Depressing realization: Geithner is actually worse than Paulson

[HamdenRice]

Geithner either isn't very smart, or is so constrained by ideology that he can't see what's best, or even worse, is trying to protect the economic interests of friends and former colleagues.

It really is a terrible plan, and it's hard to understand why Geithner keeps pushing it.

At least Paulson could be terrified into trying to do the right thing. The first TARP bailout -- the purchase by the Treasury of preferred stock and warrants in the banks, in a "I'm going to make you an offer you can't refuse" setting -- was actually potentially a good first step. The banks have already paid billions in dividends to the Treasury, and although Paulson overpaid for the stock and warrants, there was still a good chance that the Treasury would get back more in the end than they paid. It was also the camel's nose into the nationalization tent.

The crap that Geither keeps coming up with is stupefyingly bad, a plain, blatant giveaway to the banks, and worse to hedge funds.

Obama needs to fire him or pretend he isn't there by working around him and get some other smart people to come up with a rational plan.

[David Dunham]

1. The stock market went up 500 points. And you say Geitner's plan stinks?

[HamdenRice]

3. If he announced a $1 billion gift to each corporation, the stock market would also go up

that doesn't mean it would be a good plan. Also, it's not clear that there is any relationship between the plan and the market going up. When he first presented the outline of the plan a few weeks ago, the market went down.

[HereSince1628]

11. Geitner is stuck in the past. He is a sunk-cost thinker

No one is sure what to do. Geitner's plan is to keep on doing the same. Shoveling money toward the banks is something to do even if it isn't right. No one can claim that nothing has been done.

It's cost me my retirement, chuckle chuckle. Fuck the gallows humor, its for smart asses who have landed $250K/year retirement packages for 4 years work.

[HereSince1628]

12. Sorry, double dribble.

[KittyWampus]

17. If you went on a rampage and destroyed thousands of dollars of property and found out you weren't

going to be held liable for damages, you'd not only celebrate... you might very well go out and do more damage.

[leftofthedial]

37. that's practically PROOF his plan stinks.

If he announced tomorrow that he'd give a trillion-dollar gift to each executive on wall street, the Dow would go up.

[eridani]

48. Anyone who sets any store by bear market rallies is a credulous sap

There were four such rallies during the worst of the Great Depression, and they didn't do jackshit to help average people.

[LakeSamish706]

2. Another opinion from an arm chair critic... No end of them here. n/t

[Cant trust em]

24. Bingo.

If I had a dollar for every post I read from someone who thinks they have all the answers I'd be a rich man.

I at least have the guts to admit that I don't know shit about the economy. (pardon me while I pat myself on the back).

[AllentownJake]

30. What's the difference between an arm chair critic and an arm chair cheer leader?

:shrug:

[chimpymustgo]

43. NICE.

[merbex]

58. NICE Squared

People here on DU need to pull out some old alegbra and calc books because when you run the numbers the Geithner plan sucks for the FDIC which tears another thread from the safety net of ALL of us

[Supersedeas]

60. Bingo

[Two Americas]

50. what does that even mean?

Leave it all to the experts, and place absolute trust in our fearless leaders? That is an anti-democratic and authoritarian point of view.


...

[WI_DEM]

4. We'll see what happens with the economy due to what the administration is doing

[ProSense]

5. Does that make Bush better than Obama? n/t

[Reterr]

54. Are you incapable of anything but the most cartoonish black and white thinking?

Look, this is a huge deal. Not everyone is going to just put their faith in Obama like you do and hope everything turns out well.

I highly doubt that any halfway sane person here, who isn't a Repuglican troll, actually thinks Bush/Palin/any other random loathsome Repug is better than Obama. But that is a pretty fucking low bar to set and I expect more from Obama than just not being the complete fricken disastrous failure that Bush was.

For those of you really pushing this thing here-honestly, if nothing I would recommend varying your
approach in the interests of effectiveness. Calling Krugman a Freeper and calling everyone who disagrees with the plan a Bush loving troll or PUMA may get you points with others who whole-heartedly agree with you already, but it is unlikely to convince anyone on the fence (for instance lurkers).

[ProSense]

62. Are you capable of toning down the hysterics because not everyone agrees with you?

Look, this is a huge deal. Not everyone is going to just put their faith in Obama like you do and hope everything turns out well.

That's my problem? Does it mean I'm supposed to agree with idiotic conclusions?

You can't even distinguish between legitimate criticizing of Krugman and calling "Krugman a Freeper."

Try weighing all the sides and stop pretending you're the only serious one on the planet.

[sharp_stick]

6. And your qualifications?

I think it's only fair that when you post something along the lines of "It really is a terrible plan" you should folllow up with why you think so and what you would have done differently.

Without the backup it's just another anonymous rant from nobody.

[HamdenRice]

16. I did

The point is that if Geithner's theory is right, that the mortgage backed securities are valued at below their actual probable discounted present value, then the taxpayers should recoup the gains when the market accurately values them. Geithner's plan makes a free money gift (in the form of guarantees and low interest) to hedge funds to take all the upside.

That's why I contrasted it to preferred and warrants.

I thought every intelligent reader at this point understood the outline of the plan and that this didn't need to be explained.

[sharp_stick]

18. No you did not

and thanks for the smartass quip "every intelligent reader".

I really do so enjoy reading bullshit from monday morning morons, that it really makes my day when they pull that kind of smarmy assgrease.

Perhaps I missed it? What were those qualifications you once again failed to note.

[HamdenRice]

23. I used to design asset backed securities

I could tell you other parts of finance I worked in, but you probably wouldn't understand what I was saying.

And yours?

[sharp_stick]

35. Class must run in your family huh?

I'm an MD/PhD toxicologist for a fortune 100 company.

I could tell you more about that but I'm pretty sure you couldn't comprehend the basics.

And what do you do now, besides the being a dick that is? Run tables at Les Halles.

[HamdenRice]

38. I would have guessed a 14 year old in your Mom's basement based on your rhetoric

Come on, just read what you wrote. That's what you sound like in every single post.

[sharp_stick]

55. Ahhh isn't that original

thanks a lot. Do you come up with these nice little cliche's all on your own or do you get help from your buddies?

[Two Americas]

51. gee

When the same poster was "siding with Obama" no one questioned his credentials.

How about responding to the message rather than attacking the messenger?

Your attack on the other member is "just another anonymous rant from nobody." What does that have to do with anything?


...

[HamdenRice]

56. Thanks. That's true. I was accused of being knee-jerk pro-Obama. Now I criticize Geithner ...

I'm some kind of nut or pea brain. We can support Obama and still recognize that mathematically, Geithner's plan is terrible. It's Geithner and Summers, not Obama, who came up with this.

[empyreanisles]

7. If it helps the economy and makes banks less afraid -- WHO CARES?

The end game is increasing bank confidence by improving their balance sheets. Yeah they fucked up. Big Time.

But in our economic system, THEY CREATE MONEY. Money is created when banks make loans. If this plan makes lending to the end user more likely, WHY DO YOU FUCKING CARE who buys or benefits from the assets.

Look at the big picture and clamp down on the bloodlust.

[Cant trust em]

27. Absolutely. I hope these investors do make money.

I don't care if we make any profit on these loans. Just give me the principle plus interest back.

[Two Americas]

52. labor creates wealth

Any and all political positions other than that of the extreme right wing agree on that point.

[MarjorieG]

8. We want to get the economy going again. What is it then, who we're trying to finesse?

Revolution makes the blood go around, but not smart blowing everything up.

[Name removed]

9. Deleted message

Message removed by moderator. Click here to review the message board rules.

[AllentownJake]

32. Alot of people aren't going anywhere

Donovan McNabb isn't going anywhere either...I still am a huge critic every year.

[Occam Bandage]

10. Hey, know what's really easy? Saying things suck.

[monmouth]

13. Hey Paul! Is that you???...n/t

[Tigermoose]

14. I respectively disagree.

I think it is a bold double down plan that ensures the stability of the banking system. In effect, we are betting that people around the world believe that the United States of America can and will ensure that the banking system stabilizes and that the world economy will halt its downward spiral. This is what a super power does. This is why we elected Obama. This is how you lead.

If the world's believes we can pull this off, we will. We will because assets that some here describe as "toxic" will be auctioned off at a non-toxic price and thus allow the banks to remain solvent. And the timing of this was perfect.

Once the system is stabilzed, then the U. S. can lead the world into a new system of global banking regulations.

[flpoljunkie]

15. Ben Stein tells Wolf taxpayers get the risk, Wall Streets gets the reward--guaranteed.

What's not for them to love!

[Thrill]

19. You really don't know what is a good or bad plan. Considering no one has had to deal with such

a horrible problem.

Nationalizing the Banks sure as hell wouldn't be the best way to handle it.

And I'm sick of people blaming Geithner for trying to fix Bush's bullshit. Which isn't an easy task

[TexasObserver]

20. You are consistently wrong about all things financial.

You were TARP's biggest advocate. It was going to solve the credit crisis.

You were wrong about that, and you're wrong about this topic.

[HamdenRice]

25. Uh, nope

"It was going to solve the credit crisis" -- no, I said it could prevent a complete meltdown, which fortunately did not happen.

[TexasObserver]

28. Uh, yep. And you said it would save the stock market.

I told you it was a bandaid the Bush admin wanted to help it hobble out of office.

You were too busy giving your support to Paulson.

[HamdenRice]

29. Everyone is entitled to their own opinions. Everyone is not entitled to their own facts

You can make stuff up, but that doesn't make it true.

[TexasObserver]

39. You were the biggest cheerleader of the bailout bill last fall.

That's a fact.

[HamdenRice]

47. The biggest? I don't know but I certainly supported it, not for the reasons you give

In fact, I said many times that the reason the bailout needed to happen was to prevent a complete collapse that would prevent anyone from cashing checks or banks from settling accounts. I never said that it was to rescue the stock market.

By coincidence, someone asked about this in the 9/11 Forum today, and I gave exactly the kind of explanation I gave back in September:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=125&topic_id=237410&mesg_id=237901

[Two Americas]

53. that should give you pause

When even TARP's biggest advocates are now seeing the problems with the course we are on, that should give you pause I think.

[HamdenRice]

57. I would just add it's a different course

In retrospect, I shouldn't have called it "Paulson's plan" because it wasn't. It was Barney Frank's plan, the 100+ page law that replaced Paulson's 1 pager. Or maybe we should call it "Gordon Brown's plan" because Treasury didn't even follow the Frank Plan at the end, and TARP I was mostly a an imitation of Gordon Brown's British plan.

At any rate, TARP I would recapture any increase in value from the rescue through the preferred shares and warrants.

Geithner's plan is just a huge gift to the hedge funds, for no apparent reason. It's a change of course from what happened under TARP I.

[wyldwolf]

21. If / when the economy improves, the same voices will claim Obama had nothing to do with it

[Pirate Smile]

22. Everybody thinks they are a fucking genius right now when they aren't.

Yeah - Obama is trying to fuck over the American people through Geithner. Get a grip.

[LittleBlue]

26. Geithner should resign

He's proven himself to be a mere puppet of the banksters and insurance scammers.

[CreekDog]

31. i don't see any content or substance in your post explaining "why" the plan is so bad

frankly, positing that Geithner is not very smart or so contrained by ideology really is a conclusion for which the premise is not demonstrated (by you).

so without substance to judge your position by, i'm left comparing your opinion to Geithner. i don't know you and though i have my suspicions about Geithner, my suspicions about your opinion are greater.

[FrenchieCat]

33. You need some substance on those bones!

Come on.....you can't demand someone be fired, and write nothing that backs it up that contains substance.

[HamdenRice]

36. OK, look here

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8284822&mesg_id=8284898

[Jennicut]

34. The hyperbole around here lately is amusing

[Zen Democrat]

40. There's not an economist alive with a perfect track record .. not even Krugman.

I work in finance and cannot begin to comprehend the massive conundrum facing this Administration. As a result I shake my head at both cheerleaders and naysayers. We need to cross our fingers and hope, because I don't know much, but I know enough to recognize there's no magic fix, but the surest cure of all is consumer confidence.

[Uzybone]

41. Wow. A Paulson shill on DU. Amazing.

[depakid]

42. Hardly- just someone who recognizes that there's little difference between the two on a policy level

despite having six months to consider the problems.

[Occam Bandage]

49. *shrug* Hamden supported Paulsen at the time.

[galloglas]

44. Sorry, I believe you are wrong!

The post below is also part of a post I made on another thread. It is totally pertinent, however.


So with a view to what the Federal Government proposed today, in respect to the "toxic loans" that are abounding, I can say that it should be an excellent vehicle for curing what ails the US. The individual modification of many of these mortgages will result in a higher Net Present Value than now exist. Indeed, there is no current market for the "toxic mortgages" because there in no trading in them!

In the 1980s, the US faced a similar problem with mortgages within the S&L system. It was largely ignored by the GOP government, and its accomplices, and was allowed to fester until the US finally ate the bad mortgages (low interest fixed mortgages) to the tune of 750 Billion dollars. If they had modified those mortgages instead, the US would have actually made money on the problem.

And all of that raises another point. All of the bellyaching over a Trillion?? That is only 1/3 more than we blew away in the mid 1980s! Comparatively, much less than that now. So the Obama-Geithner plan is very workable and addresses the problem. That is, unless the GOP Doomsayers in Congress and the Chicken Little liberals make so much noise it is torpedoed.

In an old military axiom it is said, "If you can lead,lead. If you can't lead, follow. If you can't follow, get the hell out of the way and let someone else do it."






Good advice, I think, for GOP and incensed liberals alike.

[Tigermoose]

45. Well said.

It seems many can only "whine, bitch, moan or complain."

[Median Democrat]

46. I Give You The Overly Dramatic Post Of The Day Award

Paulson was going to pay full value for the assets.

[Mike 03]

59. Your post worries me because you are usually right.

And Krugman, who I really respect, is upset too. But I don't understand the specifics of what those opposed to this plan would like Tim Geithner to do exactly.

This is stage three of a process.

Even if this part is wrong, what do you think of the other prongs in the fork: the Stimulus package, the Mortgage plan, and the direct injection of capital?

It is depressing as hell if you are right.

Please, remember this was Paulson's initial idea but he changed it because of changes in market conditions, and a lot of economists were angry at him for changing it.

Isn't Geithner just going back and adding this initial idea back into the pie?

What should he be doing, in your opinion?

[uponit7771]

61. Can we give the guy more than 23 days?!?!?!