Summers beats back at Krugman on CNN Situation Room

[jefferson_dem]

:popcorn:

Summers beats back at Krugman
Posted: 07:00 PM ET


Summers appeared on CNN's The Situation Room Monday.

(CNN) – President Obama's chief economic adviser Monday beat back recent criticism from liberal economist Paul Krugman over the administration's latest bank rescue plan, telling CNN Krugman was too quick to pass judgment.

"Paul's a great economic theorist and I wish he'd waited until the plan had been announced and the steps had been described before he had written his column," said Larry Summers, the director of the White House's National Economic Council.

Writing in the New York Times Monday, Krugman said the latest plan unveiled by the Treasury "fills me with a sense of despair" and "assumes that banks are fundamentally sound and that bankers know what they’re doing."

The plan, fully unveiled Monday morning, proposes taxpayer funds to seed partnerships with private investors that will buy up toxic assets backed by mortgages and other loans. The goal is to buy up at least $500 billion of existing assets and loans, such as subprime mortgages that are now in danger of default.

Speaking on The Situation Room, Summers defended the plan, saying it is not designed to be a cure all for the banking system.

"What Mr. Krugman did today surprisingly was he took an action in one area — strengthening the capital markets — and he said it didn't solve another problem — the issues in the banking system. He's right about that. But it wasn't intended to," Summers said.

http://politicalticker.blogs.cnn.com/2009/03/23/summers-beats-back-at-krugman/

[QC]

1. Krugman is an enemy of the people. n/t

[jefferson_dem]

2. Apparently, President Obama is...if you listen to Krugman as of late.

:)

[BzaDem]

4. I would add the sarcasm tag if I were you. n/t

[DrDan]

11. bull roar

don't you think "enemy of the people" is a bit strong

[Demeter]

3. Larry Summers Would Like to Wait Until The Utter Failure Is Obvious

Because if other people can predict it before it happens, Summers looks like the idiot he has proven himself to be every other time.

[Political Heretic]

19. That's about my assessment as well

[BzaDem]

5. Wait what? This wasn't intended to help the banking system?

"What Mr. Krugman did today surprisingly was he took an action in one area — strengthening the capital markets — and he said it didn't solve another problem — the issues in the banking system. He's right about that. But it wasn't intended to," Summers said."

He responds to Krugman by saying that this bank rescue plan was never intended to solve the banking crisis? What is he talking about?

[terisan]

6. Wonder what he thinks of Galbraith saying won't strenghten capital market here. nt

[burythehatchet]

7. This @sshole is actually starting to make me physically ill. If you want to measure

how much he is lying watch the video and count the furrows on his forehead. It is a direct correlation; the more furrows the more bald-faced the deception. The darting eyes are just further confirmation.

[Reterr]

18. He makes me a bit queasy too.eom

[dave_p]

8. stfu

Krugman's been ahead of the curve throughout this nonsense, and for years before. Larry's an extremely smart guy, and should know when to shut up and listen.

[depakid]

9. "not designed to be a cure all for the banking system."

Then what's it supposed to be Larry?

:shrug:

[CTLawGuy]

22. it's supposed to restart the credit market

when the banks bought these mortgage backed securities (MBS), they thought that, when they needed to get cash, they could sell the MBSs for cash to lend out. The problem is the MBS have no mark-to-market value, because buyers do not have any confidence in them. So the banks cannot get enough money to lend, and as such, there is much less money to lend.

The purpose of the plan is to buy the assets and hold them for a very long time, and, as the individual payments are made on the multitude of mortgages, as most of them will be, the government will slowly recoup its "investment". That happens over time, but immediately, banks get the money they need to start lending again.

This doesn't allow them to profit. They won't because the value of the MBSs are diminished, but it allows them to function as lending institutions to the degree we need them to.

How we change the banking system to prevent this again (e.g. break up banks, restrictions on loans, repeal of gramm leach bliley) is a different kettle of fish. This plan is meant to restore credit availability to a normal level on an immediate time frame.

[Postman]

10. Summers helped create this mess.

Repeal of Glass-Steagall in 1999

[high density]

12. Summers makes a good point here

I think it shows that Krugman, et al need more patience.

[xchrom]

13. so whe can we expect a 'plan' to 'help', 'regulate', etc

the banks -- since this wasn't it?

and where's all the white house promotion of this 'other' plan -- explaining it -- posting it -- discussing it?

[stillcool]

15. That's a legislative action, isn't it?...

call your Congressman?

[xchrom]

24. what makes you think i haven't? -- call your's. nt

[TripleKatPad]

14. Sorry, but I have to ask

Why should I trust the very same people who brought us this mess....to fix it?
I. Just. Can't.
Maybe I'll change my mind.
But right now?
I. Just. Can't.

[stillcool]

16. Don't..who asked you to trust?

are you willing to trust anyone you don't know, because someone told you to?

[Phx_Dem]

21. I'm not sure how they got us into this mess since

it was Congress with the help of a few former Presidents who deregulated us to death along with some* unscruplulous bankers, traders who were reckless. How did Geithner and Summers cause this? And please be specific; saying they're Wall Streeters doesn't cut it.

*Not every person who works at a financial institution or investment firm was reckless or unethical.

[Hansel]

23. self-delete.

[Reterr]

17. Shocking.eom

[Political Heretic]

20. This guy is slimy. You can just physically feel the lying as he talks.

I love the part where his defense of criticism of the bank bailout is that the bank bailout isn't about bailing out banks.

That was old school, sir! Old Bush school, that is.