
    Incertus says:

    I wonder how the "responsible critics" will respond to this:

    Calling into question the legitimacy of all the signing statements that former President George W. Bush used to challenge new laws, President Obama on Monday ordered executive officials to consult with Attorney General Eric H. Holder Jr. before relying on any of them to bypass a statute.

    I love how President Obama is, in so many cases, simply undoing everything the Bush administration tried to do.

  26. 26
    Paul L. says:

    @Comrade Stuck:

    Of course it is. It’s why they’re crazy as shithouse rats.

    You believe that because of Hoover’s crown achievement in Free market laissez-faire policy?
    The Smoot-Hawley Tariff Act
    You must be a worshiper of Former Enron Advisor Paul Krugman.

  27. 27

    Responsible critics? Surely you jest. I am usually appalled at the wingnut response to anything Obama but the only time they surprise me is when they DON’T go apeshit over something. I expected a louder outcry from the Mighty Righties when the administration sent a memo to all departments that they NOT rely on Bush signing statements. But they have more important things to be outraged over, I guess.

    EDIT: Looks like Brian beat me to it.

  28. 28
    NonyNony says:

    @Incertus:

    I love how President Obama is, in so many cases, simply undoing everything the Bush administration tried to do.

    I still wish Congress had done their Constitutional duty and called Bush on it. Because even if Obama rolls everything back, eventually we’re going to elect another sociopath to the White House and he’ll start reciting "Unitary Executive" theory and we’ll be doing it all over again. If Congress or the SCOTUS had forced this instead of relying on electing someone with a different interpretation, I’d feel better about our vaunted system of "checks and balances".

  29. 29
    Josh Hueco says:

    @Paul L.:

    Does it smell like goat jizz in here to any of you?

  30. 30
    Barry Soetoro says:

    @Paul L.:

    /sarcasm/Your insight has compelled me to reevaluate my position./sarcasm/

    Also, why is it that you’re so hung up on creating straw men, get called on it, but keep doing it anyway?

  31. 31
    Incertus says:

    @NonyNony: True, which is why even though Obama is rolling back the stem cell research restrictions, there’s also a move in Congress to make it more permanent. Same with DADT, which can’t vanish soon enough to suit me. But in the short term, it’s good that Obama is doing this as well, to give Congress some cover when they go to make it permanent.

  32. 32
    The Moar You Know says:

    Also, why is it that you’re so hung up on creating straw men, get called on it, but keep doing it anyway?

    Shoot, you want to see Paul "hung up" on something, you ought to see him defend the Duke rapists. That guy has some serious mental issues.

    They were guilty, we all knew it, they got sprung on a technicality. But Paul just can’t let it go.

  33. 33
    El Cid says:

    I don’t think the right wing generally has any views on Hoover whatsoever. Just like today, it was simply anti-New Dealism.

    There was something before FDR, and then FDR came in and ruined everything, and from then until Reagan the liberals ruined America.

    Then Reagan came in and saved America from the liberals and the n***** lovers and now they’re in a struggle to keep Obama from destroying America just like FDR did.

    At least Herbert Hoover really gave a damn and thought that his business-led principles would work. He was a shyster in trying to lure / force FDR into continuing his (Hoover’s) programs after the election but before the inauguration, but FDR just wanted no part of the Hoover administration.

    A lot of the New Deal programs got their start under Hoover.

    Which really says more about the role of the upper-class funded public policy planning groups who were influential under both presidencies than it does about Hoover himself.

  34. 34
    Brachiator says:

    @John Cole:

    WHO GIVES TWO HOOTS IN HELL WHAT THE FOLKS AT REASON MAGAZINE THINK?

    We’re on the same page here. I was delivering a gratuitous swipe to the Reason Mag folks, who are just as delusional as the "let ’em fail" GOP wingnuts.

    The prescription drug plan was a number of things, including a horrid waste of money, a compete give-away to big pharm, and much more, but it was not socialism. They have all lost their damned minds.

    The prescription drug plan was a blatant example of the Dubya and the Republicans letting the drug industry write federal law. I still don’t understand why the Democrats didn’t make more of this — unless key Dems were colluding with the drug industry and the GOP leadership.

    And I am still amazed that a person cannot deduct the cost of legal and legally obtained drugs from their tax return, if they do not come from an American drug company.

    NonyNony: For a bank like Citi? Yeah, none of that stuff is easy. Let’s start with the fact that Citi is a multi-national corporation and the jurisdictional issues of nationalizing a corporation with such a world-wide disbursement would be a messy piece of diplomatic dancing.

    This point was made in the "Sixty Minutes" piece. But you misread me here. My point was that the "Let ‘Em Fail" GOP Political Theater Troupe entirely ignore the fact that the banking system is founded on federal regulation and guarantees, and the GOP would cease to exist if they pushed "free market" proposals to their logical conclusion. But hell, maybe they’re hot for a return to the Gold Standard.

  35. 35
    Indylib says:

    Even Republican voters don’t think the party has a leader.

  36. 36
    jcricket says:

    ll Congressional Republicans offer now is warmed-over Hooverism, at best

    Are you saying that Hooverism is a dish best served cold?

    A stitch in Hoover saves the economy?

    Or that Hooverism is past its sell-by date from having been left out of the fridge too long?

  37. 37
    Comrade Stuck says:

    @Paul L.:

    You believe that because of Hoover’s crown achievement in Free market laissez-faire policy?
    The Smoot-Hawley Tariff Act

    That’s like the Captain of Titanic who swears his boat can’t be sunk, and sails into a field of Icebergs to prove it.

  38. 38

    do nothing and let the banks fail on their own, keep bailing the banks out, or nationalize the banks

    We need to stop thinking that there is a distinction between "bail out" and "nationalization." Nationalization isn’t an alternative to bailing them out. It’s a method of bailing them out.

    Forget about the common shareholders. They are so close to being wiped out that what’s left is a rounding error. Yes, I want them to lose even that, but it’s not important in the big picture. There’s just not enough money there to matter that much.

    The question is the bondholders, and whether or not we make them take a substantial haircut. This is a question that’s completely orthogonal to the question of whether or not to nationalize. You can nationalize and pay off the bondholders, nationalize and not pay them off in full, not nationalize and pay them off, or not nationalize and not pay them off. All for are doable.

    In figuring out how much money the taxpayer is going to have to pour in, the nationalization axis is not quite, but almost, entirely unimportant. All of the banks’ assets and liabilities are still there, it’s just that the US government has assumed responsibility for them.

    As I’ve said before, this is also the reason why Tim Geithner is waffling and delaying. It’s not corruption, and it’s not stupidity. He doesn’t have a choice. He can’t make an announcement until he has a plan of action ready, and he can’t have a plan of action ready until he has secured the money to implement it. As of right now, he doesn’t have access to the kind of money it would take to implement what most people mean when they say "nationalization." Congress would need to appropriate it.

    Now, please tell me how Geithner explains to Congress why he needs that money without triggering the meltdown that he won’t be prepared to deal with until he has the money.

    Here are your options to go forward:

    1) Tell the bondholders they’re fucked, and they get whatever is left in liquidation. This is not only what the Republican idiots are advocating, it’s also what a lot of people here are saying we need to do, and that Geithner is obviously a tool because he won’t. They just muddy the waters by using the word, "Nationalization," a pretend that that somehow magically solves the problems associated with insolvency.

    2) It turns out that the banks aren’t really insolvent, and it blows over. I’m not buying this one.

    3) We decide to pay off the bondholders, and immediately tell the press and Congress that we are taking the big banks into receivership, and will pay off as soon as Congress appropriates the money. Hopefully, this doesn’t spark a run on the banks that we don’t have the capacity to handle yet.

    4) Stall. Try to find someway to square this fucking circle, and either get the money to pay out. If you can’t get Congress to give it to you under the current conditions, try to scare it up from private sources. However, if you’re planning to get any money from private sources, you have to be able to convince them that they aren’t just throwing it down a rathole, and that the government stands behind them. Which is tough to do if Congress hasn’t appropriated the money.

    Look, maybe Option 1 really is the way to go. Maybe we can survive the resulting wave of defaults just fine. My personal opinion is that we wouldn’t, but it’s not like I have concrete evidence available to convince anyone. However, everyone calling for Geithner’s head needs to acknowledge that that’s the game they are playing. They either think that he really does have enough money to solve the problem, or they are willing to gamble that the money isn’t needed. Not acknowledging that is intellectual bankruptcy.

    No, I don’t think that Geithner has been a perfect Treasury Secretary so far. Beyond that, I’m not willing to go, because we don’t have the slightest idea what a good Treasury Secretary would have been able to accomplish so far, so we don’t know that he isn’t a good one.

  39. 39

    At least Herbert Hoover really gave a damn and thought that his business-led principles would work.

    Hoover is unfairly treated by history. He wasn’t as bad a president as most people think, and he was amazingly good at just about everything else he did. That included getting food to starving people in Europe after both world wars.

  40. 40
    Mary says:

    If a Republican taps their foot in a bathroom and no one hears them, do they still have to apologize to Rush?

  41. 41
    Comrade Stuck says:

    @El Cid:

    At least Herbert Hoover really gave a damn and thought that his business-led principles would work.

    I suspect Reagan did too, as most other so called conservatives. Their crime is suspending belief that human nature, in the end, trumps all ideology.

  42. 42
    kay says:

    I think it was pretty stupid to make the stock market the measure of Obama, personally. I’m convinced no one knows what the hell is happening, or going to happen, to the financial system. I’m taking the word "unprecedented" at literal meaning. The people in charge are just trying things, or not trying things, based on the tools they have to use on the problem.
    What do they do if the stock market goes up? At this point, the coverage is as breathless as daily tracking polls during the campaign. They’re freaking out that it’s going down, daily. If it edges up can Obama claim victory? Or are they simply hoping it goes up not at all prior to the midterm elections? They’re inherently reckless, Republicans. They bet the whole political wad on the stock market continuing to go down?
    Incidentally, the entire dialogue on the foreclosure plan has inexplicably changed, from negative to positive. Nothing happened. Same plan. Now, mysteriously, it is widely accepted that it is a good idea.

  43. 43
    NonyNony says:

    @J. Michael Neal:

    Tell the bondholders they’re fucked, and they get whatever is left in liquidation. This is not only what the Republican idiots are advocating, it’s also what a lot of people here are saying we need to do, and that Geithner is obviously a tool because he won’t. They just muddy the waters by using the word, "Nationalization," a pretend that that somehow magically solves the problems associated with insolvency.

    Another thing to muddy up the waters …

    Who are the "bondholders" that everyone is clamoring to take this haircut? We don’t know – if anyone has reported anything factual on this I’d appreciate a link. But I have a tingling suspicion (from my former life in the pensions area) that the majority of the bondholders for the major banks are going to turn out to be institutional investors who have purchased great gobs of "safe" bonds from banks. We’re talking everyone from the private pension management companies, to the state pension systems like CalPERS and others.

    Forcing the bondholders to take a haircut means hurting these organizations. Which in at least some cases will probably mean destroying people’s pensions. Which means that the Federal government will be on the hook – somehow – to help those folks out as needed. Maybe not a full-on bailout of the pension systems, but somehow those retirees have to be taken care of (not to mention how bloody awful it would be to suddenly dump a large number of previously not-participating people into the job market – unemployment would jump even higher if these retirees suddenly needed to work again).

    I don’t know how much of the foot dragging is because of this, but I’m really beginning to have my doubts that the worries even mostly boil down to "Wall Street insiders afraid of hurting their friends" (though I think some of that is going on too).

  44. 44
    El Cid says:

    @Comrade Stuck: No, I think there’s a difference. Yes, faithfully working hard at a profoundly wrong idea can cause just as much harm — but I think Reagan and his jacked-up clone, Bush Jr., both are a couple of cynical bastards who may occasionally (have) believe(d) their own bullsh*t, but they really just don’t (didn’t) care.

  45. 45
    kay says:

    No one can even produce anything valid that guarantees nationalization is cheaper. Isn’t that an important question here? If we’re talking about thiftiness and sound money management? Is it cheaper, or are we just looking for a definitive answer, and if we’re just looking for clarity, when did short-term clarity start to trump all else? Because people are scared? Because Wall Street (now) says it trumps all else?
    "Geithner won’t nationalize" is all I’m hearing. Why won’t he? Isn’t that the better question? I’m extending him the benefit of the doubt on "capture". I don’t have anything solid to indicate he IS captured, although I’m certainly willing to consider it.

  46. 46
    Comrade Stuck says:

    @El Cid:

    Ok, we will have to disagree, though it is unpossible for me to get inside any gooper head to know how they think, and that includes Mr. Hoover, which was well before my time anyway. I will say that I believe that all of them believe that a free market economy is something more than what it is — or some kind of entity that has self governing powers of it’s own accord, rather than a human concoction fraught with human error and needing constant management and regulation from without. And further, that it somehow belongs to the wealthy only, as does the lions share of the wealth in generates when functioning properly, or improperly FTM.

  47. 47
    liberal says:

    The trouble is that there are no “responsible critics” in the Republican party.

    That’s only part of the problem. The other part is that often (if not always), the media look to members of the two parties (or people closely aligned with them) for criticism. If viewpoints lie outside the two-party consensus, they tend to get ignored.

  48. 48
    DougJ says:

    Nationalization isn’t an alternative to bailing them out. It’s a method of bailing them out.

    Sure, I mean "bailing them out a la Geither/Paulson" versus "bailing them out via nationalization".

  49. 49
    liberal says:

    @NonyNony:

    I’m not saying that putting Citi into receivership isn’t the right thing to do – I think eventually it will be the ONLY thing we can do – but let’s not kid ourselves about with analogies to how the FDIC does day-to-day business right now.

    I’m strongly in favor of nationalization or whatever you want to label it, but I agree that some people are too blithe about what’s involved. (I’m thinking e.g. of Blodget, on Tech Ticker.)

  50. 50
    liberal says:

    @The Moar You Know:

    Shoot, you want to see Paul "hung up" on something, you ought to see him defend the Duke rapists.

    You mean, the Duke-falsely-accused-by-someone-crying-"rape"?

  51. 51
    liberal says:

    @J. Michael Neal:

    My personal opinion is that we wouldn’t, but it’s not like I have concrete evidence available to convince anyone.

    That’s because no one will really have the data until the banks are properly nationalized and their books harshly examined by regulators.

    That’s one of the reasons nationalization/whatever must come first.

  52. 52
    liberal says:

    @NonyNony:

    But I have a tingling suspicion (from my former life in the pensions area) that the majority of the bondholders for the major banks are going to turn out to be institutional investors who have purchased great gobs of "safe" bonds from banks.

    Probably, but also foreign banks and so on.

    Which in at least some cases will probably mean destroying people’s pensions.

    IMHO that seems doubtful. How many people are going to have a large fraction of their pension in bank debt? Some, yes, but…

    Again, none of this stuff can be resolved until control of the big insolvent banks (e.g. Citi, BoA) is truly seized by the government.

  53. 53

    Sure, I mean "bailing them out a la Geither/Paulson" versus "bailing them out via nationalization".

    Part of my point is that we don’t really know what "bailing them out a la Geithner" means. Assuming that what he means is what he’s said so far is a more complicated assumption than most people seem to understand.

  54. 54
    liberal says:

    @kay:

    No one can even produce anything valid that guarantees nationalization is cheaper. Isn’t that an important question here?

    What thoughtful analysts like Krugman have produced is something very valid—historical experience.

    History shows that nationalization is far more effective than the current strategy of throwing money at zombie banks.

    I for one wouldn’t be surprised if nationalization isn’t sufficient, but it does seem necessary. (I think it’s possible that history might show that if private sector debt is too large and too suffocating, the only way out is inflation, but I haven’t read up enough on that.)

    I’m extending him the benefit of the doubt on "capture". I don’t have anything solid to indicate he IS captured, although I’m certainly willing to consider it.

    Uh, the fact that he’s a product of the banking industry is extremely strong evidence that he’s captured.

  55. 55
    liberal says:

    @J. Michael Neal:

    Part of my point is that we don’t really know what "bailing them out a la Geithner" means.

    Yes, we do. It means "I’m going to grasp at straws to avoid nationalization." Like this recent stupid idea of having private investors go in with Uncle Sam on buying toxic waste from the banks (to generate price discovery)…except Uncle Sam issues a guarantee to the private investors that their losses won’t exceed some preset fraction.

  56. 56
    El Cid says:

    Wonkette highlights responsible critic Chuck Norris writing in Whirled Nut Dactyly.

    From "I May Run for President… of Texas"

    …When I appeared on Glenn Beck’s radio show, he told me that someone had asked him, "Do you really believe that there is going to be trouble in the future?" And he answered, "If this country starts to spiral out of control and Mexico melts down or whatever, if it really starts to spiral out of control, before America allows a country to become a totalitarian country (which it would have under I think the Republicans as well in this situation; they were taking us to the same place, just slower), Americans won’t stand for it. There will be parts of the country that will rise up."

    Then Glenn asked me and his listening audience, "And where’s that going to come from?" He answered his own question, "Texas, it’s going to come from Texas. Do you agree with that Chuck?" I replied, "Oh yeah!" Definitely.

    It was these types of thoughts that led me to utter the tongue-n-cheek frustration on Glenn Beck’s radio show, "I may run for president of Texas!"

    I’m not saying that other states won’t muster the gumption to stand and secede, but Texas has the history to prove it. As most know, Texas was its own country before it joined the Union as its 28th state. From 1836 to 1846, Texas was its own Republic. Washington-on-the-Brazos (river) served as our Philadelphia, Pa. It was there, on March 2, 1836, where a band of patriots forged the Texas Declaration of Independence. (We just celebrated these dates last week.)

    Note: At the time, the would-be Lone-Star Republican was declaring Independence from Mexico, whose tyrant idiotically thought that by luring in a bunch of Americans with free land, that they’d be happy to remain Mexican while bringing agricultural productivity. Don’t Mess With Texians!

    Anyway, back to Super-Patriot Chuck Norris:

    On March 1, 1845, then-President John Tyler signed a congressional bill annexing the Republic of Texas. Though the annexation resolution never explicitly granted Texas the right to secede from the Union (as is often reported), many (including me) hold that it is implied by its unique autonomy and history, as well as the unusual provision in the resolution that gave Texas the right to divide into as many as five states. Both the original (1836) and the current (1876) Texas Constitutions also declare that "All political power is inherent in the people. … they have at all times the inalienable right to alter their government in such manner as they might think proper."

    Yeah, y’all. Good luck with that whole "secession" thing. It went a ways last time.

    Couldn’t we make a good start by withdrawing all federal funds and military bases and federal contracts from these tough, secession-minded independents? You know, ’cause the South just hates all them dang fedrul gubmit subsidies they’s always takin’.

  57. 57
    jonas says:

    An analogy to our current situation: There’s a dying patient on the table and a group of doctors — Republican and Democrat — are standing around deciding on the best way to proceed with diagnosis and treatment of the mysterious ailment. The chief surgeon, a Democrat, suspects an infection or something and suggest a battery of tests and various drug treatments. The Republicans demand we try leeches first and also think he may be possessed by devils.

    A question for our Washington press corps: should the head surgeon, in the interest of professional "collegiality" and to avoid being called names, take the Republican doctors’ suggestions? Or should he tell them to shut up and come back when they’ve learned to accept some of the basic premises of modern medical science and have some constructive ideas? Actually, scratch that. Your answer might depress me too much.

  58. 58
    El Cid says:

    An analogy to our current situation: There’s a dying patient on the table and a group of doctors—Republican and Democrat—are standing around deciding on the best way to proceed with diagnosis and treatment of the mysterious ailment. The chief surgeon, a Democrat, suspects an infection or something and suggest a battery of tests and various drug treatments. The Republicans demand we try leeches first and also think he may be possessed by devils.

    Unfortunately that’s kinder to Republicans than I’d be.

    In real life they’d be denouncing the Democrat for manipulating the patient into thinking he’s sick in order to distract us from the immediate task of lowering taxes on the rich in order to prevent illness from spreading.

  59. 59
    Brachiator says:

    @jonas:

    A question for our Washington press corps: should the head surgeon, in the interest of professional "collegiality" and to avoid being called names, take the Republican doctors’ suggestions? Or should he tell them to shut up and come back when they’ve learned to accept some of the basic premises of modern medical science and have some constructive ideas? Actually, scratch that. Your answer might depress me too much.

    The Republican doctors would say let the patient die. He or she is obviously too sick to live, and letting God decide will allow the efficient re-allocation of scarce medical resources.

    This has been another episode of "Free Market Medical Man"

  60. 60
    Comrade Stuck says:

    Yeah, y’all. Good luck with that whole "secession" thing

    As a New Mexico resident, my vote is yea. It would mean we could carve out the SE corner of our state we call Little Texas and they can have it. And since they’ve bullied for stealing our water for a couple of centuries now, we could dam up the Rio Grande and tell them to suck on cactus for a drink.

  61. 61
    AnneLaurie says:

    I love how President Obama is, in so many cases, simply undoing everything the Bush administration tried to do.

    One miniscule time-saver amid the vast manure-piles bequeathed by the C-Plus Augustus to the Obama administration: If it’s something Dubya approved, it’s wrong . Backwards, immoral, ineffective, toxic, or all of the above. The new guys don’t have to waste their energies trying to figure out exactly how or why any particular policy was wrong; they can just work from the ironclad assumption that if George W. Bush had come out in favor of sunshine and rainbows, then we’re about to discover that sunshine causes cancer and rainbows are a sign of chemical pollution. You know that "secret letter" every departing Oval Office occupant leaves for his successor? I have the image of Obama using Dubya’s scrawled message as a To-Undo list… starting with the header "Skrew those loosers in Congriss, they are not the boss of you!!!" and "Always pay atenshun to the richest guys in the room, cuz we know God loves them best."

  62. 62

    I for one wouldn’t be surprised if nationalization isn’t sufficient, but it does seem necessary. (I think it’s possible that history might show that if private sector debt is too large and too suffocating, the only way out is inflation, but I haven’t read up enough on that.)

    The question of whether nationalization is necessary (I’m in favor of it, actually) doesn’t address the larger issue. No, nationalization isn’t sufficient, because it doesn’t even try to answer whether or not we pay off the liabilities. They way you are using it is a dodge. An attempt to avoid having to answer the really difficult question.

    Answer me two questions:

    1)Do you think that the government should pay off the banks’ liabilities?

    2) What does "nationalization" have to do with your answer to #1?

  63. 63

    Yes, we do. It means "I’m going to grasp at straws to avoid nationalization." Like this recent stupid idea of having private investors go in with Uncle Sam on buying toxic waste from the banks (to generate price discovery)…except Uncle Sam issues a guarantee to the private investors that their losses won’t exceed some preset fraction.

    No, we don’t know what his plan is, and your comment here exposes your lack of thinking. How does nationalization prevent having to guarantee (or explicitly not guarantee) some amount of value to the liability holders? The liabilities don’t magically disappear just because the government buys starts running the bank.

  64. 64
    Bubblegum Tate says:

    Help me out here: What would be the down side of Texas seceding?

  65. 65
    gex says:

    @Bubblegum Tate: I was going to bring up the phrase "in the tent pissing out versus outside of the tent pissing in" but then I realized Texas is in the tent AND pissing in it at the same time.

  66. 66

    Help me out here: What would be the down side of Texas seceding?

    We’d have to militarize the border to prevent illegal immigrants.

  67. 67
    kay says:

    @liberal:

    Uh, the fact that he’s a product of the banking industry is extremely strong evidence that he’s captured.

    You harm your credibility with me with that argument. The fact that he’s a "product" of the financial sector is not evidence that he’s captured.
    I’ve been reading a lot. I was leaning towards bankruptcy for some of these entities. I then come upon a single commentor at TPM who casually mentions that the changes in the 2005 bankruptcy code may impact some of these raging populist calls for bankruptcy wind-downs. I look at the code. I think "he’s right". Well, well. The bankruptcy proponents weren’t bothering looking at the bankrupcty code? WTF?

    What else don’t you know? What else haven’t you considered?

    Geithner has an obligation to explain what he’s up to, or explain WHY he can’t explain. If you’re starting your analysis with "he’s captured" you’re biased. You may be RIGHT. The thing is you’re starting way beyond where the facts thus far take you. That makes me think you have an ideological objection to him. That’s fine, but don’t dress it up as fact-finding. It isn’t.

  68. 68
    Les Miserable Fulcanelli says:

    Good post DougJ.

    "Responsible Critics"?… Any reasonable MSM or rightwing pundit can look like a rock star when everybody else is wearing a helmet and drooling on themselves in public.

    "Galttard" (Brilliant!)

    Think back to when FDR was trying to keep capitalism as we know it alive way back when. He had a virtual right-wing coup d’ etat nipping at his heels. I remember hearing somewhere how he and Eleanor were frequently in touch with the Nation’s newspaper editors and they worked with him in keeping the country’s mood up as Americans went through some really hard times for years at a stretch before the jobs program Paul Krugman likes to call World War 2 got rolling.

    I suppose that could never happen again in an America where what, 5 families run damn near all the media outlets, and that’s not even taking into account Fox.

  69. 69
    SBW says:

    J. Michael Neal,

    Who is proposing — in the public sphere –nationalization without explicit bondholder losses. Who? Could you send me any link, because I have yet to see that. The point of temporary nationalization is to repair the bank, not make the investor whole. Let me ask — at what point during any receivership (assuming all deposits are recovered), is the government required — required — to make any investor whole?

    What I do see currently is continual taxpayer capital injections to the same failed management teams.
    Essentially taxpayer ownership without the benefits of public control — and you are defending that as the prudent course? Because it has been so outstandingly successful so far?

    As far as Geithner’s plan, liberal did sum up it’s last evolution quite succinctly. The next evolution of the toxic asset insurance program may indeed look different, but they are all iterations of the same general theme first proposed by Paulson, where taxpayers ultimately bear losses for trash assets. And to say no one’s knows Geithner’s exact plan is not a positive from my viewpoint.

  70. 70
    kay says:

    Someone posting here issued a sort of challenge, this past week. I don’t remember who it was. Maybe Chuck Butcher? He asked what are the US obligations under nationalization? No one responded. I’m not comfortable with that. I think you have to know what are obligations are, under both US law and various agreements and treaties and international provisions before you-all go getting me into this.
    Satisfying my justified populist rage is going to be cold comfort if it costs me more. If you’re telling me I have to bar bad people from profitting under this disaster they created, okay, but where do I come out with that? Am I shooting myself in the foot? I’m not interested in the moral argument. I’m not interested in bad guys finishing last. I want to limit my exposure, in a way that contributes toward a long-term rational plan for the country.
    Make that argument. I know bankers suck. I don’t care.

  71. 71
    SBW says:

    Kay,

    Why don’t you share that bankruptcy information with all of us?

    Making a statement without supporting evidence — well, that certainly doesn’t elevate your credibility over liberals.

    What else can’t you prove?

  72. 72
    The Populist says:

    I agree he needs to reassure us and he has done this a few times. What we need in these times is an adult talking to us like adults. When Bush would try and reassure us, he would bungle the words and it would always sound fake and stupid.

    With Obama, he’s focused on so many things right now that I don’t hold him to it because he’s busy. When he’s ready, he will do what needs to be done.

    My problem is if he gets up there and says better days are coming what the heck good does that do to the people hurting out there? The right will eat him alive if he were to do something like that.

  73. 73
    SBW says:

    Kay,

    How about public ownership without public control is ultimately damaging to the taxpayer?

    How about the financial management in power is the same one that got us into this mess — that is easily verified.

    Denouncing legitimate public rage as immature is, well, immature.

    There is nothing immature about demanding — not asking — for control of what one pays for.

    The is nothing immature again about demanding transparency in government, and government funding of private entities.

    See, a child blindly trusts. We need to give $750 billion more to the financial industry– to the same people — or the world will implode.

    That may be enough for you, though it smacks of ‘weapons of mass destruction’ to me.

    A citizen is supposed to carefully weight information and then decide. As I’ve said before, the Obama administration differs very little from the Bush administration in it’s relationship with the financial industry.

    Of course, Bush was an idiot — and he was — but Obama is doing the exact same thing, but has a master plan. I don’t think so, and shouldn’t have to take it on faith either way.

    A lot of the arguments here really do caricature Republican arguments about requiring blind faith in public officials.

  74. 74
    The Populist says:

    I want to limit my exposure, in a way that contributes toward a long-term rational plan for the country.

    Kay,

    Two points about bankruptcy:

    1) If you let, say, BofA go into bankruptcy, they get liquidated unless the USA steps in to takeover and nationalize the business. The FDIC will protect the deposits but who’s to say that a foreign entity or government doesn’t try to buy the assets in court? It has happened and can happen. I don’t like the idea that our biggest banks could be taken over by foreign interests that may not have the American public’s best interest at heart (not that the banks ever do, just saying).

    2) If, say, Citi were to go under is there any guarantee that anybody will step in and take over? I hate the idea that the FDIC will most likely be broke if they have to step in and buy this rotting corpse.

    The exposure you refer to is that no matter what we do, the US taxpayer loses. This idea/charade of a so-called free market is bullshit and has been for a decade at least. Too big to fail should NEVER be something we allow. Roosevelt (Teddy) was the trust buster and he did a damn fine job of creating a pretty fair, free market in his day. Congress could easily start breaking these monopolies via new regulations. They won’t do it because the right thinks regulation is wrong. It’s not wrong because when this country actually had growth, we had strong regulation in place to keep the very thing we are dealing with from consuming the nation and putting us into Great Depression, Act II.

    In my view, we can’t let these companies get liquidated unless the US government is involved. To let these entities fail is to send the worst kind of message to the world, in my book.

  75. 75

    Who is proposing—in the public sphere—nationalization without explicit bondholder losses. Who? Could you send me any link, because I have yet to see that. The point of temporary nationalization is to repair the bank, not make the investor whole. Let me ask—at what point during any receivership (assuming all deposits are recovered), is the government required—required—to make any investor whole?

    Fine. You are taking option #1 that I listed. Do you have any idea whether or not this will trigger more defaults? Given the panic caused by the collapse of Lehman, which was a pretty small bank compared to the ones we are talking about now, do you think that we will have a worse panic when it happens? Have you considered what we should do if it does? Do you think that we should head down that road without funding in place to deal with such an eventuality, given that it is reasonably likely?

    Or, are you just frothing with rage, and want to stick it to the bondholders without any regard for what the practical consequences are? I get the frothing rage. I share it. However, I would prefer to look before I leap. I’m all for hangings when we’re done.

    The alternatives to the taxpayers picking up the tab for the failed assets isn’t nearly as clean as a lot of people want to pretend that it is. Saying that the bondholders take the loss doesn’t mean that the losses disappear. Real banks, real pension funds, and real insurance companies will take those losses. A lot of them won’t even be the ones that took out particularly risky investments.

  76. 76
    Comrade grumpy realist says:

    …especially not if said risky investments were bundled up as CDOs and had "AAA"! slapped on them.

    And don’t blame the quants–all the quants I know were screaming about the problems and the assumptions involved in putting the little sh*t-buckets together. Nobody listened.

  77. 77
    SBW says:

    J. Micheal Neal,

    Essentially, your argument boils down to — no one knows what’s going on, so we must keep shoving money at the problem, otherwise bad things might happen. If that doesn’t boil down the essentials of your argument, you let me know.

    And you don’t have a problem with that argument. Really? You’re worried about impacts — I personally think pumping public money into the current system is a ruinous solution, not only economically but socially.

    For one, the public will go much further into debt — and we’re not talking a distributed public good like the stimulus program here — without any clear benefit. It’s mainly fear propagation. All this TARP money — and the banks have cleaned their balance sheets how? They are more solvent now? More transparent? Better run? You tell me.

    There will be pain no matter what — on that we agree, and I’m not really interested in that pain involving hanging.
    However, I think the way out of this crisis begins — not as an afterthought, not later, but begins — that is, a necessary first step — I need to stress the ‘first’ in this — with a systemic replacement of management in, and restructuring of, key failed financial institutions, and full transparency in operations. I happen to think — pitchfork alert! — that confidence will be restored in time by proper operation, not dumping public money in and just hoping for the best. That is far more an emotional — and illogical — reaction than pitchforks.

    You seem to trust these current financial leaders, or think they cannot be replaced. I think they can and should.

  78. 78
    kay says:

    @The Populist:

    All of your populist rant is fine with me. I agree. You don’t have to convince me.
    Here’s the thing. I’m following this carefully. Let’s take the big three discussion. I’m reading both sides, here and elsewhere, and no one mentions health care. Not health care for auto workers. The huge, job-producing health care industry in the rust belt that relies on union benefits and union retirees. It occurs to me, and I mention it, here and elsewhere.
    I’m listening to the tv tonight and I hear that BC/BS Michigan would like the country to be aware that if the Big Three are left to die, BC/BS MI die. Along with all of those health care benefit-dependant jobs. Without union-benefit health insurance, what happens to the Michigan health care workers? Those are real people. They’re health care workers, and suppliers and allied jobs. They’ll lose their jobs. In Michigan, no less.
    I’m thinking I’m glad as hell that cooler heads prevailed, before the Right AND the Left threw a whole freaking state under the "populist" bus. To punish the dumb-ass CEO at GM, and to further a populist aim you would have thrown tens of thousands of regular people out of work.
    I’m not thrilled with Geithner. I AM noticing that the anti-Geithner commentators have a luxury he doesn’t have. You get to change your fix as the facts come out. Good thing we considered health care workers before we listened to the southern Senators, huh? Michigan would never recover. I know why Republicans are offering "solutions" that they know are bullshit. Why are liberals playing along?

  79. 79
    kay says:

    One more thing, and then I promise to stop ranting. Krugman can float ideas and suggest fixes, sit back, look at the data coming in, and fine-tune. He’s a pundit-economist.
    Geithner can’t float. He can’t suggest, and then back-track, and then wait for a little data, and fine-tune, because the whole world is listening. He simply doesn’t have that luxury. If he lays out a plan, changing that plan can, all by itself, damage credibility, and not just Geithner’s credibility, but the whole US. We have experience with this quandary. We know what happens when we lay out a course and stick with it, so we won’t appear "weak", regardless of whether it’s the correct course. So, that’s what he has to deal with. Do academic economists have the same narrow parameters in which to work? I don’t think so. Geithner can announce, but if he does he better be damn sure he has enough data and wants to stay the course he lays out. I can wait.

  80. 80
    SBW says:

    Kay,

    Geithner has already floated several variations of his plan (a variation of the Paulson plan), and has been since early February. This plan has been widely covered in the media. And of course it was roundly denounced — and one his critics was indeed that uneducated lout Krugman, who should better know his place.

    I can’t, however, say Geithner has backtracked on anything.

  81. 81

    Essentially, your argument boils down to—no one knows what’s going on, so we must keep shoving money at the problem, otherwise bad things might happen. If that doesn’t boil down the essentials of your argument, you let me know.

    No, that’s not my argument, but thanks for playing.

    My argument is that you have no idea how much money we need to shovel into the problem. You haven’t really stopped to consider what the consequences of not shoveling money into it would be. Until you do, there’s no good reason to take you seriously. Given that you misrepresent what I’ve said, there’s further evidence to that end.

    However, I think the way out of this crisis begins—not as an afterthought, not later, but begins—that is, a necessary first step—I need to stress the ‘first’ in this—with a systemic replacement of management in, and restructuring of, key failed financial institutions, and full transparency in operations.

    Great. This has zero to do with the question of how much money we need to shovel into the system. None. I agree that we need to get rid of current management, but that still has nothing to do with nationalization. We can accomplish that with restrictions on further money we provide.

    However, we also shouldn’t do this until we have a plan, and we can’t really have a plan without funding for it. Again, the problem is to figure out how to publicly work out the plan and the funding without triggering the events that require that the plan and funding are already in place.

    Until you are willing to consider the possibility that this is the reason Tim Geithner is talking the way he is, I’m not going to take you seriously. Tell me why it isn’t a problem that banks start to go belly up without a finished plan in place. Or, tell me why you think that banks won’t start to go belly up as soon as Geithner announces that he’s working on a plan to take the banks into receivership, but he needs to finalize the plan and make sure that there’s actually money to implement it. Or, explain to me why just letting a bunch of banks go belly up, and the bondholders taking the losses won’t produce a crisis on a larger scale than the Lehman bankruptcy.

    If you can’t tell me how to avoid a problem, or that there is no problem, get back to me when you can.

    You seem to trust these current financial leaders, or think they cannot be replaced. I think they can and should.

    Again, you are putting words into my mouth that I never said. I don’t trust the people in charge of the financial institutions. However, saying that I don’t trust them doesn’t get me to an answer of what we should do.

    Fine. Fire them all and replace them. With whom? Who is out there that you think both has the skill and knowledge required to run Citigroup through receivership and that you trust? Putting a bunch of complete yahoos in place solely for the purpose of getting rid of the yahoos currently in place isn’t my idea of a step forward.

    Who?

    For one, the public will go much further into debt—and we’re not talking a distributed public good like the stimulus program here—without any clear benefit. It’s mainly fear propagation. All this TARP money—and the banks have cleaned their balance sheets how? They are more solvent now? More transparent? Better run? You tell me.

    More solvent now than what? Than they were in 2006? No. Than they were last summer? Maybe. It depends upon exactly how you’re timing their balance sheets. More solvent than they were the day Lehman filed for bankruptcy and everything seized up? Probably. I tend to think that stock prices have been catching up since then, rather than reflecting new events. More solvent than they would be right now if we hadn’t had the TARP? Almost certainly. Without the TARP, and other bailouts, there are at least six major banks (Citi, Wachovia, Wells Fargo, BoA, GMAC, MetLife) that would be where Washington Mutual is now, and that’s just looking at the American ones. How would the FDIC handle all those deposits? How far in the hole would CALPERS be? What other banks would it turn out were dependent upon these banks’ liabilities in order to stay solvent themselves?

    You don’t know. As far as I can tell, you don’t even care. I do. Unfortunately, I don’t think any one knows, or even that anyone can know at this point. What I do know is that what I want is very difficult to obtain. I simultaneously want to have a plan and funding for whatever it is that we decide to do, and I don’t want to go through a lot of public wrangling as to exactly what that plan is going to be since it will trigger defaults when it happens, and I want there to be a public discussion as to what we are going to do, since this is a democracy and we should have it.

    Guess what? It’s impossible for me to get everything I want here. I don’t think that there is a good solution, and I’m not even sure exactly which of the above I would trade to get some of the others. Given that, I’m unwilling to concede that Tim Geithner is either corrupt or incompetent. Maybe he’s one. Maybe he’s the other. However, there is also a perfectly plausible explanation for what he is doing that involves neither.

    In the meantime, I have no intention of deluding myself that nationalization actually deals with the most important question here. It’s where I think we should probably end up, but the really, really tough questions are unanswered by it.

  82. 82
    SBW says:

    J. Michael Neal,

    Look, Lehman was an investment bank. It failed — it was not put into an FDIC receivership like say, a Citibank would. The two actions would not be equivalent.

    You must know that, otherwise you wouldn’t have mentioned the responsibilities of the FDIC, yet you continue to mention Lehman like it would be an indication of the effects of nationalization in the present. That is simply misleading.

    Geithner — I actually don’t think he’s incompetent, and I don’t care if he is personally corrupt — probably not, as he’s far poorer than previous Treasury Secretaries like Robert Rubin or Hank Paulson. What is apparent is his view on current financial system. It was a system he helped build and maintain — he had a part in every bailout plan in 2008. Did he not? (Right, no time to ask those questions now.)

    As such, I do not see Geithner pushing through necessary financial reform — painful to the politically powerful — except under enormous public pressure.

    You’re not there — cool.

    I am.

    You’re worried about CALPERS? Okay. I’m worried about every, oh, 16 – 20 year old in California who may be f*cked the next decade due to our current passivity and pursuance of failed policies. Or do you just care only about pensioners? Do you?

    I’m serious. I see very little concern — from you — for where we’ll be in 10 years.

  83. 83
    SBW says:

    J. Michael Neal,

    As far as naming new management — in a nation of 305 million people, only a few are currently qualified to run Citibank (or BoA, etc)? And you are offering that up as a serious argument?

    That’s about as asinine as saying if President Obama wasn’t president, who would be? Who could be? I don’t have to offer names. No one is irreplaceable. You may be a proponent of those arguments — and hence the enormous pay differential, and continued bonuses, going to these financial ‘leaders’ , but I, of course, am not — and I know many people in the financial industry would agree.

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