MEDIA ALERT: Warren Olney’s “To the Point” on Geithner, AIG, and Obama’s Economic Muddle


warren olney 2009.jpgI will be participating in a discussion today on Warren Olney’s excellent “To The Point” that runs on the National Public Radio network all over the country at various times.
Other guests on the show will be David Sirota, Congressman Brad Sherman, and David Rothkopf.
It will be live on KCRW from 3 to 4 pm EST, or 12 noon – 1 pm if you are on Pacific time.
Locally, it will play on WAMU between 10 and 11 pm here in Washington.
For those interested, this is the digital audio file for the show:

The subject today is all the pressure that is being brought down on top of Treasury Secretary Tim Geithner, who Barack Obama stated is facing challenges like no other Treasury Secretary since Alexander Hamilton.
My only somewhat flippant response is that Hamilton was an incredible communicator and writer — and when challenged would not need Washington’s statement of support. Hamilton would spend the weekend writing 20,000 words or so making his case or argument and would do battle with his opponents.
I am hoping that Tim Geithner begins doing that. He seems a bit too much like the Beaver to Bob Rubin’s Wally — and needs to demonstrate that he’s thought through the options — even those proposed by rivals — and has a better, convincing plan. That’s what he needs to do to restore confidence in his leadership.
This article may be referred to during the conversation.
— Steve Clemons


10 comments on “MEDIA ALERT: Warren Olney’s “To the Point” on Geithner, AIG, and Obama’s Economic Muddle

  1. erichwwk says:

    Jeffrey Sachs:
    “Will Geithner and Summers Succeed in Raiding the FDIC and Fed?”
    This column explains how the Geithner public-private scheme to buy toxic assets at inflated prices is – in expected value terms – a hidden subsidy to bank shareholders paid for by US taxpayers. If the toxic assets turn out to be good investments, there is no transfer, but if they turn out to be bad loans, the taxpayer is left holding the damage while the private investors walk away.
    Geithner and Summers have now announced their plan to raid the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve (Fed) to subsidize investors to buy toxic assets from the banks at inflated prices. If carried out, the result will be a massive transfer of wealth — of perhaps hundreds of billions of dollars — to bank shareholders from the taxpayers (who will absorb losses at the FDIC and Fed). Soaring bank share prices on the morning of the announcement, and in the week of leaks and hints that preceded it, are an indication of the mass bailout at work. There are much fairer and more effective ways to accomplish the goal of cleaning the bank balance sheets.


  2. erichwwk says:

    Paul Krugman interview on why Geithner (Paulson) plan won’t work on
    Willem Buiter pleas for the US to tell the public the truth re the banks, and to stop leveraging the public’s money linked in URL above.


  3. erichwwk says:

    Paul Krugman interviewed on on why the Geithner plan won’t work:
    Jeffrey Sachs take is here:
    Willemm Buiter’s take is linked above


  4. erichwwk says:

    JStanton writes:
    “it is abundantly clear that Geithner is thoughtful and experienced”
    Experience comes in many flavors.
    Geithner’s experience with, and training in, other cultures is certainly impressive, as is his experience in the mechanics of keeping the banking machine on the road at the NY Federal Reserve.
    Once that machine leaves the road, and different skills are required, his experience and training is less relevant.
    Eg, much transportation moves ideas, not weight or volume. In that case programming knowledge, perhaps in packet communication may be more important than knowledge of mechanics and roads.
    Economics deals with a much broader set of problems and relationships than does business or banking. The schism between the Goldman Sachs/ Robert Rubin types on Obama’a economic team of advisers who still believe markets are self-correcting, that financial institutions create wealth and what matters is economic throughput, and those that see money as neutral and metrics of health, education, and joy as being more important is indeed wide.
    Eg, here is an interview conducted by Matt Renner [MR] and SMU economics professor Ravi Batra [RB]:
    “MR: What do you think about the current steps the Obama administration is taking to address the economy?
    RB: First of all, they are confusing cause with effect. They think the cause is the financial crisis, but actually that is the effect. The cause is the rise in the wage-productivity gap. The gap between supply and natural demand [as opposed to artificial demand created by easy access to debt] is so vast now. That gap cannot be plugged easily, especially if you’re not looking in the right place.
    Freeing the credit markets won’t end the recession, because why would a bank lend money when it’s afraid that it won’t come back? When the borrowers are not creditworthy and have no collateral, why would a bank want to lend them money?
    The Obama administration should focus on trying to help the economy grow. The stimulus package will help in the sense that it will slow down the bleeding, but it won’t stop it. If all the policies that led to the growing wage-production gap remain in place, the stimulus package will not end the recession.”
    I is in this sense that I would include Steve Clemons in the group of the five economists Steve mentioned in a previous post: James Galbraith, Joe Stiglitz, Bob Kuttner, Robert Reich, and Paul Krugman. These folks have the broad economic skills that those that focus more narrowly on only Wall Street, markets, and the financial sector seem to have difficulty grasping. It is what leads the former to see the problem as one of liquidity and credit, and the latter to see a solvency or balance sheet problem.
    I encourage all to listen to the discussion with Olney. To me it was of a much higher quality than what one gets from Larry Summers or Tim Geithner, and should encourage folks to listen to the March 26 NAF event as well.
    At some point one has to offer some model of “how the world works”, so one can distinguish between the two cases. I find what Steve is doing invaluable in moving us in that direction.


  5. TonyForesta says:

    I second Lurker’s defense of Mr Clemons. “Nuts” or not Geithner has not ‘thought through” any option that does not involve shielding and/or using taxpayer money to bailout the banks and Paulsons cronies in the banks. All other options were either not examined seriously, or intentionally ignored.
    Geithners’ plan is a trillion dollar giveaway to the predators class swindlers and thieves on Wall Street, as the market proved today, and a risky gamble for the American taxpayer. Worse, the underlying problems and flaws are not redressed, so while there may be a new boom, bust bubble on the horizon with predator class swindlers and thieves on Wall Street realizing outrageous fortunes – the fundamentals of the economy are decidely unsound, and the inevitable callapse of the next house of cards will put further strain on an already stressed and overburdened, underpayed, upsidedown, debtridden, and frightened American poor and middle class. The predator class, the superrich get superricher, and poorer and more voiceless poor and middle class Americans are left with the crushing debts, defictis, and terrible losses.


  6. Lurker says:

    Steve, your comments were excellent and thoughtful on Geithner, and few before you raised the issue of Goldman Sachs $12.9 billion dealing behind the scenes with Polson, Rubin and others with AIG. You are a valuable economic commentator, but TWN is also a platform for easy come, easy go criticism. So, I disagree with Mr. Stanton on the economic things you do but agree with him about your excellent foreign policy views.


  7. Steve Clemons says:

    Thanks J. Stanton — I have done economic policy for years and Tim Geithner is an old friend/acquaintance from Japan days….that said, I may rephrase the “thought through” part of this — to say that he may have considered options, and chose a strategy that was Bush/Paulson light, i.e. — to try and hold Wall Street as it was designed largely together in its current form. Whether or not he thought through other options or not — the reality is that the Obama economic advisory team is as Bob Kuttner said somewhat like a “Team of Rubins” rather than a team of rivals.
    I will continue to comment on economic matters and used to run the Economic Strategy Institute in DC with Clyde Prestowitz — so take it or leave it. I’ll continue to be here, and strongly disagree with you that my suggestions about Geithner and his direction are “3rd rate” efforts. I pretty much see my own critique as consistent with some of the points raised by Krugman, Stiglitz, Soros, Schwartz, and others.
    All the best — Steve


  8. M. Alireza says:

    Here is a link to one of the very best articles I’ve read on the financial mess so far.


  9. J. Stanton says:

    Steve, I think you need to stick to foreign policy.
    Are you truly asserting that Geithner has not “thought through” his options? That is just nuts. I’m not sold on the plan (though not convinced otherwise, either) but it is abundantly clear that Geithner is thoughtful and experienced.
    Opining on these matters in the second-hand, superficial way that you do while offering questionable political analyses will only dilute your authority on the issue that is your strength. We need your good efforts in that sphere, not 3rd rate efforts in others.


  10. Dan Kervick says:

    “I am hoping that Tim Geithner begins doing that. He seems a bit too much like the Beaver to Bob Rubin’s Wally — and needs to demonstrate that he’s thought through the options — even those proposed by rivals — and has a better, convincing plan. That’s what he needs to do to restore confidence in his leadership.”
    I think this is an excellent point. Geithner’s track record , as I understand it, has been to do an excellent job working for other people. he hasn’t much experience being in charge of something as important as the US treasury Department. It is not clear that he fully understands the requirements of leadership beyond the requirement to devise a plan. He is also young, and fairly or unfairly, people pull age-rank age and jump on that.
    Right now, the chief problem is that Geithner has lost control of the national debate, and needs to get it back. Maybe Treasury should hire a full time mouthpiece with a brain for detail and numbers, and authoritative presence and an established public reputation. In the past, the State Department and the Pentagon have often had high-profile spokespersons to get their message across. Why not Treasury?


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