January 2009
14 posts
How to Keep the Banking System in the Private...
Tim Geitner said today, in response to questions about the prospect of bank nationalization, that the Treasury is considering a range of options with the intent of preserving the private banking system. “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he told reporters. Well, it all depends on...
Why We Need Stronger Unions, and How to Get Them
Why is this recession so deep, and what can be done to reverse it? Hint: Go back about 50 years, when America’s middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs. At the center of this virtuous circle were...
How You and I Are Paying Wall Street to Lobby...
The new administration and Congress are busy preparing the second tranche of bailout money for Wall Street — TARP II — at the same time they’re developing a new set of regulations to make sure Wall Street doesn’t get into this kind of mess again. But will the old politics intrude? Wall Street is one of the biggest campaign contributors to both parties, and the...
An Open Letter to Rush Limbaugh, Sean Hannity, and...
In a time like this, when tempers are riding high and many Americans are close to panic about their jobs and finances, you have a special responsibility to consider the accuracy of what you say and the consequences of inflammatory and erroneous statements. In the last few days, manifestly distorting my words and pulling them out of context, you have accused me of wanting to exclude white males...
How America Embraced Lemon Socialism
America has embraced Lemon Socialism. The federal government — that is, you and I and every other taxpayer — has taken ownership of giant home mortgagors Fannie and Freddie, which are by now basket cases. We’ve also put hundreds of millions into Wall Street banks, which are still flowing red ink and seem everyday to be in worse shape. We’ve bailed out the giant insurer AIG,...
The Banking Crisis (Continued)
The banking crisis is worsening as the economy continues to sink. It’s not just that bank balance sheets are still stuffed with “toxic” assets probably worth far less than what they’re listed for — subprime loans mixed up with all sorts of other things. It’s because more and more individuals and businesses that had been credit-worthy six months ago can’t...
Obama's First Choice
Today, at noon eastern standard time, we have a new president. And after all the pomp and parades and parties are over, President Obama will turn to his first major job, which is to revive our moribund economy, which means attending to getting his stimulus package through Congress. Almost every economist will tell you the stimulus has to be massive in order to have any real impact. Even Marty...
How the Ensure that an Aggregator (or Bad) Bank...
It looks increasingly likely that a big chunk of the TARP II funds will be used to set up what’s being called an “aggregator” — or “bad” — bank to buy up the bad assets that continue to hobble the balance sheets of private-sector banks. That’s what Hank Paulson and Sheila Bair suggested Friday. Obama officials-in-waiting seem to view the idea...
Why Citi Turned Around on Mortgage "Cramdowns"
The latest data show one out of ten homeowners in the United States is either late in making a mortgage payment or in such serious arrears as to risk foreclosure. Last week, congressional Dems breathed a sigh of relief when Citigroup dropped its opposition to a proposed change in the bankruptcy laws allowing distressed homeowners to do what owners of commercial property and second homes can...
What Should Be Done With The Next $350 Billion of...
It’s difficult to make the case that the first $350 billion bailout of Wall Street — so-called “TARP I” — fulfilled its goals, unless one argues that the Street would have imploded without it, which is pretty much what Hank Paulson is saying these days. And since it’s impossible to prove a counter-factual, especially when the Treasury was never clear about TARP...
[Respite]
[I’m out of town and beyond blog access until next Thursday. The world will go on without my commentary.]
The Stimulus: How to Create Jobs Without Them All...
The stimulus plan will create jobs repairing and upgrading the nation’s roads, bridges, ports, levees, water and sewage system, public-transit systems, electricity grid, and schools. And it will kick-start alternative, non-fossil based sources of energy (wind, solar, geothermal, and so on); new health-care information systems; and universal broadband Internet access. It’s a two-fer:...
Stimulus Plan: The Need and the Size
The core problem we face is not access to capital. The Treasury has already flooded Wall Street and the banking system with money, committing nearly $350 billion; the Federal Reserve Board has exchanged Treasury bills for some $2.2 trillion of troubled assets; other agencies, such as the FDIC, have guaranteed trillions more. But there has been no appreciable result. Banks will not lend because...
Stimulate the Economy by Mending Our Safety Nets
Lots of talk this week about the proposed stimulus. One high priority ought to be the most vulnerable members of our society. The safety net created in the 1930s to protect Americans from extreme poverty is in tatters. Now that we’re in the worst downturn since the Depression, that safety net needs mending. This should be a key part of any stimulus plan. Unemployment insurance, for example, was...
