Weird…and probably misleading

I read this WaPo article, following a link from Atrios.  It’s about when Tim Geithner considered leaving and he recommended Hillary take his place as Secretary of the Treasury.  So, the summary goes like this: Geithner was ready to leave a couple of years ago and when they asked him who would be a good replacement, he suggested Hillary.  Here’s the run down of how that played out including the part that Atrios finds weird in bold:

Geithner had submitted a list of names to the White House. Chief of Staff William Daley appeared to “slow-walk” and rob the Clinton suggestion of any momentum, according to one of the administration officials. But actually, Daley was conducting his own vetting process, another official said.

He broached the idea with Clinton. An administration official familiar with the exchanges characterized her response as “cautious interest.” A person close to Clinton had a different take: “She listened respectfully and politely.”

Daley called a few trusted eminences on Wall Street, sounding them out on the personnel switch. Their response was resoundingly positive, both officials said. She had never been a banker, but as a senator from New York, Clinton had cultivated many relationships within the financial sector. Some of them had been longing for the kind of attention they had received from her and her husband, former president Bill Clinton, but rarely got from Obama.

And unlike Geithner, who disdained high jinks on Capitol Hill, Clinton had an intuition for political risk. She knew committee chairs. As the debt crisis worsened in the United States and Europe, Clinton’s popularity abroad would have also allowed her to talk sense to other leaders.

Weird indeed, considering that these were the very same bankers who rejected Clinton for Obama in 2008.  Back then, I suspect that Hillary looked a little too much like rehab so they threw their weight behind the guy who might like to party with them later.  That didn’t work out so well for any of them, or us, for that matter.

It doesn’t surprise me that the Clintons cultivated the bankers.  They’re politicians.  It’s what they do. Of course, there’s a difference between cultivating and prostitution. But as Karen Ho’s book, Liquidated, explained, bankers distrust Yale graduates as being too liberal.  I know that sounds facile on the surface but conditioning and tribalism are not easy things to overcome, even for the banker crowd.

In any case, by the time Geithner was ready to retire from Treasury, the damage was already done.  The article reports that sources close to Clinton says she listened “politely and respectfully” to the suggestion but it doesn’t sound like she was interested.  She’s not stupid, which is probably why only a national emergency will ever persuade her to take the VP position and maybe not even then.  Why the f^&* would she want to do clean up after Geithner?  They didn’t get along almost from the beginning when he wanted to move into her territory at State.  At State, she’s not sullied by all of the domestic crap.  If Obama and Geithner made a royal mess of things and didn’t support the homeowners drowning in their mortgages, they couldn’t pin it on Hillary.  Her political reputation doesn’t take any hits.  Dragging her into Treasury would definitely do her in.

I think it says a lot about Clinton’s professionalism and capabilities that Geithner even suggested such a thing.  It’s like saying she’s the best that Obama has in his cabinet.  She can do practically anything.

But note who “slow walked” it around the White House.  It was Chief of Staff William Daley.  There is a political component of this that the Chicago boys don’t like.  Were they afraid she’d get more face time?  Get in to the office and find that there were things she actually could do after all?  Make Obama look even worse than he already does?

I don’t know.  There’s not enough information for me to go on, although I’m sure it is more meaningful to the people in the immediate vicinity of Washington.

What this article *does* do is associate Clinton’s name with Wall Street’s in a potentially negative way, implying that she would be friendlier to them than Obama has been (hard to imagine that, to be honest).  We’ve seen this kind of thing before whenever the voting public starts getting wistful about Hillary.  Suddenly, there are articles about “Hillaryland!” at State and how she doesn’t run State like a man would, like that’s a bad thing.  But it’s all rumors and innuendos, intended to put you off your kibble if you’re a Democrat constructing all of the possible 2012 election scenarios.

Nevertheless, we can’t deny that the bankers took a good look at both candidates in 2008 and decided to pass on Hillary, despite the “attention” she gave them as their senator from New York.  They threw all of their weight behind Obama in a major way.  Let’s not pretend that the bankers had nothing to do with Obama getting the nomination. It has always been my suspicion that the Clintons weren’t overwhelmed by the “complexity” of the financial industry, after their experience and time to reflect where things went wrong.  The fact that the bankers seemed receptive to the idea of Hillary going to Treasury indicates that they thought they didn’t have much to fear from her after they’d already rewritten the rules in their favor and endorsed the blank checks in 2008-2009.

It was the White House that blinked.

Also, Atrios has an Asshole Test about children of illegal immigrants.  Cut out and carry with you.  This is useful.

More of this please.  It could be a series.

*********************************

BTW, this is what Hillary said in September 2008 and gives a pretty good indication why she didn’t get the nomination.  She put too damn much emphasis on bailing out people with bad mortgages.  Her priorities were all wrong even it turns out she was prematurely right.  Hmmm, if we’d elected her, we might actually be on our way to recovery right now and looking forward to a second Clinton term instead of dreading the future:

Geithner and Summers: Economic Disaster Deja Vu

Timothy Geithner’s profanity-laced rant against Sheila Bair and Mary Shapiro for their rational, reality-based concerns about increasing the power of Federal Reserve Bank, as opposed to increasing oversight of the system, should elicit a kind of déjà vu because the scenario has been played before. (Note: Increasing oversight does not mean policy disclosure.)

In 1997-8, Brooksley Born, the head of the Commodities Futures Trading Commission, tried to open a discussion about introducing oversight measures into the OTC derivatives market by producing a memo because she could see that:

“There was no transparency of these markets at all. No market oversight. No regulator knew what was happening,” Born says. “There was no reporting to anybody.”

Summers, Rubin’s deputy (and now director of the National Economic Council), said the memo had “cast the shadow of regulatory uncertainty over an otherwise thriving market, raising risks for the stability and competitiveness of American derivative trading.”

History, in the form of the role these derivatives played in this economic disaster, has proven that she was right to undertake that initiative. Unfortunately, Greenspan, Leavitt, Rubin, and Summers, to name some major players, were effective in pushing legislation that ended the CFTC’s ability to undertake oversight.

Born assailed the legislation, calling it an unprecedented move to undermine the independence of a federal agency. In eerily prescient testimony, she warned of potentially disastrous and widespread consequences for the public. “Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans,” she testified that July. “Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Notwithstanding, her concerns were dismissed and her ominous predictions came to pass.

Geithner is a protégé of Summers.

Is it not an ironic twist of fate, and a testament to Geithner’s blind faith against oversight, that he, like his mentor before him, is assailing intelligent, moral, qualified women for pointing out the  folly of his ways.

{Note: I defer all economic inquiries to our resident expert, Dakinikat.  My interest in the situation is the social dynamic.}

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Who’s Zoomin’ Who?

On a day when Chairman of the Federal Reserve, Ben Bernanke and Treasury Secretary, Turbo Tax Timmy Geithner, tax cheat (TTTG,tc) appear before Congress seeking unprecedented power to further loot manipulate regulate the financial industry, including non-banking entities like AIG, the company whose bonuses they’ve been called on the carpet to address, perusal of the day’s news stories, blog posts, and opinion pieces reveals more questions than answers.  Is this the bizarre Obministration Hokey Pokey Bamboozle One Step Forward, Two Steps Back Cha-Cha-Cha it appears to be, or are the Obanomic efforts of the government so far truly on behalf of the people?

Talking Points Memo‘s Josh Marshall wonders if we are living in an “alternate universe” after reading today’s Wall Street Journal article claiming that the Obministration has had a recent change of heart towards Wall Street, itself.  I’m not sure what exactly it is about the Journal’s conclusions that has Marshall’s knickers in a twist, but one of the passages that jumped out at me lead me to believe that the article’s writer is completely full of hooey.  Rather than eschew a close working Wall Street relationship as Monica Langley claims, it seems to me that Barack Obama was bought, paid for and hand-delivered to the White House courtesy of the banksters he now serves.  Though Ms. Langley spends a lot of ink chronicling the many instances where Obacolytes paid lip service to being critical of the “dirty bankers” that financed his campaign and advised his every move during his presidential run, she ignores the obvious fact that he’s been dirty banker pocket lint all along.  Here’s the part that leapt off my page:

Tim Geithner Could Get Some Assistance at Treasury Soon

This is so exciting! Tim Geithner may get some help at the Treasury Department soon. President Obama has just announced three new Treasury appointments. From Reuters a short time ago:

President Barack Obama moved to fill three of the four most senior Treasury Department positions on Monday, including announcing his intent to nominate former department counsel Neal Wolin as deputy Treasury secretary.

Obama also named Lael Brainard, a Brookings economist, as undersecretary of the Treasury for international affairs and said he had decided to keep Stuart Levey as undersecretary of the Treasury for terrorism and financial intelligence.

Wolin and Brainard must be confirmed by the Senate. Levey was confirmed in his post in 2004 and is being asked to remain so does not require reconfirmation.

No word yet on whether they’ve found anyone to answer the telephones yet.

Let’s hope Wolin, Brainard, and Levey’s taxes are all paid up. Timmy really needs some help!

Another piece of news that might not be so good for Timmy and Barack:

There have been rumors and announcements from China about a new reserve currency.

And the IMF has said that it is considering printing hundreds of billions of dollars worth of its own currency.

Today, the two stories came together in a dramatic development. Specifically, the head of China’s central bank proposed making the IMF’s currency the world’s reserve currency, to replace the dollar.

Yikes!

This is an open thread.

Obama’s 60 Minutes Interview and that Odd, Inappropriate Laughter

This morning I watched the 60 Minutes interview with President Obama that aired last night. You can read the transcript here. Part of the interview took place at the White House, with Obama discussing his schedule and how his daughters are adjusting to their new surroundings. The other part was a sit-down interview in which Steve Kroft asked Obama some questions about the economic crisis. I’m posting the first part of the interview below, along with some segments from the transcript that I’d like to discuss.

Just a personal note–I think Steve Kroft comes across as quite biased toward the Wall Street point of view throughout the interview. He expresses compassion for the unfortunate people working for the banks and thinks it’s terribly unfair to ask them to work for *only* $250,000 per year.

STEVE KROFT:
Your Treasury Secretary’s plan… Geithner’s plan, and— your plan really— for solving the banking crisis— was met with very, very, very tepid response. And you had a lot of people criticize… a lot of people said they didn’t understand it. A lot of people said it didn’t have any— enough details to— to— to solve the problem. I know you’re coming out with something— next week on this. But these criticisms were coming from people like Warren Buffett, people who had supported you, and you had counted as being your—

PRESIDENT OBAMA:
And— and— and— and Warren still does support me. But I think that understand Warren’s also a big player in the financial markets who’s a major owner of Wells Fargo. And so he’s got a perspective from the perspective of somebody who— is part owner of a bank. You’ve got members of Congress who’ve got a different perspective. Which is, “We don’t want to spend any more taxpayer money.” You’ve got— a whole host of players, all of whom may have a completely different solution. (LAUGHS) Right?

And— you know, one of the challenges that Tim Geithner— has had— is the same challenge that anybody would have in this situation.

people want a lot of contradictory things. You know, the— the— the banks would love a lot of taxpayer money with no strings attached. Folks in Congress, as well as the American people, would love to fix the banks without spending any money. (LAUGHS) And so at a certain point, you know, you’ve got just a— a very difficult line— to— to walk.

It seems to me that Obama perceives himself as someone who is trying to meet the conflicting demands of many different people; and that is certainly something that is going to happen to the President of the United States. What is missing for me is any sense that Obama sees himself as an advocate for a particular point of view. This is the thing that has bothered me about Obama from the very beginning. I just don’t get a sense of there being a real flesh-and-blood person in there beneath the polished exterior. I don’t get the feeling that he really cares about anyone or anything–except himself, of course.

Obama: Financial Crisis is all about me.

Yesterday at Obama’s appearance before the Business Roundtable (h/t msclutterbuck in comments),

Richard Parsons, chairman of beleaguered Citigroup Inc., asked if Obama could offer some help in a national battle “between confidence and fear.”

“A smidgen of good news and suddenly everything is doing great. A little bit of bad news and ooohh , we’re down on the dumps,” Obama said. “And I am obviously an object of this constantly varying assessment. I am the object in chief of this varying assessment.”

“I don’t think things are ever as good as they say, or ever as bad as they say,” Obama added. “Things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy. They’re not as bad as we think they are now.”

Oh really? Does Dear Leader know about the Obamavilles popping up around the country?

Tent city, Sacramento, CA

The sea of tents along Sacramento’s American River is growing by the day. Newcomers just pick a spot and prop up a tent.

“Anywhere from 20 to 50 people a-week are showing up out here that just became homeless,” said one resident.

Does he know that people in Elkart, IN have been reduced to begging for food handouts?

Canned tomatoes for the hungry in Elkhart

Roughly 1,600 familes picked up food and other items sent by a charity to economically distressed Elkhart, Ind., which has an unemployment rate of 18.3 percent.

The 13 semitrailers that came to Elkhart carried more than $2.1 million worth of food, enough to help sustain about 5,200 families for a week. In addition to those who picked up supplies Tuesday, Feed the Children arranged for shipments to 3,600 northern Indiana families.

So no, Barack, it really isn’t all about you.

Meanwhile, Secretary of the Treasury Tim Geithner is heading a staff of one and quite a few people are asking why Obama isn’t finding him any help.

Treasury Secretary Tim Geithner is supposed to have 17 top deputies helping him run his massive department. But none have been confirmed [1].

“The secretary of the treasury is sitting there without a deputy, without any undersecretaries, without any, as far as I know, assistant secretaries responsible in substantive areas at a time of very severe crisis,” is how President Barack Obama’s economic adviser and former Fed chairman Paul Volcker put it a couple weeks ago [1]. He called it a “shameful” state of affairs.

To hear Treasury officials tell it [2], there’s no problem. Geithner hasn’t been short on new plans or new billions for the financial sector in his first weeks on the job, they say. And he still has time for his morning workout [3].

Well thank goodness Timmy can still find time for his morning workout. Maybe he and Barack should get together at the gym and come up with some names for those Treasury appointments? After all, even after they are chosen, they have to be confirmed by the Senate. And maybe they should try finding some nominees who weren’t in on causing the financial crisis in the first place–that might cut down on the vetting problems.

Frankly, I find it embarrassing that the U.S. response to the global crisis is becoming a laughing stock among financial experts. And why aren’t the phones being answered at Treasury? The Brits have been complaining about this for awhile now.

Check out this rant from Willem Buiter’s blog at the Financial Times.

Since the Obama administration took over on January 20, the US Treasury has effectively been out to lunch. As widely reported (see e.g. this account in the Financial Times), Sir Gus O’Donnell (as cabinet secretary the top UK civil servant) has attacked the “absolute madness’ of the US spoils system, where a new Federal administration replaces the entire top stratum of the civil service with new officials possessing the right political connections and leanings. Quite a few of these top officials need to be confirmed before they can start working. This can take months. Many of the new officials have no political, government or administrative experience and spend most of their first months in office trying to figure out where the washroom is instead of designing and implementing policy.

Buiter says the “spoils system” in the U.S. government which allows officials to appoint their unqualified cronies to positions that require real expertise has led to the “emasculation of US macroecononomic policy making.”

The price of the US spoils system has been high, if the quality of economic policy making in Washington DC by the Obama administration is anything to go by. The Obama administration’s handling of the financial crisis and the recession-verging-on-depression has been surprisingly fumbling and kak-handed. The economic team should have hit the ground running following a lengthy transition period and the appointment to the top positions of experienced economic policy makers like Tim Geithner, Larry Summers, Peter Orszag and Paul Volcker. But there is little evidence of coherent teamwork. Instead we are treated to repeated examples of the Unfinished Symphony (Geithner) or of A Night at the Improv (Summers).

In the US Treasury, Timothy Geithner has come up with a number of half-baked plans, under the grand umbrella of the Financial Stability Plan of February 10. These plans are not worked out to the point that they can even be evaluated properly, they are not costed properly and, except for the money left from the TARP and the funds approved by the Congress for the US$ 787 bn fiscal stimulus plan, they are not funded.

That the half-worked-out fiscal-financial rescue plans of the US government are not funded is due to a deeper flaw in the US political economy than the spoils system. It reflects the extreme polarisation of American society and of the polity. This may have started as early as the Vietnam War years, accelerated during the Reagan administrations and exploded during the George W. Bush administrations. Almost any departure from the status-quo is subject to de-facto veto from some well-organised and well-funded special interest coalition. During times of war and economic crisis, policy paralysis is costly.

But the fact that the economic plans of the administration are only half worked out is due to the fact that, except for the Treasury Secretary himself, the entire top of the Treasury is vacant. it is even possible that Geithner has to make his own coffee, a task normally delegated to a Deputy Secretary. This is an insane situation that no self-respecting country should allow to continue.

With Geithner under-supported and over-worked, Larry Summers, Director of the National Economic Council, has jumped into the macroeconomic policy fray with gusto, but not, unfortunately, with the benefit and backing of careful analysis.

Whew! That’s a scathing indictment if I ever saw one! Tim Geithner’s and Larry Summers’ ears must be burning. But I suppose if Obama read it, he’d just continue to preen and think it’s all about him. But while he’s focusing on “me, me, me,” the U.S. economy is crashing and burning. Is there anyone who can talk some sense into our narcissist in chief?

The Funniest Thing I’ve Read All Day

The Establishment?

This is hilarious. Howard Fineman of Newsweek says that “The Establishment” is turning against Barack Obama.

Luckily for Obama, the public still likes and trusts him, at least judging by the latest polls, including NEWSWEEK’s. But, in ways both large and small, what’s left of the American establishment is taking his measure and, with surprising swiftness, they are finding him lacking.

But who is “they?” Fineman provides no examples of Establishment figures who have been whispering in his ear, nor does he bother to clearly define what he means by “The Establishment.” In my mind, the term refers to the ruling class of a country–the top government figures as well as the heads of the most powerful corporations and foundations, and the most influential members of the national media. Here’s Fineman:

If the establishment still has power, it is a three-sided force, churning from inside the Beltway, from Manhattan-based media and from what remains of corporate America. Much of what they are saying is contradictory…

Presidentin’ Is Hard

Though I make no claims of being a financial wizard, or a political maven, even I can see that all is not right on Wall Street, D.C. where the heart and soul of our country is on life support, currently being administered to by second graders who want to be doctors when they grow up.  And, I’m sophisticated enough to recognize that a lot of what I read about our dire national situation is presented in the media by people representing the political party so far out of favor they have to look to bloviating blowhards for advice, or worse, can be made to appear to need to do so.  I get that.  However, in spite of all that, the forces pretending to represent the white-hatted good guys in this classic Adventures in Administration movie, armed with their heralded sky-high approval ratings for their poor man’s Dark Gable leading man, simply can’t mount enough of a stampede to disguise the fact that the dustcloud that follows them like Charlie Brown’s pal Pigpen’s is not the result of riding hard and strong over the dusty trail, but merely the wispy smoke trails from their “throw ’em off the path,” hastily built, diversionary cookfire.  In other words, they got nothing.

Stalwart bastion of the Obamedia protection service, Salon Magazine, has an article by former Clinton labor secretary and Obacolyte, Robert Reich, in which he pitifully attempts to pooh-pooh rightwing claims that the Obamessiah himself is responsible for our economic woes by trying to lay them at the feet of the finger-pointers:

When it turns out that people like Lloyd Blankfein, the CEO of Goldman Sachs, who took home $68 million in 1997, was the only Wall Streeter in a meeting last September at the New York Federal Reserve to discuss the initial AIG bailout with Tim Geithner, then New York Fed chair, among others, at the very time Goldman was AIG’s largest trading partner, a distinct scent of self-dealing begins to emanate. When it turns out that Citigroup got a bailout deal last October far more generous than that given to any other distressed bank, when a top Citi executive was advising the Treasury and Fed, the scent increases. Goldman’s past CEO was treasury secretary at that time, by the way, and another former Goldman CEO was a top Citi official and also a former treasury secretary. I am not suggesting anything so crude as corruption. But could it be, given these tangled webs, that — innocently, unintentionally, perhaps even subconsciously — the entire bailout effort was premised on saving these companies rather than protecting the public? Or that the distinction between the two was lost, and still is?

Yet, Reich gleefully and disingenuously, ignores the fact that the people he’s defending his ObaMaster against are the people who funded his campaign.  Not only that, the central figure in Reich’s little morality play, Turbo Tax Timmy Geithner, tax cheat, (TTTG,tc)  has a family history of sorts with Barry Sutoro, and is currently employed as the Blameless One’s lapdog and whipping boy.  To point out that he may have colluded with the banksters against the public in ripping off the country on the other team’s watch is…well…stupid.

Why would anyone purporting to defend the Obama administration draw attention to the man quickly becoming the public face of its incompetence?  Especially when the author can’t even make it through to the end of his own piece without acknowledging at least some of the complicity of the Obama Drama Troupe?

The Wall Street and Republican media attack machine doesn’t know exactly what to make of this. The Wall Street Journal’s editorial page, along with CNBC, alternates between attacking Obama for bailing out Wall Street and excusing Wall Street’s excesses. But then again, Obama doesn’t seem to know exactly what to make of it either. He seems to vacillate as well — one moment scorning Wall Street, the next moment justifying further bailouts. I do hope he takes a firmer hand, drawing a clearer distinction and making a clearer connection between clearing up these financial balance sheets and helping average people. Otherwise, the next populist uprising will be born in this moneyed quagmire. It is here — within the muck that was created by AIG, Citigroup, Fannie and Freddie, other giant financial institutions, now in combination with the U.S. Treasury and Fed — that the public is most confused, bears its most serious scars, and is potentially most burdened in future years, by decisions still made in secret.

Lindsey Graham would consider nationalizing banks; Barack Obama dithers about preserving capitalist culture

Yesterday, the new U.S. President played basketball and then watched the NBA all-star game with a friend. He’s been enjoying a vacation in Chicago, seemingly unconcerned that we are in the midst of a financial crisis the like of which we haven’t seen since the 1930s.

Not everyone is so relaxed and carefree. Yesterday Nouriel Roubini wrote in the Washington Post that “We’re all Swedes now,” arguing that the US banking system is on the ropes and the only solution is nationalization. But Barack Obama insists we just can’t do that because we are Americans–or something like that.

“Obviously Sweden has a different set of cultures in terms of how the government relates to markets and, and America’s different. And we want to retain a strong sense of that private capital fulfilling the core — core investment needs of this country,” he says. “And so, what we’ve tried to do is to apply some of the tough love that’s going to be necessary, but do it in a way that’s also recognizing we’ve got big private capital markets and, and ultimately that’s going to be the key to getting credit flowing again. ”

Tim Geithner; Herbert Hoover – Depression revisited

Unlike fellow Conflucian “headliner” Dakinkat (see her must-read post), I am not an economist, and I do not purport to have expertise in the field. I offer this post based on the claims of Paul Krugman and Barack Obama that the fiscal crisis facing the United States and its citizens today is more comparable to the conditions of the Great Depression than any other crisis faced since then. If that is true, no wonder I find the details of whiz-kid tax evader Tim Geithner’s newly dubbed Financial Stability Act (this is NOT the TARP redux bill just passed by the Senate) personally depressing. So, by the way, does Wall Street.

Treasury Secretary Timothy F. Geithner announced a vast new rescue plan for the financial sector. Stocks plunged following the unveiling of the program to use $1.5 trillion or more in public and private funds to bail out banks and financial institutions and thaw frozen credit markets. The plan would create a $500 billion fund to buy up toxic bank assets such as bad real estate loans and commit up to $1 trillion to reopen lending markets for consumer, student, small business, auto andcommercial loans.

The Dow Jones industrial average was down 383 points in afternoon trading. The tech-heavy Nasdaq plummeted 63 points, and the Standard & Poor’s 500-stock index dropped 43 points.

(source)

Here are the highlights of the Geithner plan, according to The New York Times:

Now, read these excerpts from an overview of the Hoover administration’s approach to the Great Depression, which set in 6 to 8 years before Franklin Delano Roosevelt was first elected.