{"id":2077,"date":"2009-02-02T19:44:22","date_gmt":"2009-02-03T00:44:22","guid":{"rendered":"https:\/\/ctblueblog.com\/?p=2077"},"modified":"2009-02-02T19:44:24","modified_gmt":"2009-02-03T00:44:24","slug":"a-prediction","status":"publish","type":"post","link":"https:\/\/ctblueblog.com\/?p=2077","title":{"rendered":"A prediction"},"content":{"rendered":"

Once again Paul Krugman nails it in this morning’s Times<\/a>. The Obama Administration, whether through timidity or ideological rigidity on the part of its economic team, seems poised to follow in the footprints of the Bushies. Well, not precisely. Bush spoke softly and carried no stick. Obama speaks harshly, but goes similarly unarmed.<\/p>\n

When I read recent remarks on financial policy by top Obama administration officials, I feel as if I\u2019ve entered a time warp \u2014 as if it\u2019s still 2005, Alan Greenspan is still the Maestro, and bankers are still heroes of capitalism. <\/p>\n

\n

\u201cWe have a financial system that is run by private shareholders, managed by private institutions, and we\u2019d like to do our best to preserve that system,\u201d says Timothy Geithner, the Treasury secretary \u2014 as he prepares to put taxpayers on the hook for that system\u2019s immense losses. <\/p>\n

Meanwhile, a Washington Post report based on administration sources says that Mr. Geithner and Lawrence Summers, President Obama\u2019s top economic adviser, \u201cthink governments make poor bank managers\u201d \u2014 as opposed, presumably, to the private-sector geniuses who managed to lose more than a trillion dollars in the space of a few years. <\/p>\n

And this prejudice in favor of private control, even when the government is putting up all the money, seems to be warping the administration\u2019s response to the financial crisis. <\/p>\n

…<\/p>\n

If news reports are right, the bank rescue plan will contain two main elements: government purchases of some troubled bank assets and guarantees against losses on other assets. The guarantees would represent a big gift to bank stockholders; the purchases might not, if the price was fair \u2014 but prices would, The Financial Times reports, probably be based on \u201cvaluation models\u201d rather than market prices, suggesting that the government would be making a big gift here, too. <\/p>\n

And in return for what is likely to be a huge subsidy to stockholders, taxpayers will get, well, nothing. <\/p>\n

Will there at least be limits on executive compensation, to prevent more of the rip-offs that have enraged the public? President Obama denounced Wall Street bonuses in his latest weekly address \u2014 but according to The Washington Post, \u201cthe administration is likely to refrain from imposing tougher restrictions on executive compensation at most firms receiving government aid\u201d because \u201charsh limits could discourage some firms from asking for aid.\u201d This suggests that Mr. Obama\u2019s tough talk is just for show. <\/p>\n<\/blockquote>\n

What we need is temporary nationalization, which is what worked in Sweden a while back.<\/p>\n

And here’s where I come to my sure fire prediction. In a few years, thanks to all this no cost to the banks government largesse, these banks will be back making money and planting the seeds of yet another meltdown. When that time comes, the people who are now paying themselves bonuses on our dime<\/a> will be lecturing the federal government about its budget problems, insisting that it must curb its massive deficits, deficits it incurred in rescuing them.<\/p>\n


<\/p>\n","protected":false},"excerpt":{"rendered":"

Once again Paul Krugman nails it in this morning’s Times. The Obama Administration, whether through timidity or ideological rigidity on the part of its economic team, seems poised to follow in the footprints of the Bushies. Well, not precisely. Bush spoke softly and carried no stick. Obama speaks harshly, but goes similarly unarmed. When I […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,32],"tags":[],"class_list":["post-2077","post","type-post","status-publish","format-standard","hentry","category-economics","category-obama"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/ctblueblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ctblueblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ctblueblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ctblueblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ctblueblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2077"}],"version-history":[{"count":1,"href":"https:\/\/ctblueblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2077\/revisions"}],"predecessor-version":[{"id":2078,"href":"https:\/\/ctblueblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2077\/revisions\/2078"}],"wp:attachment":[{"href":"https:\/\/ctblueblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ctblueblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ctblueblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}