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Thursday: Geithner channels Alfred E. Newman

Tim Geithner takes optimism to the next level

Tim Geithner takes optimism to the next level

I’m plugging Planet Money again today.  I simply *love* these guys.  Their podcasts reveal as much about the bizarre atmosphere surrounding the economic meltdown as the situation itself and its major players.  Gee, I hope they continue to get the high level guests after this last episode with Tim Geithner.  As I said before, Planet Money doesn’t seem to be into propaganda but they are keen observers.

So, Tim Geithner gives Planet Money an interview and he brings along a press aide.  As the producer mentions, during parts of the interview, you can hear the aide whispering to Geithner while he speaks as she keeps him relentlessly on message.  Too funny.  Or disturbing, because what Geithner says about “stress tests” makes you wonder- why bother?  According to Geithner, the government will begin to stress test several banks with the worst case scenarios.  They’re going to be tough and thorough, you betcha.  And if the stress test shows that the bank is troubled, we’re going to rescue them so they stay in private hands.  Even iffen they don’t need a lot of rescue, we’re going to rescue them so they stay in private hands.  Whatever the outcome, we’re going to save them- for the private sector, so don’t you worry your pretty little taxpayer heads because the banks will stay in private hands.  Of that, you can be sure, bynettyjingo!

What if the stress test shows the banks need to be nationalized?

We will save them for private hands!

The message seems to be pretty unambiguous:  No matter what the stress test reveals, the banks shall remain private.  This is meant to be reassuring to us, the taxpayers but if I were a banker, I’d be *doubly* reassured.  In fact, I might just ease up on the xanax and take a mini vacation to someplace warm.

It’s all going to be just fine.

If it weren’t for Paul Krugman always trying to harsh Geithner’s mellow.  Paul quotes Adam Posen about Japan again.  Says Posen:

Pretending that distressed assets are worth more than they actually are today for regulatory purposes persuades no one besides the regulators, and just gives the banks more taxpayer money to spend down, and more time to impose a credit crunch.

These kind of half-measures to keep banks open rather than disciplined are precisely what the Japanese Ministry of Finance engaged in from their bubble’s burst in 1992 through to 1998 …

What a frickin’ crepe hanger.

In the meantime, the banks will take our money and get back to us on it someday in the future.

111 Responses

  1. Capitalists on the way up, socialists on the way down

  2. Alfred E. Newman is not Barry after all. He is perrrrrfect for Tim Geithner, even if Alfred may in the end be a tad more wily.

  3. These stress tests remind me of the roll call at the DNC convention – we may stage it to appease the crazies, but the stadium is already booked and the temple already built!
    And for even more absurd goings on, Rush Limbaugh wants to find out why women hate him. really!

  4. There’s so much misdirection in this interview that it defies logic.

  5. When the President speaks, the market listens… and crumbles.

    November 5, 2008 (Wednesday after Election Day): -486 (5.0%)

    January 9, 2009 (one day after Obama speaks at George Mason University on “need” for $800 billion stimulus package): -143 (1.6%)

    January 20, 2009 (Inauguration Day): -332 (4.0%)

    February 10, 2009 (one day after Obama declares that without a stimulus, “an economy that is already in crisis will be faced with a catastrophe”): -382 (4.6%)

    February 17, 2009 (market opens for the first time after Congress passes $787 billion stimulus on February 13; Obama signs bill into law, declaring, “The stimulus lets Americans claim destiny.”): -298 (3.8%)

    February 19, 2009 (one day after Obama announces potential mortgage relief plan): -90 (1.2%)

    February 25, 2009 (one day after Obama’s first speech to the full Congress): -80 (1.1%)


  6. My best friend, who spent his entire career in finance, raised an interesting question the other day. He asked why Americans are opposed to nationalizing major banks but don’t object to large portions of stock being owned by Middle East investment funds. As he rightly pointed out, countries such as Saudi, Kuwait, the Emirates and others don’t have private investors. The wealth of those countries is essentially owned by the ruling families, and investments are made in the name of each particular nation. So, he asked, why is it okay for our banks to be owned by foreign nationals but not by us? Wouldn’t we rather own these companies ourselves than have the majority of stock held by foreign nations? Or is that just too much common sense?

    • It could depend on the definition of nationalism. If it is receivership in the sense that Krugman thinks of nationalism, equity would be zeroed out (wiped out), whether they had been in the hands of private investors, sovereign wealth funds, or the US government. There would be no issue of ownership. Just the matter of defining and absorbing the loss on the bad assets and thereby rebalancing the bank books. Most if not all of the cost would be incurred by taxpayers.

      • We’re going to be absorbing the losses anyway, but if there’s a chance for recovery of these institutions, I’d prefer to see some upside potential for the taxpayers. But that wasn’t my point. My point was that nationalization seems to be a dirty word in this country if the nation happens to be us. But if it’s a foreign nation that comes to the rescue, we seem to think that’s okay. Ridiculous, IMO.

        • Sovereign wealth funds have invested in non voting shares of US banks. Like other investors, they have taken big hits and are not eager to invest again. The Treasury last fall took non voting preferred share stakes in all the large US banks. This week Treasury is moving to convert that stake at Citi into common shares with voting rights, effectively absorbing a 40 billion loss, and leaving a 90% reduced taxpayer stake that has quicker upside and downside. That has made the debate on nationalism more urgent. Congress’ estimate last month for socializing all the bad debt at US banks was as high as 4 trillion. The SS trust fund by comparison has 2 trillion. There is a separate discussion on overseas central banks and their foreign reserves buying US treasuries to support our national debt. One of the resulting effects was keeping the dollar high and driving consumption of imports. Not sure that effect is active today. Net net, we got too deep into debt. If we’re going to pay it off at cost (nationalize), it is going to effect everyone and it will take time.

          • “The SS trust fund by comparison has 2 trillion.”

            Not for long, if Barky has his way with it 😉

        • Put another way. Socialism sucks when you’re already in debt, because it levels the playing field for debt servicing. Just my view.

    • 0oh!please..that’s way too much.common sense for our government!

  7. I saw Geithner on PBS news last night. I couldn’t hear much of what he was saying because I was riding my exercise bike. My impression watching him was that he is either on drugs or completely insane. I’m listening to him on Planet Money right now and he does sound like he’s been sedated.

    Meanwhile, both Krugman and Dean Baker say that the stress test is based on a worst case scenario of 8.9 unemployment and 22% drop in house prices. And we should hit that by April!

    • if that’s the worst case scenario, they’re smoking something. that’s just a bad recession, it doesn’t even hit a mild depression definition

  8. Is it possible that Obama, Geithner, Summers, and the rest of these guys are just in denial? Or are they really trying to bring the whole country down?

    • I can’t figure that out either. But I think the con men are still trying to work out another shell game. What I do know is that we lost before the game even started.

      • I agree – I suspect they are trying to find an angle for themselves.

        UGH just do the right thing for once in your godforsaken lives!

        I know. I’m shaking my fist at the sky.

    • Very good question, bostonboomer. I sort of hope it’s the former, because then there’s a chance that something might smack them in the face and bring them back to reality. The latter possibility is frightenting because they are in a position to accomplish that.


      The majority of American bank stocks are in the hands of Foreign Entities or Persons. And who funded most of Obama’s campaign?

      Do you think ANYBODY in the O’s Administration is going to move to wipe out billions of dollars in investments held by such generous supporters?

      And also, if we need foreign investors to buy our galloping debt, would it not be the worse move to wipe out some of their already present investments, specially considering such already lost 50% ot their value ?

      I think Geithner is perfectly aware that he has to promote a loosing financial policy because of the political choice Obama made on the economic crisis.

    • my guess is that they’re trying not to panic people and then set up a self fulfilling prophesy, they undoubtedly have worse case scenarios than that out there … otherwise why was the military practicing for food riots in my city last month?

      • Food riots practice in New Orleans?

        What was the practice: organizing people to distribute and collect needed food OR beating up and arresting hungry protesters?

      • Are we not the largest food producing nation in the world?

        Under what hideous scenario would America have food riots. You know what I’m saying?

  9. I’d been miffed at NPR because they were not always so kind to Hillary. But they seem to be a yeoman’s job on the financial crisis. Interesting, because unlike PBS which is funded by 80% by CPB (Corporation for Public Broadcasting) and the rest by membership, NPR is 100% funded by membership. So if the administration were to pull the plug on CPB, Jim Lehrer and Bill Moyer may not have jobs, but NPR would forge on. Outside the web, it is the only mass medium I can think of that is purely owned by the public.

    • NPR gets a lot of money from corporations, at least around here they do.

    • Yeah, I don’t think that’s right. NPR gets plenty of CPB money. Check out CPB’s annual report, page 41 or so. It looks like public radio got over $100 million in 2007 from CPB, for various program services at least. Later in the report, the money to individual stations is detailed. So while some individual stations may get no CPB money (I didn’t check through all of them, just the few around me), most of them do.

    • I hope this isn’t a duplicate comment, my previous one seems to have not posted. But public radio stations get plenty of money from CPB for programming services, at least. You can see it in CPB’s annual report (latest is 2007):

      CPB annual report.

      • Yes, thanks for the correction. NPR seems to get some CPB funds, and as bostonboomer says around 25% of their budget comes from corporates. Alas.

        • I’ve wondered how much NPR’s listener support has diminished due to its anti-Hillary, pro-O bias, its veritable drooling over Teh One. I know my pledge dollars never left the bank (credit union) last year.

          • Since I was a little kid I have listened to NPR every day of my life. Until last year. And I’m through with them.

    • Wait a minute – that was not my understanding at all. I’ve read separately that NPR is funded by 3 approximately equal sources: government, individual donations, and institution (corp/non-profit) grants and donations of that type.

  10. SOD, I know. Common sense seems to be an uncommon virtue.

  11. There is just no way anyone could be as “calm” as Geithner is in this situation unless either he is sedated or he is a sociopath who does not experience normal emotions. No way.

  12. bostonboomer
    I agree.
    Geithner acts like someone on drugs.

  13. Catarina,

    He may be, but I think he’s a sociopath.

    • I think he is in WAY over his head. I tend to be kind though.

      • If he’s in over his head, we’re really in trouble. Didn’t he come over from the Fed?

        • The last Fed is partially why we are in the present predicament. Quite frankly him being from the Fed doesn’t inspire extraordinary confidence from me.

        • yeah, but being a bank regulator isn’t the same as looking at the macroeconomy even if you are in charge of the NY Fed, you’re more into market structure than the big picture economy

    • Yes, there is no reason he can’t be both.

  14. That’s what you get from placing a tax CHEAT in charge of our treasury. What did you guys expect? Anything transparent and clearly defined? Ha! Even Paul Krugman, one of the world’s must prominent economist, can’t make sense of Geithner’s plan (Ok ok I know he’s SHRILL).

    Did you guys see Andy Rooney on Geithner’s language? Hilarious.

    PS: Hey BB! I really miss interacting with my fellow Conflucians on a regular basis. Somehow, I’m also kinda jealous and envious for not being in the midst of this whole charade, because we saw it coming.

    • Hi MABlue!

      Did you notice we have nested comments now? It’s caused a lot of turmoil among us Conflucians, but you can reply directly to someone’s comment these days.

      How are things in Germany?

    • Germany’s banks aren’t in all that great shape according to the link I included in my Canadian bank research…

      Weird thing today (off-topic)…a post I did a few weeks ago on HRT and brain shrinkage is suddenly popular in Germany…it’s been translated into German 14 times today by Windows Translator….so says my WordPress “hit list”…..STRANGE

      • Insightanalytical,

        Cool! You’re world famous!

      • Hi guys:
        Just got back in The Conflience.
        Indeed Germany’s banks are not doing that great. You know that Commerzbank will certainly be nationalized and Dresder Bank has been acquired by Commerzbank. Deutsche Bank is still throwing some smoke screens pretending they are not doing soo badly after all but I have some insight info on them and it ain’t pretty.

        PS: Could u link to ur now famous post about brain shrinkage? I missed it.
        PS2: I’m not on my computer, which means I’m torturing myself with iPod-blogging

  15. Speaking of taxes,

    The 2% Illusion
    Take everything they earn, and it still won’t be enough.


  16. Good Morning, everyone!!!Here’s some more research I did on CANADA taking over U.S. banks….and GG is back with the way this might spin out….cynic that she is!! (LOL, but probably on track…)

    Canadian Banks On the Move Buying U.S. Banks While Bailout Recipient AIG Sells Canadian Life Insurance Business to Bank of Montreal (”Picking over the Carcasses”)


  17. I just saw this in an AP article on Obama’s budget,

    President Barack Obama is sending Congress a “hard choices” budget that would boost taxes on the wealthy and curtail Medicare payments to insurance companies and hospitals to make way for a $634 billion down payment on universal health care.

    Is that just careless writing or did I miss something? Do we know what his plan for health care is yet? there isn’t even a HHS secretary yet is there?

    • No, you didn’t miss anything but as always it depends on how you define “universal”. Isn’t it rather sad that in this economic crisis we are not even permitted to debate Medicare For All(which is supported by a majority of Americans)? If this plan subsidizes public health care for the poor while forcing the rest of us to buy for-profit private insurance ala MA health “reform”, then it’s a colossal waste with weak political legs. If he opens up Medicare to everyone ala Hillary’s plan then it’s much better, though frankly, with the disaster we are in, the only reason we are not debating straight forward Medicare for All is because of the private for-profit market failing insurance sector. I mean, Obama and Harry Reid and Nancy Pelosi all agree Medicare Advantage has to go because subsidizing private insurers under single payer Medicare has proved an unmitigated disaster, so then why would an even bigger plan for subsidizing private insurers work? Makes no sense. I will say if he allows everyone access to Medicare, the key to Hillary’s health plan, he will have achieved a great deal and the largest expansion of federally administered health care since LBJ.

    • I have concerns about this but I have to go to class so they’ll have to wait. What happens in the meantime is my question. Curtailing is cutting back. What if you don’t currently have Medicare but are supplemented by it? What happens to you then?

      I’ll find out later, I guess.

      • The cuts are things Bush put in place, ie Medicare Advantage, as well as not paying for hospital mistakes. Both things that are just wasteful spending, and were proposed by Hillary.

    • I have no faith in his plan whatsoever. I’m sure whatever he comes up with will look like the “Clean Skies Initiative”

    • he’s always saying things and then never showing any one any detail or plan, drives me nuts!

  18. Never fear investors, Supertaxpayer will save the day.

    Unemployment 6.5 million
    Housing at a 21 yr low
    Corporation shuttering sites faster than you can say their names but hey Rejoice because Obama and his merry men will continue to use Supertaxpayer to prop up the investment sector.

  19. apparently, Obama thinks he’s living on “Planet Money”

  20. apparently, Obama thinks he’s living on Plant MONEY

  21. The rumor is Obama has finally picked a dog.

    • comment removed

    • That’s not a rumor anymore.

    • okay this burns me… One of the kids is allergic to dogs, right? So they plan on getting a “hairless” dog. The Obamas lived in one of the meccas of alternative health treatments and New Ageism, yet he never once looked into NAET which gets rid of allergies. I’ve had this done, and believe me it works! So Mr. Big I’m organic man ladida… is one big FAKE! I can’t believe that so many people in the field of natural health/alternative treatments, which tend to be more of the liberal persuasion have yet to see into this bullshit.

      rant off

  22. Doesn’t this economic meltdown have that feeling we all had watching Katrina happen and happen and happen? All the while the government was talking and bamboozeling and scheming ways to take advantage of the disaster.
    We are drowning and they throw cement blocks our way.
    Scary sh*t!

  23. The rumor is Obama has finally picked a dog

    If you’re gonna get a “shelter dog” you don’t consult the AKC book of breeds and then announce to the media what breed you want.

    You take your daughters (leaving the media behind) to the local shelter and let them pick one of the inmates on canine death row, then you give it a pardon. You take it home and teach your daughters how to take care of their new pet/family member.

    How many animals have been put down in the last month because no one adopted them?

    • I’ll bet some lowly WH staffer will have “feed, care for and clean up after dog” in their job description.

      • Well, the kids will look after the dog for a little while, but like all kids it’ll eventually become a chore they don’t want to do. I’m sure BO and MO won’t be picking up the poop. Maybe Rahm will do it? There’s a play with heavy symbolism in there somewhere madamab might want to consider writing!

  24. I heard on the radio this morning that it is a portuguese water dog. That is a far cry from a shelter dog.

    • they’re waiting for a rescue one, I guess… right, i’m sure it’ll be a leftover failed show dog from some rich breeder.

    • A friend of mine in New Orleans adopted a Port. water dog and sorry to say, the poor thing was crazy as a loon. Very, very aggressive and with no liking for any living, breathing creature, human, canine, or feline.

  25. poor dog

    • listen, those girls are going to need something to get them through the next 4 years other than just sneaking to the white house kitichen for french fries … i can’t even imagine the trauma of growing up with all that living in the white house entails at that age.

  26. they go for about $2000 a pop. I guess Michelle Antoinette and King Asshole the first are living up to our expectations….


    • gary, as I replied above, the Obamas could have paid less than a $1000 to get allergy treatments and then went to a shelter to let those girls get whatever dog they wanted. urgh

  27. It’s hard enough to find a Portuguese Water Dog from a breeder- no way that you’re going to find a “rescued” one or one waiting at the shelter- just be truthful about it, BO!

  28. Port. water dogs are high end. they are hypo allergenic and don’t shed.

  29. maybe they should name it “stimulus” and claim they are doing their part to help the economy…

  30. The family wants a rescue Portuguese water dog of the appropriate age and match. “Temperamentally they’re supposed to be pretty good,” Mrs. Obama said. “From the size perspective, they’re sort of middle of the road. … And the folks that we know who own them have raved about them. So that’s where we’re leaning.”

    I guess rescued for the Obamas means they don’t have to pay the $2000 asking price…

    • Ding Ding DING!!!!

    • LOL!!! right you are. Like they wanted to move into a Gov house before Jan 20th….. remember that? They were saying ” our girls need residency for school!”

      A it’s a private school, I doubt they will hold you to that

      B didn’t you know that after Nov 5th ?

      But that was B&M, just looking for free digs

    • “Rescued” means it was rescued from a life with “common folks”. And they won’t pay for it – someone will donate it just for the priviledge of making the O girls happy.

      Good lord, I hope those girls don’t start asking for a miniature horse next.

  31. Labradoodles are the other hypoallergenic breed, and they did have one at the local shelter at one time, as they are the progeny of relatively common breeds, labs and poodles. I love dogs!

    • me too!

      • What kind of dog is in your avatar?

        • Macho is half Shi tzu half maltese. I think they call them malte-tzus, but I like to call him a shitese 🙂 I hate to admit we bought him, but our other three dogs are all rescue dogs. you can see pics of them on the sidebar of my blog at garychapelhil.wordpress.com

          • He’s a cutie. I have a McNabrian Dobreador- McNab Terrier, Australian Shepherd, Lab, and Doberman. She’s the most loyal and intelligent dog I have ever owned- found her in front of Walmart, and the owners had the class enough to issue a birth certificate with the above info. Sorry to highjack the thread.

  32. Click to access fy10.budget.pdf

    Obama’s budget in all it’s 146 page glory

    • and for a mere 26 bucks it can be yours!
      available for purchase from the Government Printing Office-keeping America informed!

  33. this is excerpted from the Obudget:

    Prevents Teen Pregnancy. The Budget supports
    State, community-based, and faith-based
    efforts to reduce teen pregnancy using evidencebased
    models. The program will fund models that
    stress the importance of abstinence while providing
    medically-accurate and age-appropriate
    information to youth who have already become
    sexually active.

  34. How much you wanna bet a PWD will turn up at a shelter in the next couple weeks?

    Double or nothing it will be housebroken and obedience school trained.

  35. what exactly is a ” crepe hanger”?

    I’m always shopping for new insults… perhaps I can work this one in to my repertoire.

  36. CNN.com has a picture of a klansman with a burning cross and burning swastika on its front page. I guess they really don’t want people looking at that budget.

  37. Important: Please read

    On March 11th, the View From Under the Bus is celebrating Women’s History Month with their first annual Women’s HERstory Month Trivia Sudden Death Showdown.

    Pre-register to be a contestant for the fun, fast and fantastic Conflucian Game Show! Send an Email with your name (or screenname) and the last 4 digits of your phone number to:


  38. The banking industry, who happens to be broke enough to need taxpayer handouts, evidently still has enough money to lobby. They managed to thwart mortgage relief in bankruptcy court. It’s being tabled due to infighting.

    The article even goes on to relay what they want written in the legislation and what it has managed to get written thus far. Isn’t it swell that we aren’t even hiding the fact that an industry who got a 700 billion dollar bail;out because of its poor decision making is helping write legislation that Americans will need to rely on?

  39. Medicare Advantage is a BUSH scam and every Democrat worth his or her salt wants it eliminated. It will not reduce Medicare benefits. I disagree with his higher premiums on Medicare for the wealthy because I think Medicare works politically because premiums cost everyone the same, BUT many of the things he is suggesting in this plan come right out of Hillary’s health plan.

    • Alot of us don’t consider ourselves Democrats any longer, nor do we consider the term worth it’s salt any longer.

      I’m sure the devil will be in the details which will be hidden until after they are voted on and likely not even read by the people voting on it. God Bless Obamerica

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