So it begs this question: who do i find more credible?
Mr. Krugman, a NY Times op-ed columnist since 1999 and Nobel prize winner (economy), or Mr. Geithner, president of the NY Fed from November 2003? So I have to ask another set of questions:
• do i trust the guy who was at the forefront of predicting this financial mess?
Crash Landings: Paul Krugman's Depression Economics
So for the past twenty years Krugman has dutifully mapped the patterns, worried the numbers and issued his warnings--as in (now we can say it) his seriously underestimated book The Return of Depression Economics (1999), a primer on the financial busts of Japan, the Asian "tigers" and Latin America, transparently meant to caution Americans about their own vulnerabilities. He could not have chosen a worse time for prophesy than the end of the millennium. Technology markets were booming, Google was just a year old and Enron was voted a Fortune "Most Admired Company" (for the fourth consecutive year). Meanwhile, a budget surplus was accruing, and the Clinton White House, the Federal Reserve and Congress were all in agreement that, say, regulating "credit default swaps" would be an insult to the professionalism of investment bankers.
Paul Krugman: Graduates versus Oligarchs 2006
. . .Mr. Bernanke's position. . the 80-20 fallacy. It's the notion that the winners in our increasingly unequal society are a fairly large group - that the 20 percent or so of American workers who have the skills to take advantage of new technology and globalization are pulling away from the 80 percent who don't have these skills.
The truth is quite different. . . . Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.
So who are the winners from rising inequality? . . . Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year ... being a college graduate, wasn't a ticket to big income gains.
But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint.
• or do I trust the guy who has been a Wall Street/corporatist insider and driver of economics that led to this mess?
Can Tim Geithner Lead the Economy Out of Its Mess?
By August 2007, . . . During the Jackson Hole meetings, Geithner pressed the view that Fed policy was behind the curve; the problem in the credit markets was big and likely to get worse, and the Fed needed to get out in front of it, to err on the side of being aggressive.
It wasn't a popular view back then. . . As an insider put it, they thought Geithner had been captured by his constituents — the heads of the largest banks and investment firms in New York, most of whom were leveraged to the hilt and deeply vulnerable to turmoil in the mortgage-backed-securities market. . . It has been frantically trying to contain that crisis ever since.
Where was Geithner in turmoil?
"We have only two things to say about Tim Geithner, who we do not know: AIG and Lehman Brothers," said Christopher Whalen of Institutional Risk Analytics. "Throw in the Bear Stearns/Maiden Lane fiasco for good measure," he said, referring to the site of the New York Federal Reserve, where many rescue discussions took place.
"All of these 'rescues' are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion."
Tim Geithner Deathwatch
Obama's Treasury Secretary is in trouble. Yesterday, we heard the first public discussion of a resignation. That theme will likely gain steam over the next few days.
A recap of what everyone is frustrated about:
• Geithner approved the AIG bonuses
• Geithner forced his boss (Obama) to step in and overrule him (recoup the bonuses)
• Geithner arranged the AIG bailout that has since ballooned to $170 billion
• Geithner participated in the decision to hide the AIG counterparty bailouts
• Geithner still has no coherent plan to fix the banking crisis
• Geithner still thinks the problem is "liquidity," not solvency
• Geithner has persuaded no one that he's the right man for the job
In a normal environment, the country might have time to wait for Tim Geithner to recover from his early missteps. In the current crisis, however, we don't.
In a normal environment . . . pictured in happy days, black and white photographs, and kids who actually played outside instead of their own death watch of putrid consumer-producing television shows.
in a mood today, folks.
Comments are closed on this story.