Geithner's bailout plan (PPIP) may not be needed

[DrToast]

We've come a long way from "nationalize the banks or we're all screwed."

The Wall Street Journal reports that the Public-Private Investment Program -- better known as Geithner's Plan -- might never live at all.

The Legacy Loans Program , being crafted by the Federal Deposit Insurance Corp., part of the $1 trillion Public Private Investment Program ... is stalling and may soon be put on hold, according to people familiar with the matter.<...>

PPIP was to be split between the FDIC program, which would buy whole loans, and one run by the Treasury Department focusing on securities. Treasury is expected to push ahead with its plan -- the larger and more substantial of the two -- and could begin purchases sometime this summer.

Given how much publicity -- and controversy -- Geithner's plan received when it was announced last March, that might seem a bit odd. But the reasons appear to be twofold. First, few investors or banks want to work with the government. And second -- and maybe more importantly -- few investors and banks now think they'll have to. The banks, in particular, are apparently enthused by their ability to raise private capital, and now think they can wait out the market turmoil and sell their toxic assets in a few years, when they'll be worth more money.

http://voices.washingtonpost.com/ezra-klein/2009/05/is_the_geithner_plan_doa.html

[ClarkUSA]

1. No wonder Paul "Obama Is Wrong" Krugman is now singing a different tune. Schadenfreude feels good.

[vaberella]

2. Strange isn't it?

I don't know why they didn't give it the benefit of the doubt before.

[ClarkUSA]

3. Because PUMAs never give President Obama the benefit of the doubt...

... but they're good at eating crow. ;)

[Larkspur]

16. Obama is a PUMA now

Most of his Admin team are Clintonistas.

[DrToast]

4. Surprised more people aren't happy about this

This seems like really good news to me.

[FrenchieCat]

5. There's nothing worse than good news at DU......

doncha know?

[DrToast]

6. Good point!

:)

[depakid]

10. What an ill informed thing to say

Especially based on vacant speculation in this article.

You must not value credibility much.

[ClarkUSA]

11. Um, it happens to be the truth: Krugman is indeed singing a different tune now.

No more doomsday "Obama Is Wrong" talk from Krugsman. Now it's "the economy is stabilizing" CYA yadda yadda yadda. :eyes:

Oh, and I do "value credibility" which is why I believed Krugman was wrong about President Obama and his economic team's plans to begin with. Looks like I and many others here who doubted Krugman was right all along as the economy is clearly improving not getting worse, ergo schadenfreude feels good. But I realize that you wouldn't understand, given which side of the debate you were on.

[depakid]

12. He's been saying the same thing with respect to the economy as he said in February

He expects to see improvement in 4Q.

The reason you haven't heard anything on the financial side is- first, he was in China, and second, those are not the issues on the front burner at the moment. Health Care and Carbon taxes are.

As soon as the PPIP gets set into place, I'm sure we'll hear more on it.

And btw: There's not much of a "debate" in my mind about Krugman or any other economists vis a vis Obama supporters. My interest is in responsible public policy- not childish (and vacuous) expressions of scheudenfraude. I'd prefer it came from Congress and the administration- but that's unfortunately not been the case as often as one would have hoped.

[ClarkUSA]

13. Quotes, links, proof? Because Krugman's "Obama Is Wrong" Newsweek cover story came out in April.

In his twice-a-week column and his blog, Conscience of a Liberal, he criticizes the Obamaites for trying to prop up a financial system that he regards as essentially a dead man walking... In his Times column the day Geithner announced the details of the administration's bank-rescue plan, Krugman described his "despair"... He enjoys his outsider's power: "No one has as big a megaphone as I have," he says. "Aside from the world going to hell, it's great."

Schadenfreude feels good. :D

[depakid]

14. I was wrong

He's been saying this since January:

Whatever the new administration does, we’re in for months, perhaps even a year, of economic hell. After that, things should get better, as President Obama’s stimulus plan — O.K., I’m told that the politically correct term is now “economic recovery plan” — begins to gain traction. Late next year the economy should begin to stabilize, and I’m fairly optimistic about 2010.

http://www.nytimes.com/2008/12/22/opinion/22krugman.html?_r=1

The point's also been made in interviews- and it's consistent with what some other economists have been predicting as well. This of course had to do with GDP -and not unemployment numbers, which will likely continue to rise into 2010.

[Larkspur]

15. I find it interesting that for a guy who got it "wrong" about Obama

he was invited to the White House for dinner. Makes me think that Obama and his team RESPECTED Krugman's dissent and most likely learned from it.

Obama is not god. He's human and his Goldman Sachs economic team -- Geithner and Summers -- are just as anti-labor as the Republicans.

[Uzybone]

7. Maybe the Obama admin is competent

ya think... just maybe they are working hard and doing the best they can in trying to solve all the problems left by the previous admins.

[Larkspur]

8. All Geithner is doing is setting the stage to reinflate bubbles

The entire finacnial system needs to be redone. Glass-Steagel needs to be reinstituted as well has tough bank regulations; otherwise we will endure another economic fallout. I think Elizabeth Warren has done more to scare the banksters than Timmy "Goldman Sachs bitch" Geithner has done any good.

And as one who is still unemployed after being layed off 6 months ago, I'm not experiencing any economic recovery. Obama better get another stimulus package passed that extends unemployment benefits another year or 2 for those of us who can't find jobs that are being sent overseas.

[jonestonesusa]

9. Thanks for posting - interesting article on the subject

though we're still in a severe recession, albeit it's great that we didn't end up in a bank panic so far. I agree with you that it's good news if the feds don't have to guarantee 85% of risky economic products - I hope that holds true. The health of Wall Street is certainly connected to the general health of the economy, but regional economies - the industrial Midwest, California, rural America - still needs specific attention.

Personally, I still wish that the political capital that brought Obama to office could have been used for additional public investment in the states, federal purchasing of properties in some of the most distressed areas, and additional strengthening of the safety net rather than marginal tax relief for the currently employed and major finance bailouts, though I would be ecstatic if Wall Street once again accepted its status as private sector. Plus, as one other post has said so far, the value of the many of the "toxic assets" still rely on the direction of the economy as a whole and the presumption of no future bubbles, as for instance mortgage-based securities still rely on recovery for the housing sector, and high unemployment doesn't help that. Not to mention the foundation of fraud underlying a lot of this.

I miss the days when we talked about the issues rather than focusing so much on who's right and who's wrong and doing end zone dances. These issues are too important to stray away from real substantive discussion.

[Hawkowl]

17. Extremely premature

All the talk of recovery is mind boggling premature. The unemployment figures are perpetually announced "better than expected" and then quietly revised downward (hiding the worsening) next reporting period.
If you are paying attention you noticed this just happened with the durable goods orders. Record setting foreclosures, record setting TOTAL unemployment claims, and the partial re-inflation of the stock market and commodity bubbles by a completely unprecedented, previously unimaginable scale printing of money by the Fed (a consortium of private corporate bankers).

So far Obama's policy is nothing more than reverse-Robin hood at its worst. Instead of holding the multimillionaire's on Wall Street to some unaccountability, he's simply stealing from all future generations of working class Americans to prop up the bankers and insurance industry.

Get back to me in late September, early October about our wonderful fantasy recovery.