Is it time to fire Tim Geithner and Ben Bernanke?

A lot of serious people are questioning the Obama economic team. Paul Krugman has accused the administration of dithering. Henry Blodget is not feeling like the ship of state is under control. Willem Buiter feels that the Fed is working at cross purposes to correcting the fundamental problem. And Ralph Nader, perhaps the last principled liberal left in the US, is questioning the sanity of it all.

Outside the US, Secretary Geithner does not engender a lot of confidence. Earlier this week we saw reports of potential FDIC troubles. In the meantime, private markets already seem to be moving in the direction of saving the banking and housing systems, without taxpayer assistance.

So why do we need Geithner and Bernanke lavishing taxpayer guarantees on their friends and colleagues on Wall Street? At what point does Obama own this fiasco? The Paulson/Bernanke initiative last fall was roundly criticized. I don't think a lot has changed in this administration and that cannot be overlooked indefinitely.

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consensus seems to be

they need to resolutely and quickly temporarily nationalize these banks and stop throwing money at them.

The Federal Reserve Chair serves 4 year terms at a time. I don't know if one can be removed before that time is up.

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Blow up Derivatives

There should be a lot more talk of blowing up the over the counter derivatives market as promoted by Myron Scholes on Bloomberg yesterday in an article by Christine Harper.

Firing Tim and Ben is secondary. They need a plan that will build confidence, and then the nature of that plan should determine who will implement.

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An Economic Nuremberg

If it weren't so sad it would be entertaining to watch these bought-and-paid-for Quislings posture as though they had any idea whatsoever of what to do fix this mess. Presupposing that the bank's so-called "toxic" assets have a value much greater than that which most knowledgable economists estimate, they persist in trying to resusitate a past that is clearly beyond recovery. The Rubin/Summers/Geithner/Paulson/Bernache axis, having so contributed to the emasculation of oversight in the 1990s, seems committed to a course that has both their personal vindication and the welfare of their political benefactors as its objective. Such can't be realized in the common sense environmment of nationalization.

A system that can produce an abuse on the scale realized by the bailout of AIG alone has lost its moral right to exist, but our looting by AIG's "public service" enablers is not simply an outrage, its a kind of war crime, one in which the battle lines have the political leadership and their contributor beneficiaries on one side and everyone else on the other. The time has come for a new constitution, one which prohibits both lobbying and public service by anyone currently holding office or their forebears going back four generations. All of this to follow the show trials to be held at the Rose Bowl, naturally.

in a war in which the political class is arrayed against the rest of us.

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Is it Geithner, or someone else?

Simply put, is it Geithner behind the government's doomed-to-fail economic strategy (as complete restructuring is the order of the day)?

Or is it his old firm, Kissinger and Associates? Or perhaps one of the organizations he belongs to: CFR?

Group of Thirty??

Bank of International Settlements??

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The chosen ones.

I agree James, Geithner, et al are just front men. I think Geithner's biggest problem is that he isn't adept at the level of spin and non-speak/double speak that the position requires. Greenspan was a master at that. Personally, I think these guys are intelligent enough to know what is happening and they appreciate the consequences of their actions. Consequently, I'm not willing to cut them a lot of slack.

As for who is behind it all James, your list of candidates makes sense. For me, the unbelievable increase in the Fed's balance sheet from January 2008 to January 2009 seems too much of a coincidence. Therefore, I would cross reference the top individuals in those organizations you mention with the owners of the Federal Reserve Banks. I believe that would generate an interesting list of suspects. In the words of Charles A. Lindbergh (not the aviator):

This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President (Woodrow Wilson) signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill.


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Odd. 1913 just came up

Odd. 1913 just came up under my radar on an apparently unrelated issue: it was the year Indian Hemp was, according to a news item I read, prohibited in California. It just seems a striking timeline to me.

It's the modern-day Invisible Hand?!

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Hand? Nope, just the old gang...

1913 - along with establishment of the Federal Reserve System, that was the same year for the establishing of the income tax and the oil depletion allowance.

The year prior to that (1912) the NY Times ran an excellent article detailing the extraordinary bank interlocking corporate directorates/directorships. (Google: bank interlocking directors - along with - NY Times)

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Bernanke has been saying

Bernanke has been saying "Our economy is sound", "Banks are well capitalized", "the 'subprime' crisis is contained", blah, blah, for two years. Either he is extremely incompetent or he is lying through his teeth. He should be fired for incompetence and investigated for corruption.

As part of the NY Fed, Geithner was part of the problem. I suspect he is just plain stupid. Fire him.

Paulson was the CEO of Goldman Sachs when they were creating CDOs and minting money. He was the treasury secretary when Goldman and their buddies were bailed out, again and again, in multiple forms. He was treasury secretary when Goldman Sachs people were placed in major financial institutions and top roles in government. He should be investigated for his role in this mess and if found guilty should be thrown in jail for the remainder of his life and all of his wealth confiscated.

Then their is Shela Bair, Chris Cox, and number of other people. How did bank's balance sheets deteriorate to this level? These people were supposed to regulate the financial entities. To see what a good job they did, look at the settlement of Lehman's credit default swaps. Lehman had a 20-25% hole in their balalnce sheet, i.e. a quarter of their assets were marked to the tooth fairy. Same with WaMu, IndyMac, Countryslide, etc. The SEC, auditors, regulators, all were in on this. Its difficult for me to swallow that such balance sheet holes can develop in the presence of proper oversight.

There needs to be a "mother of all investigations" to root out corruption at the top.

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An Apology

It would seem that in addition to increasingly bad hearing, advancing age also can lead to ones failure to edit their posts thoroughly. By way of apology I'll link you to an absolutely delightful aria from Rossini's one act opera, L'inganno Felice, by name "Quell tenero dilleto". Enjoy:

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commongood, good post

Naked Capitalism liked it so much they put your post in yesterday's links.

Congratulations. (Thank you NC for recognizing his post too).

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