Well, I'm still on the bank thing. Some heavyweight economists have come out with their prescription for the problem in today's WSJ, which I happen to agree with.
Underneath this I reference another Geithner article, this one from yesterday's WSJ (A3). I can't really analyze what's wrong the first paragraph, it just seems to somehow characterize the vagueness of Geithner's goals.
The second and third paragraphs bother me for two reasons. Number one, Obama went to the G-20 asking for this, and basically got shot down by other world leaders. Especially negative was Germany, which is significant because they are one of the few countries in the world actually sitting on cash at the moment, and they rejected our plea for stimulus. So it seems Geithner is unlikely to succeed where Obama failed.
The second thing that bothers me about these paragraphs is that I have a feeling Geithner is setting up his excuse for failure here--- getting ready to say that his plans failed because the world didn't stimulate enough.
I include the fourth paragraph simply because it is so goofy, another thing that bothers me about Geithner. Is someone proposing that we not have a financial system in the world?
Today's Wall Street Journal, pg A2
WASHINGTON -- Instead of funneling taxpayer money into big financial firms, the government should take the radical step of breaking them up into smaller, more transparent companies, top economists told lawmakers Tuesday.
"We have little to lose, and much to gain, by breaking up these behemoths, which are not just too big to fail, but also too big to save and too big to manage," said 2001 Nobel Prize recipient and Columbia University Prof. Joseph Stiglitz, one of the witnesses testifying before the Joint Economic Committee of Congress Tuesday morning. He argued that big institutions are more likely to take excessive risks that backfire and distort markets.
Mr. Stiglitz also criticized the Treasury Department's $700 billion financial-rescue program for propping up large firms with subsidies, while allowing community-based banks to collapse. He voiced skepticism that the Troubled Asset Relief Program would be successful, because it paves the way for big banks to continue dominating the U.S. financial system.
Massachusetts Institute of Technology Prof. Simon Johnson argued that policy makers need to overhaul antitrust laws to prevent the development of financial firms that are too large. Banks should be sold to new private-equity owners and broken up, Mr. Johnson said, adding that banks could be divided regionally or by type of business to avoid a concentration of power.
Geithner Weighs Bank Repayments
"We want to make sure that the financial system is not just stable, but also not inducing a deeper contraction in economic activity. We want to have enough capital that it's going to be able to support a recovery," Mr. Geithner said.
Mr. Geithner also said he plans to discuss signs of improvement in the U.S. economy with his counterparts at the coming Group of Seven finance-ministers meeting. But he said a "dramatic" mobilization of resources is still needed across the world to avert a deeper global recession.
"We're trying...to make sure there's as strong and broad a global consensus on stimulus, financial repair and quick deployment of resources to emerging economies so that we can avert risks of a deeper downturn world-wide."
"You can't have economic recovery without a financial system," he said. "Without a financial system you have no credit, which means higher unemployment, lower production capacity and a higher number of failing institutions."