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Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman today (March 24) lambasted the plan by Treasury Secretary Tim Geithner to take more than $1 trillion of smelly assets off banks' books. The plan would use massive amounts of taxpayer funds to subsidize private sector buyers of the near-worthless debt. The subsidies could be as much as 90 percent. Thus, there is essentially no risk for Wall Street, whose stupidity and gambling proclivity have driven the global economy to the brink. Stiglitz of Columbia University denounced the "perverse incentives" of private investors getting all the upside without taking risks. It's "a robbery of the American people," says Stiglitz, who thinks it will fail once the taxpayers wake up. Krugman, a Princeton professor and New York Times columnist, says it is a "sweet deal" for Wall Street but bad for taxpayers. He likens it to earlier flops proposed by former Treasury Secretary Henry Paulson. The plan is grounded on the idea that the big market losses and economic declines are the result of "irrational panic." Through bribery, the government is trying to make Wall Street feel better (it rallied wildly yesterday; after all, it was getting free money). Supposedly, this will help everybody else feel better. However, the miseries of this recession weren't irrational and can't be wished away, says Krugman. "You can't have the centerpiece of financial policy based on hope," he says.

Comments
15

Geithner is about to go.

He needs to change things up real fast or he is out of Treasury.

Heat is coming from all sides, and people are MAD~!!!

March 24, 2009

According to Johnny...everyones going, Sanders going, Dumanis is going, Judges are going etc etc, ...but no one has left.... Don't you tire of these end predictions Mr. Vegas-Surfpuppy619

March 24, 2009

The government should limit the AIG bailout to only the amount of money needed to make good on retirement annuities, fund whole life insurance payouts, and reimburse pension fund losses. AIG should be shuttered without delay and hedge funds and other large investors should receive nothing. The $1 trillion should be used to fund federally insured loans directly through solvent banks and credit unions. If failing businesses are critical to the economy, the FED should make the loans directly. Geithner's Wall Street masters should accept the fact that Bank of America, CITI, and other similar banks are gone and no amount of money will make them viable again. Geithner has become a stooge for the big money interests on Wall Street, and his policies are destroying what's left of the government and the economy.

March 24, 2009

Response to post #1: Obama is sticking by Geithner. Of course, you have noted that he permits Geithner to go up there alone and present his program. Best, Don Bauder

March 24, 2009

Response to post #2: I agree with SurfPuppy on Sanders and Dumanis, along with several judges. Best, Don Bauder

March 24, 2009

Response to post #3: Good thinking. There should be a way to close down these institutions. If the counterparties on the derivatives can truly be deemed critical to the world economy, then the U.S. government should pick up the tab. But Goldman Sachs was not. The money went from the government to AIG and right to Goldman, which had claimed it didn't have big exposure to AIG. It turned out that it did -- supposedly. But why in the world should U.S. taxpayers be bailing out Goldman through AIG? I suspect that Goldman is a front for a money laundering operation. The other side was actually a critical institution in China. But the U.S. was afraid the public wouldn't stand for that, so Goldman, which has close China ties, was substituted. Best, Don Bauder

March 24, 2009

Respose to post #6. I wonder if that is part of the reason China doesnt want rely on the once "stable" U.S. greenbacks and is considering another form of global currency.

March 25, 2009

Reserve currency I ment to type in the above comment.

March 25, 2009

Response to posts #7 and 8: I don't think the dollar will fall quickly as the world's reserve currency. It would not be in China's interest to dump the dollar; it holds too many of them now. China might buy fewer of them and sell some of them it holds. That would be enough to hurt. No other currency, including the euro, has the strength to supplant the buck -- at least now. But we have to be concerned. Being the world's reserve currency has major advantages. Best, Don Bauder

March 25, 2009

The best article I've found yet on the situation we're in is by Matt Tiabbi of Rolling Stone:

http://www.rollingstone.com/politics/story/26793903/the_big_takeover

March 25, 2009

Response to post #10: I haven't read the article yet, but it has been lavishly praised. I saw him on Rachel Maddow last night. Best, Don Bauder

March 25, 2009

So you think Sanders is going?? Do you mean you think he's going to resign, or get booted out of office. Because I'm pretty sure JW was reffering to johnnyboy's prediction that Sanders would lose the election. vegasboy has become the jim cramer of these blogs: if you go with the opposite of what he says, you're probably a winner.

March 25, 2009

Response to post #12: I can't see Sanders resigning or getting booted out at this point. The public is not wise to him yet. Best, Don Bauder

March 25, 2009

vegasboy has become the jim cramer of these blogs: if you go with the opposite of what he says, you're probably a winner.

By trestles

Ahhhh.......more words of praise from my adoring weflare queens/fans.

Spank you.

March 25, 2009

Response to post #14: The rhetoric is getting heated. Best, Don Bauder

March 25, 2009

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