Bonjour les pups! Beautiful day in Paris. As noted last week, this thing is truly spinning out of control. Krugman is right. It is time to despair.
The good news is, I suppose, that there is a bottom. The bad news is we don’t know how far down it is.

digg is open.

Thanks Jane, bullseye, as per usual.

s
Responsibility is for the little people.
/s

Why is it I feel that Eddie Haskell grew up to become Tim Geithner and the rest of us are June Cleaver?
“Oh, that’s a lovely dress you’re wearing, Mrs. Cleaver…”
“Whadya want, Eddie?”

Geithner plans to use the FDIC in this madness. The FDIC, which is already short on cash, is going to underwrite loans to Wall Street. The banks are supposed to pay for FDIC through their insurance fees, but there can’t possible be enough to expand the FDIC’s function to bailing out Wall Street without getting money from the someplace else. Is this just another way for Wall Street to get taxpayer money?

A Fullerton Community Bank official made the national news asking a question about SBA loans at the Costa Mesa Town Hall. But it’s Fashion Island financiers at PIMCO who stand to reap the benefits of Obama’s announced plan to bail out “troubled assets”, or as Atrios would call it, Big Shitpile.

Geithner’s toxic asset plan is a potential gold mine for PIMCO.

Pimco’s Bill Gross, a familiar face during the meltdown, was named fund leader of the year at the 16th Annual Mutual Fund Awards. (Their statuette is known as a MOFO.)

Gross summed up his view on the subject in one recent market commentary in which he discussed cooperating with the government. “Make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond.”

Crossposted from Orange County Progressive

Gotta move fast on this perp. From a quick Google, it looks like the statute of limitations for fraud in California is three years.

according to obama, geithner has a lot of stuff on his plate, and is doing a terrific job. they’re all in

The banks are supposed to pay for FDIC through their insurance fees

Which they didn’t bother to pay, anyway.

From FDL’s Oxdown Gazette

Geithner’s Last Stand – Interesting Robert Kuttner Article

This article by Robert Kuttner, about Geithner’s Public – Private toxic assets plan, just went up on the Huffington Post. It ties in with my earlier diary about Chris Dodd and the Depositor Protection Act of 2009.

The Obama administration knows it cannot get Congress to vote for more bailout money on the scale that they need.

But they know Congress will give a lot of money to the FDIC to protect depositors. […]

Knut, Looks like 57 and partly cloudy, according to the weather map I keep on my computing machine.

I really like the approach, I had never heard of Kurland until this post. Up until now, most of these white-collar thugs were nameless, faceless suits.

Paying bomb builders to go into the dynamite business? That is fucking brilliant! That Geithner sure is one smart fellow.

I’m not too concerned about this ridiculous get-money-from-the-government plan risking taxpayer dollars. Paulson tried this under the Bush government with his auctions and nobody was interested. Geithner’s plan is essentially the same one, except the government takes on more risk. But I know I still wouldn’t put any money into worthless junk, even if the government was matching me 10-1. It’s still my “1″ that’s being flushed down the toilet.

It sucks that Geithner’s cunning plan won’t help the economy, but I don’t see a trillion dollars in taxpayers really being put on the line. All the bait in the world doesn’t matter if the fish won’t bite.

The government cover of bad investment decisions taken in the ‘private sector’ makes the investment strategery a win-win one for the banksters. The bailout winds up creating hyperinflationary conditions that make it a lose-lose proposition for the public not rife with billions in funny money.

It would be salutary to see Congress take a big hit for having bought in on this smorgasbord of deregulation/minimal regulation/throw caution to the wind. Congress needs to be taken apart and put under full scrutiny as much as Wall St. or the Big American Bank Holding Corporations in all this.

It more and more would seem the amount of exposure and where that exposure is located is driving this massive American taxpayer funded bailing out of these money game players. Will eventually be knowable as the history of this is put together but already it seems very large amounts flowing out of USA to money gamers around the planet.

This is as much about defending American $$ citadel from siege being any $$ collapse undermines American militarism/global hegemon then as well.

The vested players/gamers must be desperate indeed to recoup bad paper gambits and these Pentagon scaled taxpayer payouts surely resulting from imagined or far too real threats to American hegemon.

It is odd how Obama WH is so in alignment with Bush WH on this to be sure.

Congress needs to be crucified for this failure. Who will do that though?

It is ever so hypocritical for Congress to be lashing the money gamers when Congress allowed these charlatans to launch these fleecings in first place.

Finally–why is no one getting indicted,arrested and going to jail? If this conduct all proves to have been “legal” then that is first rank moral peril as well. Congress has some splain’n to do to be sure.

Watching Obama on 60 Minutes is cemeting my view that he does sees the “anger” as the venting of the rubes.

I will not ascribe motivation to Obama at his point, I can’t read his mind, but he is either simply ignorant about the economic meltdown or he sees the need to keep the “masters of the universe” firmly seated atop their thrones. Disappointing.

Geithner is corrupt to the core. But if you buy into the premise that Obama is at least as smart and well-informed as Jane Hamsher, which I do, this is completely his responsibility, and he’s the one who’s failing us.

I concur.

Larry Summers is Eddie Haskell – Geitner is the guileless nitwit the Haskell’s of this world employ to light the cherry bombs in the boys bathroom :D

How about someone like Bill Moyers or Charlie Rose sponsor a debate amongst Krugman, Galbraith, Geithner and Summers, before we burn the last bridge.

Or at least have someone ask Obama to explain why he’s certain Krugman and Galbraith are wrong, and Geithner and Summers are right.

The Masters of the Universe must like what they’re hearing. Market’s up almost 300.

“The same thieves are back again to pick their pockets in broad daylight, thanks to the tireless efforts of Timothy Geithner on their behalf.”

Well, let’s not forget that Obama is responsible for Geithner, Summers, et.al. and the continuing looting of America. Nor should we forget the assistance of the Bush Administration, Republican and Democratic Congresses, or Clinton, Bush I and Reagan.

So let’s realize we have had a criminal class responsible for the looting of America running this country for more than thirty years.

“Brownie..I’m sorry…Timmie, you’re doin’ a heckuva job…”

How many disappointments does it take to realize we are barking up the wrong tree? As for Obama, he’s smart enough to know that opposing the masters of the universe can be literally fatal. Maybe that’s why he’s getting out of Iraq later rather than sooner. We the people must be organized better than we are. There’s the rub. Not only don’t we want to speak in a single voice, we think collective action diminishes individuality. Until we get over that, the powers that be will keep taking us to the cleaners.

“Or at least have someone ask Obama to explain why he’s certain Krugman and Galbraith are wrong, and Geithner and Summers are right.”

Obama is certain that Krugman and Galbraith are wrong because it’s a job requirement.

I’ve shaken hands with O.J. Simpson and Angelo Mozilo.
Not much to brag about.

These plans won’t fix the system. The whole thing is set to tumble down and with it the Obi administration. He tied himself to a failed system run by greedy people who engage in what is fraud and are being rewarded for it, its complexity instead of being held accountable.

The people are suffering are asked to pay good money after bad to these crooks. They won’t be happy.

Things will heat ip this summer.

Didja wipe the orange off of your hands after?

-G

Vikram Pandi, the CEO of Citigroup, does not seem to be good at very much, but he is starting to get the hang of firing people. According to Reuters, “Citigroup Inc plans to shed about 10 percent of its global workforce, a person familiar with the matter said Friday.”

….”looting”….”criminal class”, sounds kinda shrill to me, …but totally accurate.

If you accidently read this ‘Mr President Obama’ (highly unlikely) you are heading toward the end of your political career if you don’t change course now. I can’t tell the difference between your economic bank rescue and Bush’s, that’s frighting. You will spend the rest of your term in a Carter like state of ‘doldrums’ or worse yet a Bush like state of dispair and disgust with a 15% approval and the Dem Party will disintegrate if you don’t change course now. If you fail to curb the influence of the very same corporations that created our financial disaster then God help us all.

Paul Grumman says that Obama is recycling bush economic polices and that’s exactly right

we CANNOT give more money to those same people who destroyed this economy in the first place, the very principle is bizarre and the fact that we are even discussing it, absurd

I was pleasantly surprised by the good job “Dateline” did last night in explaining much of the mortgage mess. They did, however, fail to include Congress in the list of contributors to the mess. Perhaps if Obama had a chance to see the program, he would begin to understand better the basis of the public’s outrage. I sensed in the 60 Minutes interview that he didn’t get it. He said the American people don’t want to spend any money to fix the problem. That’s not true. They don’t mind if money is spent – just not given to those who have already made so much money out of other people’s misery – like the Countrywide folks. When addressing critics, he described those with an axe to grind but left out those like Krugman and Galbraith who simply want to see a plan they can believe will actually work. Another error on his part. Hope someone is giving him good advice. Michelle maybe?

Well said.

I hope Michelle will set Obama straight. She is where I pin my hopes (what remains).

UC Berkeley Economics Professor Brad DeLong defends the Obama/Geithner plan:

The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world’s largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off–in either case at an immense profit.

[…]

Q: Why is the government making hedge and pension fund managers kick in $30 billion?

A: So that they have skin in the game, and so do not take excessive risks with the taxpayers’ money because their own money is on the line as well.

(Krugman replies here.)

IIUC, the toxic assets to be bought up are CDOs that are backed by home mortgages, in which case I have a few problems with Professor DeLong’s analysis.

First, what does it mean to hold such a CDO to “maturity”?

Second, for the market for such CDOs to “recover,” the value of their collateral has to “recover,” i.e., the mortgage bubble has to re-inflate, and busted bubbles simply don’t re-inflate.

Third, the Obama/Geithner plan is brilliantly crafted to obfuscate the transfer of real loss from the investment banks to the taxpayers, simultaneously creating profit opportunities for hedge funds:

– Helicopter Ben has recently printed up another trillion BenBucks.
– My Hedge Fund (MHF) will gladly borrow $97M BenBucks to purchase $100M of misunderstood assets (worth $50M at market) from Citi.
– MHF will insist, however, on a $10M CDS to cover the risk.
– MHF will eventually default, forfeiting its $3M.
– MHF will then file a CDS claim and collect $10M and its pocket $7M.
– Citi will write off that $10M of its real $50M loss.
– The government will seize the assets, and sell them for $50M.
– The government will eventually have to tax those other $47M BenBucks out of circulation lest they contribute to inflationary pressures.

The point here is that Citi gets to name the price. MHF will pay whatever Citi asks, so long as they’ll sell MHF a swap to cover its 3% plus a generous fee. In no case will MHF have skin in the game.

Or at least have someone ask Obama to explain why he’s certain Krugman and Galbraith are wrong, and Geithner and Summers are right.

great question there, I would add for good measure and why he thinks bush was right while krugman and galbraith are wrong

“In fact, it’s off-the-charts good,” he told Mr. Kurland

I Just Bagged the Elephant !

Third, the Obama/Geithner plan is brilliantly crafted to obfuscate the transfer of real loss from the investment banks to the taxpayers, simultaneously creating profit opportunities for hedge funds:

now so brilliant since it’s been transparent at the very conception that the plan would give our money to those who destroyed the economy in the first place.

not brilliant at all, simply depraved

And I keep saying, since FDIC has to go to congress to get more money, Congress can (and should and MUST) give the FDIC money but in a bill that bans the funds from being used for anything other than purely insuring deposits. Make the money off-limits for Geithner/Obama to steal for the benefit of Goldman Sachs, etc.

You read my mind — just working on Bill Gross. Will link you up.

Jane Hamsher March 23rd, 2009 at 8:57 am
41
In response to Aeolus @ 5 (show text)

You read my mind — just working on Bill Gross. Will link you up.

Thanks,

The OC’s been leading America in right-wing crazy and financial fraud for decades now, almost always the wrong way. County government figured out how to use leverage and Wall Street to bankrupt ourselves in 1994.

For unclear reasons, PIMCO and the bondholders it represents are treated as untouchable in all this even though they assumed a risk in underwriting all this crap.

OT a little, but FWIW, I found this conversation between Moyers and Kevin Phillips from last September fascinating. Phillips says, after stating how dangerous McCain’s (Gramm’s) economic policies would be:

But then you’ve got Obama with Bob Rubin and he doesn’t have any problem with the hedge fund types… So I don’t exactly see Obama as this fellow riding in on a horse who represents all kinds of reformism. It’s an important thing probably to have to change from the Republicans but I don’t see that he is free of the ties to finance and Democratic Party financial types. . .

[T]he Democrats are the party right at this point that’s getting most of the financial money. When Franklin D. Roosevelt won in 1932, we know he wasn’t … [t]he Democrats think it’s going to be another 1933, they get in there, they can do all the New Deal stuff. My feeling is that they’re coming in halfway and they’re going to have to make hard decisions that are going to eat the Democratic coalition like a bologna sandwich. They’re going to start civil wars…

[I]f you’re going to bail out Wall Street while you’re saying oh, the Social Security recipients, maybe they don’t even need that money. A lot of people in the financial community basically want to push Social Security on some sort of voluntary basis and needs test it and get rid of it. Now, a lot of Democrats in the labor movement are very nervous about Obama. They put out press releases talking about Rubin-nomics because they see that the flesh of the Democratic Party carries a lunchbox. But the new soul of the Democratic Party wears a pinstripe suit…

If [Obama] were to start talking about [how we’ve let this Las Vegas version of banks go berserk] I’d take him seriously. But I think half of Washington would have a problem … Cause you don’t rock that boat. You pretend that it’s a sound economy. And if it’s not sound, it’s nothing that the old Democratic elixir can’t fix… I don’t expect him to level.
But the stakes are much higher now and not “leveling” or going “halfway,” much riskier. As Krugman put it: “This administration, elected on the promise of change, has already managed… to create the impression that it’s owned by the wheeler-dealers. And that leaves it with no ability to counter crude populism.”