Thursday, April 30, 2009

I was the only Editor's Choice on Leonhardt's NYT article

...with the most readers' recommendations:

Time For Bank Creditors to Share the Pain? in Leonhardt's Economic Scene column.

Comment #21.

EDITORS' SELECTIONS April 29, 2009 2:24 pm

Let's not fool ourselves: Obama hired Summers and Geithner. He said to you airily when you soft-balled him that there are others besides the Wall Street Clinton brain trust involved in saving the U.S. economy. Who? Paul Volcker, who was trotted out for a photo op back during President-elect times and hasn't been heard from since?

The idea that the guys who created the destruction are the best for reconstruction is like saying because a fox knows how to kill a chicken he's the best one to keep it alive.

Geithner is bypassing Congress (taxation without representation indeed) by doling out money from the Treasury.

In any case, the idea that printing money out of thin air and shoveling it into the gaping maw of failed institutions will somehow unfreeze credit is belied by a rival publication on 4/20/09 (you'll print this, right, even if I quote another source--I know you've covered this story also):

"According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program."

The former chief economist of the IMF, Simon Johnson, believes that the oligarchs (or "overlords") of the financial institutions have already assumed the reins of government. Basically they own the Treasury.

Witness Geithner's brilliant plan to remove toxic assets with a trowel by subsidizing unregulated, opaque industries like hedge funds/private equity firms to purchase such assets and indemnifying them from any losses. Again, lemon socialism: privatized profits, socialized losses.

Don't be fooled by a pretty face. All that matters is policy. We're already past the tipping point to change the economic paradigm. Banks are reporting profits (who wouldn't, with cheap money thrown at them) and want to wiggle out of their obligations to the shareholders (us).

Let's see if banks represent an opportunity to private capital without a government guarantee. If not, public capital should demand its due. To paraphrase Arlen Specter, "there should be an uprising."

— Kathi Berke, New York City

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