Charlie Rose

tartufe  03/24/2009 01:11 AM Report

Geithnersan - that incognito Jap should commit seppeku a la an honorable samarai.

He has disingenuously set up a system that will once again assure the moral hazard by enbaling the fat cats to capitalize once again on the mess they created.

Morally it shouldn't work even if its possible (financially). Integrally, morally it screams to fail. If it succeeds (short term) it will fail long term. If they're functionally insolvent, there's a sound reason for it and the natural results of that should not be subverted.

Remember for every trillion dollars you could stimulate each person $3,000, or $7,000 per family. They're estimating two trillion to fix it all. That doubles these numbers to $6,000 and $14,000. Down payments, on homes, cars, trucks yadda yadda.

Percolate up (forget trickle down cause it wont).

Like Mr Krugman says, the accepted wisdom the banks should not fail could be mistaken.

I bettin the big banks are lashed to gether with the too-clever-by-fractions junk collaterized assets and smaller banks are less affected. Therefore logic says let them fail - the big ones. They need to - deserve to - and should.

Cap it off with jail time. The world will smile. Confidence will return.

tartufe  03/23/2009 11:14 PM Report

Whoops! Might make a logic assist to make that heeled and heelless.

tartufe  03/23/2009 10:35 PM Report

Not smart enough to grasp Geithner's plan announced to day. On the surface it sounds like more procuring for the well healed - yet again guaranteed by us the healless.

Prolonging rather than shortening?

IRISH  03/22/2009 10:09 PM Report

What can you expect of the insanity of the big men in suits who knelt at the altar of The Dollar ? The USA has lost more than what it thinks it may have lost in the world economy. It has lost its purpose and shining light in this world. After promoting the so-called "American Way" and why the world should be more like us, America is alone. It is no longer a shining beacon in the world. The unilaterism practiced during the last 8 years has irrevocably trashed America to a bitter and mean economic existence for a generation.

tartufe  03/21/2009 07:22 PM Report

avidreader - spot on. A culture that tolerates the gang rape of the world's financial system deserves any restitution it deserves. Particularly if we don't demonstrate that our system will not tolerate it in the future or confidence will never be restored. FBI, SEC etc need to start serious (not political superficial BS) on the top largest gimmick-using institutions.

Starting with Henry Paulson. Then Bobby Rubin, Ben Bernanke yadda, yadda (including Bush of course, but I'm already in la la land realistically).

The duplicitous pols that enabled this destructive collusion with enabling confiscatory legislation need to be taken to task as well. Our system is so corrupt we have to be going the way of Rome.

Anarchy no longer seems extreme. Damn near becoming an imperative. The abject misery these wise-guys are causing deserves reprisal not rewarding.

Citizens arise! (Love the picketing of individual AIG bonus theives. That's a start. They need to worry. At least till they get to the Bahama yachts.)

avidreader  03/21/2009 01:35 AM Report

People, wake the hell up! Are you people gullible or naive or stupid or all three?

The Treasury folks are not talking, not because they lack the skills. Under pressure of public anger this week they proved they had tongues and are fast talkers. No, it's because they are in cahoots with Wall Street and they don’t want to accidently say something that might get them caught in their web of lies.

Larry Summers and Donald Koln and the entire cabal did not talk about the counter parties, not because the “optics would not look good”. They are protecting the interests of the Goldman Sacks, Deutsche Bank and all other who benefit from the $180 million million (it helps me keep the numbers in better perspective) flowing to them.

There is a reason TARP was done in a hurry - it’s because they wanted the cover and excuse of speed.

The Treasury department is understaffed not because they don’t want people from Wall street (after all it’s flooded with people from Goldman Sacks) – they just don’t want anybody looking over their shoulders.

Greenberg came closest to pointing out that there is something fishy going on, but he does not have the moxie to lay it all out.

doodahdaze  03/20/2009 10:38 AM Report

Dear SanR, there is a degree of protecting each other, between "investigative reporters and financial wizards" of the "news" and their subjects... As evidenced in this interview.

That "phenomenon" is also how Hitler came to power, so keep your BS antennae up, and your weapons hidden but close.

SanR  03/19/2009 03:31 PM Report

So as a nation, if the financial crisis doesn’t get us, the effects of global warming will. From everything that ones reads and hears, we have careened off the cliff because of greed and our only hope is a safety net at the bottom which no one seems to know how to construct for sure. Then again, no one is sure that if it is constructed if it will it be sufficiently safe enough to maintain the economy either nationally or globally.

At present what really bothers me the most about all of this is something that Jon Stewart has been clamoring about on his show: where were all of the investigative reporters and financial wizards to let us know that this was happening long before we got to this stage of the game? The news and such only pounds this to death after the fact. I don’t know if this is better than how the news was handled regarding the 1916-18 Spanish Influenza epidemic where the US and most of the European news wasn’t allowed to mention the illness.

doodahdaze  03/19/2009 02:36 PM Report

Deleting my comment only serves to stoke the fire of my anger.

So what time would you like me over for dinner, Hank?

tartufe  03/19/2009 02:22 PM Report

Exactly! Maybe they need to read Gibbons, "The Decline and Fall of the Roman Empire."

vanron100  03/19/2009 04:20 AM Report

...there has never been a Company or Country...'to Big to Fail'...it's been happening throughout history...what a silly ruse!

tartufe  03/18/2009 11:40 PM Report

Well said, MikeW.

MikeW  03/18/2009 11:33 PM Report

Each of the guests conveniently deflected the issue of public outrage vis-a-vis the large institiutions requiring "bailout." From my personal discussions on this topic, the pervasive opinion is that institutions such as AIG and CitiBank should be allowed to fail, period. That is the depth of outrage that was not acknowledged. Don't they know this? Surely they do, but that option is not part of their reality. In retrospect, the public feels very much "handled" by the threats of financial Armageddon last year. Let them fall. Us "small folk" can take it!

morley  03/18/2009 10:08 PM Report

On Sept 11, 2001, al-Qaeda destroyed the Twin Towers in New York City. The correct response to this action was:

a) $165 million in retention bonuses

b) .....

jbsmith  03/18/2009 05:41 PM Report

doodahdaze:

Maiden Lane 3

REMant  03/18/2009 03:42 PM Report

I thought this a very useful and well-considered discussion all around, as was the debate between Sorkin and Kuttner on this subject on The New Hour yesterday.

Contracts are void if they are impossible to perform or if criminal, and both can probably be applied here. No one, for instance, would say that all contracts in the Madoff scheme should be honored. Contracts are not really sancrosanct anyway despite the way our law has gone. This is an area of tension between civil and political society. We have a govt for a reason and it is not a parasite on the back of business.

Yes, of course, as Greenberg said, AIG is being used as a funnel for the Fed's own "insurance" effort. We are talking about "Helicopter Ben" here, and AIG is his helicopter. Bernanke wants to run a no fault insurance co. He thought he was going to reflate the bubble, and he thought the faster and more massively he hit it the better. I suspect the real reason why he was so upset with AIG, as he has recently remarked a couple of times, was that he thought they were on his turf, though it is possible that that's when he finally realized the immense damage the Fed's policies had done. But there really is something wrong with his head. Perhaps, if he wants to be so compassionate, he should consider giving up his salary, too. We really can't afford to be insuring everyone and we certainly can't do it without blowing the whole bubble back up again. Maybe he thinks he can in effect refinance everyone on longer terms, but that can't work, and if that is what he wants to do then surely the bankruptcy courts would be better at it. Leaving aside the very question of the desirability of a central bank, it is certainly true that they can't be effective except in a a very narrow range, and we have been a very long way from that, for a very long time. I think he is now a major obstacle to recovery.

Either the admin follows the reflation scenario or the reconstruction scenario. It can't do both and Bernanke has put the latter in real jeopardy, not, as some have recently been saying, the other way 'round. It was Keynes' idea to find a purely monetary solution to the business cycle as it was then called, rather than dealing with the structural issues. This was taken up by Milton Friedman (and it seems particularly Anna Schwartz), but gradually abandoned by him as he saw the effect that it had on inflation beginning in the late 60's. But all this antedated Keynes, and it lives on in Bernanke and on Wall St where it fits nicely with the rational business model inherited from the Progressives. The only thing inflation and deflation do is to shift the evaluation and distribution of wealth. The loss to society occurred when the labor and materials were sunk into houses and sent overseas where they have, unfortunately, remained, when they should have been put to more constructive use here. We are seeing the attempt of some very selfish ppl to hang onto their inflationary gains by continuing the inflation, which cannot for the overall health of the nation and the world be so. If we cannot pay the debt so far accumulated, then deflation must ensue. If inflation continues we will see productivity diminish further and labor further devalued. The reported rise in housing starts is an ominious portent.

There really is no "systemic risk" in AIG and the banks, but there is in inflation. The AIG report received by ABC is a sustained argument for just that. If it is reorganized the depositors, so-to-speak, will be (or perhaps would have been) okay, their stake at worst going to other cos, but the shareholders and those involved in the swaps will lose as they should. Reorganization would be an immense task, but more inflation is no shortcut. But I have my doubts about the entire insurance industry as well. More often than not it doesn't insure, but litigates, and when it does really insure it quickly gets into trouble from the moral hazard. For the rest it only does what banks do, and the latter, probably better.

ShalomFreedman  03/18/2009 02:36 PM Report

This was quite a disheartening program. All seem agreed that the worst is yet to come, that the recovery will take a long time and will be slow. They also all fault the Obama Administration for the way it has been handling things. They claim that the Administration does not communicate clearly what it is doing. All this is very bad news. And in fact in everything that was said I did not hear any real glimmer of hope.

tartufe  03/18/2009 12:22 PM Report

Obama, Summers, Bernanke are too entwined with the big banks and hedge fund orthodoxy, which was largely - primarily in fact - initiated by the Paulson (three page) rush to throw money unregulated and unmonitored at the perpetrating institutions a la AIG, later Citigroup et al.

Consequently, their sentiments for these institutions imo precludes the possibility of meeting the cause of the financial crisis head on. The too-big-to-fail assertion emphasizes this. This merely obscures the underlying solution, which is they’re too-big-to-survive, as their very growth was due in part on creating the bubble on which to grow to be too-big. In short their size is a sham and is not an asset to be preserved. Indeed they’re liabilities that should be left to filter down to their own natural level. Laissez faire capitalism at it’s best.

The gimmicky financial instruments CDOs (Collateralized Debt Obligations) packaged and repackaged, leveraged and re-leveraged, then compounded by more leverage through CDS (Credit Default Swaps) is intertwined mostly between and within the largest banks and hedge fund institutions. These instruments are so convoluted they are 100s to 1000s of pages long. Determining the NET liability for each institution could take years. Throw in legal delaying tactics and it will run into decades. IMO this has to happen with or without government money. The viability of these participating institutions will be burdened and distracted with their own mess interminably. The so-called systemic risk is largely (80%?) Interlocked within the top 50 or so banks (out of 9,000 +/-?).

Consequently, they should be left out of the future of integral banking. The resulting dislocation imo will not be all that different - but sans the tax vulnerability on the common man’s descendants.

_____________________________________________________________________________________________________ _____________________________________________________________________________________________________ ___________

RESTITUTION:

Confidence will be restored if the people could see that justice was achievable and achieved. The populous clamor against AIG bonuses bear that out. REAL investigations (FBI, SEC, etc), trials, convictions, proportional fines and imprisonment are due and sorely needed. Ways need to be examined to include the enabling legislators in these convictions. Oligarchies need collusion from the government to be successful. Lobbying for repeal of Glass-Steagall, e.g.

Indeed, consideration and action against Henry Paulson should include putting him under house arrest (at least) with a pardon to put him on notice that a thorough investigation of his flagrant and abusive scare tactics which were insidious and capitalizing on the known ignorance of the financial mess by Congress. He used this known lack to bulldoze his three page abstraction into law solely to bailout his ilk - the cronies that created the mess. Paulson's actions initiated the wrong approach from the outset and he and his enablers should be held accountable. Bailouts in the long run is exactly what should NOT have happened.

Paying the perps bonuses for trashing the world’s financial system is anathema. Bonuses in lieu of prison makes a mockery of decency, playing by the rules, abiding by laws, and paying taxes. Makes anarchy more practical than usual. BUT THEY TRASHED THE WORLD!!!!

jbjbjb  03/18/2009 11:45 AM Report

AIG: "honor" the contracts, but hand over the money when the debt to taxpayers is repaid and the firm is profitable and the balance sheet sold.