Tag Archives: geithner

Obama Out of His Depth, ‘Funking Economics’

If Bush were still in office carrying out the policies that Obama has been, there’d be a lot more noise from the people. As the commentator says here, no criticism of the president is allowed. Is is denial, embarrassment, or have people stopped paying attention now that the election is over, thinking Obama will save the day?

Commentary: Obama is flunking economics

Welcome to March Madness on the Potomac.

Many Americans are so emotionally invested in the Obama presidency that they consider it too historic to fail.

They won’t tolerate any criticism of the president or his administration, finding it easier to simply attack critics. And whatever goes wrong that they can’t defend or deflect, they just blame on George W. Bush.

But to many of the rest of us, it’s clear that President Obama is flunking economics. He is trying to do too much at once, and so he is not doing any of it well. He vows to cut the federal deficit while proposing an avalanche of new spending that will — says the Congressional Budget Office — increase it by as much as $9.3 trillion over the next decade.

Here’s the really bad news, though. No matter what else goes awry, Obama’s strong suits are supposed to be communications and marketing. Yet, this week we learned that this isn’t the case when he has to communicate and market his message on economics.

It doesn’t help matters much that Treasury Secretary Tim Geithner seems too small for his chair. When he needs to inspire confidence, Geithner does the opposite. Whenever he speaks and comes up short on specifics, the Dow plummets. And when that happens, the Obama supporters don’t care and insist that Wall Street is part of the problem and thus can’t recognize the solution.

Full Story

Economists Question Obama

Borrowing and Spending: The Way to Hell

Geithner’s global dilemma

See Also:

Proposal of a New Reserve Currency Controlled by the IMF

With Obama’s Plan, America Will Go Bankrupt

US president battles criticism and recession

GOP predicts doomsday if Obama budget passed

Congressional Republicans on Sunday predicted a doomsday scenario of crushing debt and eventual federal bankruptcy if President Barack Obama’s massive spending blueprint wins passage.

But a White House adviser dismissed the negative assessments, saying she is “incredibly confident” that the president’s policies will “do the job” for the economy.

In a TV interview, Obama himself laughed when discussing the dire state of parts of the economy — and ascribed his laughter to “gallows humor.”

White House Council of Economic Advisers chairwoman Christina Romer insisted that the nation’s flailing economy will be rebounding by 2010.
Administration officials — and the president himself — have taken a cheerier tone despite economic indicators that are anything but positive.

“I have every expectation, as do private forecasters, that we will bottom out this year and actually be growing again by the end of the year,” Romer said.

The president, in an interview that aired Sunday on CBS News’ “60 Minutes,” talked about the need to spend taxpayer money to save financial firms and the auto industry.

“I just want to say that the only thing less popular than putting money into banks is putting money into the auto industry,” Obama said with a laugh. Full Story

A.I.G. Defends $165 Million Planned Bonuses

A.I.G. Planning $165 Million in Bonuses After Huge Bailout

aig

The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

A.I.G., nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.

Full Story

Rep. Sherman discusses outrageous AIG executive compensation announcement

America’s Biggest Creditor China Worried About U.S. Economy

US tells China its bond investments are safe

China ‘worried’ about US Treasury holdings

China’s premier didn’t say it in so many words, but the implied warning to Washington was blunt: Don’t devalue the dollar through reckless spending.

Premier Wen Jiabao’s message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington’s biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.

“Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a news conference Friday after the closing of China’s annual legislative session. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”

The appeal suggested the outlines of Chinese President Hu Jintao’s stance when he meets with President Barack Obama at an April 2 summit in London of the Group of 20 major economies on possible remedies for the global crisis.

Wen gave no indication whether Beijing wants changes in U.S. policy. But economists said his comments reflect fears that higher U.S. budget deficits from Washington’s $787 billion stimulus package could drive down the dollar and the value of China’s Treasury notes.

“China is telling the U.S. to be careful, not to overspend and keep an eye on the dollar,” said Kelvin Lau, regional economist at Standard Chartered in Hong Kong. “There are risks that China cannot control, so they’re depending on the U.S. to maintain fiscal prudence and keep the dollar reasonably stable.” Full Story

See Also: Begging China for Handouts

Obama Economy Growing More Troubled

Analysis: Obama recovery plans sowing some unease

President Barack Obama offered his domestic-policy proposals as a “break from a troubled past.” But the economic outlook now is more troubled than it was even in January, despite Obama’s bold rhetoric and commitment of more trillions of dollars.

And while his personal popularity remains high, some economists and lawmakers are beginning to question whether Obama’s agenda of increased government activism is helping, or hurting, by sowing uncertainty among businesses, investors and consumers that could prolong the recession.

Although the administration likes to say it “inherited” the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama’s still-young watch.

Every day, the economy is becoming more and more an Obama economy.

More than 4 million jobs have been lost since the recession began in December 2007 — roughly half in the past three months.

Stocks have tumbled to levels not seen since 1997. They are down more than 50 percent from their 2007 highs and 20 percent since Obama’s inauguration.
The president’s suggestion that it was a good time for investors with “a long-term perspective” to buy stocks may have been intended to help lift battered markets. But a big sell-off followed.

Presidents usually don’t talk about the stock market. But the dynamics are different now.

A higher percentage of people have more direct exposure to stocks — including through 401(k) and other retirement plans — than ever.

So a tumbling stock market is adding to the national angst as households see the value of their investments and homes plunge as job losses keep rising.
Some once mighty companies such as General Motors and Citigroup are little more than penny stocks.

Full Story

Trillions of Dollars Down a Black Hole

Obama, like Bush, is Throwing Public Money into a Black Hole
by Prof. Rodrigue Tremblay

“The [financial] crisis was not a failure of the free market system and the answer is not to try to reinvent that system. …Government intervention is not a cure-all.” President George W. Bush, Thursday November 13, 2008

“There is no cause to worry. The high tide of prosperity will continue.” Andrew W. Mellon, Hoover’s Secretary of the Treasury. September 1929

“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.” President Herbert Hoover, May 1, 1930

Tuesday, February 10, may be the date when the U.S. economy officially entered into an economic depression. This was when President Obama’s Treasury Secretary, Timothy Geithner, announced that the Obama administration was about to expand Bush’s Secretary Paulson’s $700-billion plan to rescue large U.S. banks from insolvency, euphemistically called the Troubled Assets Relief Program (TARP). The purpose now, as it was previously, is to use public capital, loans and guarantees to remove toxic financial assets from private banks’ balance sheets and to transfer them to the Government and/or to willing private investors (hedge funds, private equity firms and other investors). One must keep in mind that Mr. Paulson and Mr. Geithner were the principal architects of last October’s original plan. This was then, and it is now, a plan designed primarily to use hundreds of billions of taxpayer dollars to prevent banks from declaring bankruptcy, while in fact doing little to accomplish its presumed primary objective of getting banks to resume normal lending. Such a cure has failed in the past and is likely to fail now. Saving insolvent banks is not the same as fixing them and making them viable.

Indeed, when Mr. Geithner announced on Tuesday, February 10, that he was expanding the Paulson plan to make it a $1.5 trillion bailout plan, financial markets saw it as simply rearranging the chairs on the deck of the Titanic, and they sold off. I believe the markets are right and the Obama-Geithner plan only makes the Bush-Paulsen plan worse. Both are misguided and do little to address the root cause of the financial crisis, which is a mountain of unsustainable bad debts that was allowed to expand recklessly over the last ten years, and which is now crumbling down, dragging the entire economy down with it.

Rodrigue Tremblay is professor emeritus of economics at the University of Montreal

Full Story