Did you happen to read Tom Friedman’s op-ed in yesterday’s New York Times? Check this out:
Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”
Now, I don’t think Tom Friedman reads my little blog, but didn’t I basically say this just the other day? This is not just a downturn, it’s a threshold for changing the entire paradigm, kiddies, and throwing money at rich people isn’t going to cut the mustard.
Now the drums are starting to pound in the faraway hills, calling for the head of Treasury Secretary Timothy Geithner. While Geithner undoubtedly has the support and blessings of President Obama, and Obama needs to take some heat on this too, it has been Geithner as the supposed “go-to guy” on the banking crisis who is starting to make Hank Paulson look like a freaking Chatty Cathy. Financial commentator Henry Blodget rants on at length about Geithner’s failure here and comes up with the following indictments:
Before taking office at the end of January, Tim Geithner had many months to develop a solid plan for what to do. He had the opportunity to see what was working and what wasn’t and to consult with dozens of experts, many of whom had no stake in the matter (unlike the Wall Street kingpins who seem to have shaped Geithner’s inaccurate view of the situation). He had the opportunity to see and understand that what America needs most right now is clarity and decisiveness.
Then he took office. In the five weeks since, Tim Geithner has:
* Given a speech billed as the solution to the financial crisis in which he promised something vague, someday, that sounded an awful lot like the bad plan that didn’t work in the past administration (which really isn’t that surprising, given that Geithner was the one who came up with the earlier bad plan).
* Floated multiple versions of the same plan into the press hoping that one would be enthusiastically received by someone other than Wall Street (no dice.)
* Refused to seriously discuss the consensus opinion of most neutral economists and experts: That the banking system is insolvent and that the solution is pre-privatization.
* Given Congressional testimony in which his brusque, defensive manner and weak responses have inspired no confidence and served only to make people wonder again why Obama picked him for the job.
and, most importantly, Tim Geithner has:
* Refused to revisit or defend his almost certainly inaccurate view that this crisis is merely a temporary price decline caused by a lack of liquidity, rather than a collapse of a debt-driven economy. You can’t cure the patient if you’re treating the wrong problem.
Now, I’ll say again that Barack Obama deserves almost as much blame for 1. picking Geithner because he knew the appointment would appease Republicans and 2. endorsing what was basically the Paulson Plan II even though it was clear before the inauguration that it was the wrong thing to do. And at some point I hope people are going to hold Obama to that. But for now, he should probably find someone who a) isn’t Larry Summers or Bob Rubin and b) paid his fucking taxes on time to replace him.
This somewhat lame defense of Geithner appeared in Tina Brown’s Daily Beast from BBC reporter Katty Kay. Kay’s arguments all stem from the political side of the equation, while Blodget’s critiques come from the policy side. In this particular situation, though, political arguments are probably the last line of defense anybody really wants to engage in. The reality is that the bank bailout situation remains an enormous failure that simply started with Bush and has continued with Obama and needs a new direction, which almost certainly requires a new point-man.
Oh, and while we’re at it, this post from CNBC commentator Barry Ritholtz ought to make the steam start pouring out of your ears, if it isn’t already. Ritholtz says that Bloomberg News reports that the bailout money that the government has been pouring into AIG is being funneled back to Goldman Sachs and other investment banks, not being used by AIG for its own situation. They are getting away with this because they don’t have to tell anybody what they are doing with the money. And guess what….Hank Paulson AND Tim Geithner are both former Goldman Sachs bigwigs…hmmm…
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