Andrew Sullivan is willing to give Treasury Secretary Geithner more time before judging his performance.
Call me a shill if you want, but after a couple of months, I'm prepared to give the guy a chance.
I guess I'm not so generous nor so patient. But then again, I saw the disaster coming years ago, and Sullivan, like Geithner, totally ignored it.
Thursday, March 19, 2009
Obama's Ambivalent Signals
E. J. Dionne writes in today's WaPo, in the same vein as I have below:
Conservatives have argued for decades that the sins most dangerous to our society were rooted in lust when in fact they were rooted in greed.
We are at the beginning of a great popular rebellion against those who showed no self-restraint when it came to lining their own pockets. Their entitlement mentality arose from an inflated sense of their own value and of how much smarter they were than everyone else.
A study of compensation levels in 2007 found that average CEO pay at S&P 500 companies was 344 times higher than the average worker's wage, and that the top 50 investment fund managers took home 19,000 times -- yes, that's with three zeroes -- as much as typical workers earned.
The sound you are hearing in response to the AIG payoffs -- excuse me, bonuses -- is the rancorous noise of their arrogance crashing to earth.
The Obama administration has sent thoroughly ambivalent signals on this question. Its initial response to the $165 million in AIG bonuses (the president's lieutenants said there was little to be done about them) suggested that it did not want to join in the populist anger and maybe didn't even realize that it was there. On Monday, President Obama made clear that he got it, denouncing the bonuses.
With the populist furies unleashed, the Obama administration has two choices. It can try to fight the public. Or it can use the public's outrage to move the country in a better direction. Obama can work with the populist wave or he can be overwhelmed by it. As Kazin notes, American progressives have succeeded in improving the "common welfare" only when they "talked in populist ways -- hopeful, expansive, even romantic."
Conservatives have argued for decades that the sins most dangerous to our society were rooted in lust when in fact they were rooted in greed.
We are at the beginning of a great popular rebellion against those who showed no self-restraint when it came to lining their own pockets. Their entitlement mentality arose from an inflated sense of their own value and of how much smarter they were than everyone else.
A study of compensation levels in 2007 found that average CEO pay at S&P 500 companies was 344 times higher than the average worker's wage, and that the top 50 investment fund managers took home 19,000 times -- yes, that's with three zeroes -- as much as typical workers earned.
The sound you are hearing in response to the AIG payoffs -- excuse me, bonuses -- is the rancorous noise of their arrogance crashing to earth.
The Obama administration has sent thoroughly ambivalent signals on this question. Its initial response to the $165 million in AIG bonuses (the president's lieutenants said there was little to be done about them) suggested that it did not want to join in the populist anger and maybe didn't even realize that it was there. On Monday, President Obama made clear that he got it, denouncing the bonuses.
With the populist furies unleashed, the Obama administration has two choices. It can try to fight the public. Or it can use the public's outrage to move the country in a better direction. Obama can work with the populist wave or he can be overwhelmed by it. As Kazin notes, American progressives have succeeded in improving the "common welfare" only when they "talked in populist ways -- hopeful, expansive, even romantic."
Convenient Political Outrage
"I have complete confidence in Tim Geithner and my entire economic team," Obama said. "Nobody is working harder than this guy. He is making all the right moves in terms of playing a bad hand."
Right. Give me a break.
Now we hear from Senator Dodd that he weakened his own executive compensation limitation provision in the recent stimulus bill at the behest of Treasury officials. That must mean Geithner, since there is hardly anyone else there, except career types, who almost surely wouldn't have done that without instructions from the top.
Geithner has made it clear that he doesn't want the government messing around with what CEOs and bankers get paid, that much is clear. It's hard to know whether that's just his firmly held belief or whether he's just doing the bankers' bidding--maybe a little of both.
Does that also reflect Obama's position? One has to assume so, since he's the boss and he wants all criticism to come straight to him. Then why the outrage against AIG by the President? My answer: it's political and it comes across as fake to me. And I really dislike that kind of thing.
Tim Geithner has lost his credibility in the country, and it just doesn't seem possible to me that he will regain it. The longer Obama holds onto him, the worse it is going to get. Perhaps Obama feels like he doesn't have a choice, I don't know. But it was a sorry pick to begin with if you ask me.
And while you're at it, Mr. President, please separate yourself from the bankers and really get on the side of the average person in this. If you don't and this kind of thing continues, you are going to be severely weakened politically and that will not be good for you or for us.
Right. Give me a break.
Now we hear from Senator Dodd that he weakened his own executive compensation limitation provision in the recent stimulus bill at the behest of Treasury officials. That must mean Geithner, since there is hardly anyone else there, except career types, who almost surely wouldn't have done that without instructions from the top.
Geithner has made it clear that he doesn't want the government messing around with what CEOs and bankers get paid, that much is clear. It's hard to know whether that's just his firmly held belief or whether he's just doing the bankers' bidding--maybe a little of both.
Does that also reflect Obama's position? One has to assume so, since he's the boss and he wants all criticism to come straight to him. Then why the outrage against AIG by the President? My answer: it's political and it comes across as fake to me. And I really dislike that kind of thing.
Tim Geithner has lost his credibility in the country, and it just doesn't seem possible to me that he will regain it. The longer Obama holds onto him, the worse it is going to get. Perhaps Obama feels like he doesn't have a choice, I don't know. But it was a sorry pick to begin with if you ask me.
And while you're at it, Mr. President, please separate yourself from the bankers and really get on the side of the average person in this. If you don't and this kind of thing continues, you are going to be severely weakened politically and that will not be good for you or for us.
Not Thinking About AIG? Duh.
In an article about the AIG bonuses in the WaPo, we read:
For the new administration, the bonuses were a distraction from what senior aides called the main focus: getting the economy working and people back to work. "People are not sitting around their kitchen tables thinking about AIG," Axelrod said. "They are thinking about their own jobs."
I beg to differ. I was sitting around a restaurant table with church members the other day, and one bright older lady said, "I will never trust bankers again." And others reflected the same sentiment.
You cannot separate people's personal economic situations and their feelings about the bankers and other wealthy types who have brought a lot of this on all of us. It is of a piece, so to speak. Anyone with an IQ above 90 knows about the huge, unmerited compensations paid to CEOs and investment bankers over the last two decades, while everyone else has been just getting by or worse.
Yes, everyone wants the economic situation fixed, but there is a growing uproar outside the Washington Beltway and the island of Manhattan about the how the wealthy benefit whether the economy is doing well or not, while everyone else suffers, and the insidious corruption of democracy involved in that.
That is not going away, and the Obama administration had better stop being tone-deaf about it. Unlike many Bush supporters, who always gave him the benefit of the doubt and supported his policies no matter what, this Obama supporter does not believe in doing that. And I believe that there are many out there who feel the same way.
For the new administration, the bonuses were a distraction from what senior aides called the main focus: getting the economy working and people back to work. "People are not sitting around their kitchen tables thinking about AIG," Axelrod said. "They are thinking about their own jobs."
I beg to differ. I was sitting around a restaurant table with church members the other day, and one bright older lady said, "I will never trust bankers again." And others reflected the same sentiment.
You cannot separate people's personal economic situations and their feelings about the bankers and other wealthy types who have brought a lot of this on all of us. It is of a piece, so to speak. Anyone with an IQ above 90 knows about the huge, unmerited compensations paid to CEOs and investment bankers over the last two decades, while everyone else has been just getting by or worse.
Yes, everyone wants the economic situation fixed, but there is a growing uproar outside the Washington Beltway and the island of Manhattan about the how the wealthy benefit whether the economy is doing well or not, while everyone else suffers, and the insidious corruption of democracy involved in that.
That is not going away, and the Obama administration had better stop being tone-deaf about it. Unlike many Bush supporters, who always gave him the benefit of the doubt and supported his policies no matter what, this Obama supporter does not believe in doing that. And I believe that there are many out there who feel the same way.
Wednesday, March 18, 2009
A Good Divorce
Here is a good column about the current AIG scandel by former Senator James Abourezk. Tidbit:
Washington needs to divorce itself from Wall Street. Members of Congress need to stop accepting corporate money so they can become, once again, somewhat independent operators. Until then, we are in for more bailouts, more greedy transgressions by Wall Street, and more of the kind of show business nonsense that we’ve been witnessing in recent days.
Washington needs to divorce itself from Wall Street. Members of Congress need to stop accepting corporate money so they can become, once again, somewhat independent operators. Until then, we are in for more bailouts, more greedy transgressions by Wall Street, and more of the kind of show business nonsense that we’ve been witnessing in recent days.
Future Oil Production
Off the Daily Dish, here is one oil group's view of future production: All downhill from last year on.
What Is An AIG?
What is AIG? That's an interesting question because of its prominence in the news recently. It's also interesting because I just received a form from my mom's attorney, telling me that I am set to receive a third portion of an AIG life insurance policy that my mom had taken out.
It is a very large international corporation, about 18th largest in the world. It's biggest product is insurance, and as you can see above, it offers normal kinds of insurance, both personal and corporate. There doesn't seem to be any problem with these divisions, given they are regulated in a normal fashion.
The problem comes mainly from one division of the company, called the Financial Products Division. It offered an unregulated form of insurance, called Credit Default Swaps, which insured the products of investment banks called securities and derivatives. In other words, as I understand it, if a company like Goldman, Sachs loses money on a mortgaged-backed security because of a drop in the mortgage's value, then the insurance policy it bought from AIG is supposed to pay to cover that loss.
But because these Credit Default Swaps were not regulated like normal insurance, there was nothing stopping AIG from issuing these policies in such volume that it could not possibly cover them if they went bad. And that's exactly what they did, and made billions of dollars in the process.
The bailout money going into AIG is going out the back door to pay those policies off, to banks like Goldman, Sachs, Bank of America, and foreign banks as well. Not only were the derivatives and securities themselves risky investment vehicles, the CDS offered by AIG multiplied that recklessness.
So we taxpayers are forced to pay for the reckless irresponsibility of AIG and all those banks, under the threat that if we don't, they will fail and our whole financial system will dissolve.
It is a very large international corporation, about 18th largest in the world. It's biggest product is insurance, and as you can see above, it offers normal kinds of insurance, both personal and corporate. There doesn't seem to be any problem with these divisions, given they are regulated in a normal fashion.
The problem comes mainly from one division of the company, called the Financial Products Division. It offered an unregulated form of insurance, called Credit Default Swaps, which insured the products of investment banks called securities and derivatives. In other words, as I understand it, if a company like Goldman, Sachs loses money on a mortgaged-backed security because of a drop in the mortgage's value, then the insurance policy it bought from AIG is supposed to pay to cover that loss.
But because these Credit Default Swaps were not regulated like normal insurance, there was nothing stopping AIG from issuing these policies in such volume that it could not possibly cover them if they went bad. And that's exactly what they did, and made billions of dollars in the process.
The bailout money going into AIG is going out the back door to pay those policies off, to banks like Goldman, Sachs, Bank of America, and foreign banks as well. Not only were the derivatives and securities themselves risky investment vehicles, the CDS offered by AIG multiplied that recklessness.
So we taxpayers are forced to pay for the reckless irresponsibility of AIG and all those banks, under the threat that if we don't, they will fail and our whole financial system will dissolve.
Be Kind to Bankers
Harold Meyerson once again hits the nail on the head in the WaPo:
But Geithner's indulgence of bankers' indulgences is fast becoming the Obama administration's Achilles' heel. The AIG debacle is the latest in a series of bewildering Geithner decisions that threaten to undermine the administration's efforts to restart the economy. So long as it's Be Kind to Bankers Week at Treasury -- and we've had eight straight such weeks since the president was inaugurated -- American banking, and the economy it is supposed to serve, will remain paralyzed. The Geithner plan to restart the banks provides huge taxpayer subsidies to hedge funds, investment banks and private equity companies to buy the banks' toxic assets without really having to assume the risk. That's right -- the same Wall Street wizards who got us into this mess, using the same securitization techniques that built mountains of debt within a shadow financial system that remains unregulated, are the saviors whom Geithner has anointed to extricate us -- with our capital, not theirs -- from the mess that they created.
An administration that is busily creating alternatives to our health-care system and our energy policies is being dragged down by a Treasury secretary who cannot conceive of an alternative to our catastrophic system of banking.
But Geithner's indulgence of bankers' indulgences is fast becoming the Obama administration's Achilles' heel. The AIG debacle is the latest in a series of bewildering Geithner decisions that threaten to undermine the administration's efforts to restart the economy. So long as it's Be Kind to Bankers Week at Treasury -- and we've had eight straight such weeks since the president was inaugurated -- American banking, and the economy it is supposed to serve, will remain paralyzed. The Geithner plan to restart the banks provides huge taxpayer subsidies to hedge funds, investment banks and private equity companies to buy the banks' toxic assets without really having to assume the risk. That's right -- the same Wall Street wizards who got us into this mess, using the same securitization techniques that built mountains of debt within a shadow financial system that remains unregulated, are the saviors whom Geithner has anointed to extricate us -- with our capital, not theirs -- from the mess that they created.
An administration that is busily creating alternatives to our health-care system and our energy policies is being dragged down by a Treasury secretary who cannot conceive of an alternative to our catastrophic system of banking.
Tuesday, March 17, 2009
The Shrinking Obama Balloon
The air is coming out of Obama's balloon so fast. It is sinking, and he had better take action fast. Everything he wants to do is depending on credibility in this financial area.
I don't know what he is thinking. As a long-time supporter, I am REALLY angry with him right now for putting at risk everything he promised and we need. He needs to reboot this whole area, which means dumping Geithner before he pulls down this administration.
I don't know what he is thinking. As a long-time supporter, I am REALLY angry with him right now for putting at risk everything he promised and we need. He needs to reboot this whole area, which means dumping Geithner before he pulls down this administration.
AIG Debacle
This morning's 10 AM Diane Rehm Show was a good discussion of the AIG debacle. It can be found here.
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