Courtesy of Calculated Risk
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It’s really distrubing that many of the borderline illegal (and downright foolish) programs that Tim Geithner is pushing, such as PPIP, would result in Tim Geithner losing less money off his foolish home speculation
You would take it requires a pretty incompetent Treasury Secretary to so badly oversee the transfer of trillions worth of loans, grants, and guarantees to financial institutions that, even after those trillions, two of the largest are still insolvent.
You would be right.
April 28 Bloomberg — Bank of America Corp. and Citigroup Inc. have been told by regulators that they may need to raise more capital as a result of U.S. stress tests on lenders, the Wall Street Journal said, citing people familiar with the matter.
Bank of Americaâ€™s shortfall comes to billions of dollars, the newspaper reported. Both banks plan to mount a detailed rebuttal to the Federal Reserveâ€™s preliminary report following the tests conducted on 19 large financial companies, and Bank of America may appeal today, the Journal said.
Timothy Geithner has already given trillions worth of loans, grants, and guarantees to his friends in Manhattan, and the shareholders who enabled them.Â Considering where this has got him (a promotion to DC), why should he stop?
You have to read this New York Times article.
The summary at Calculated Risk barely begins to cover what Timothy Geithner is planning.
Here is Geithner’s plan: for every $3 investors put up, the government will match $97. Investors cannot lose anything beyond their initial investment, so the worst outcome for investors is losing that intial $3. The government money will be form of low-interest loans (secured against that $3), so nearly all the profits will go to private investors.
Geithner’s political ability has not imrpoved after the AIG fiasco:
The uproar over the American International Groupâ€™s bonuses has not stopped the Obama administration from plowing ahead. The plan is not expected to impose restrictions on the executive pay of private investors or fund managers who participate.
The best part? Only bailed-out zombie banks / primary dealers, like Citi, can participate. So if you want to get in on this, you need to (a) be rich enough to be a hedge funds and (b) pay the appropraite fees to Citi, which will take you on if it wants. You better not hire foreigners, either.
“If you want it like hell, you will get it like hell”
Those who listened to what Obama said during the campaign, and believed it, will be surprised as Treasury’s transfiguration into a xenophobic kleptocracy.
Those who read this blog, however, will not be.
The problem is not that Barack Obaam is a xenophobic kleptocrat. The problem is that Barack Obama has no idea what to do.
I’m not saying this because, when I ask myself “Who can fix the global economy?,” “A lawyer!” is not the answer that springs to mind. And I am not saying this because Geithner appears to be a uniquely awful chocie as Treasury Secretary. As I said last June:
Obama as Bush III – a guy of slightly more than average intelligence whose first term will be a triumph of cabinet politics over whatever Obama actually believed coming in â€” would be a good thing. If Obama is as incompetent as he appears, his incompetence ceases to be an issue, because he would not be able to implement his ideas
However, Obama has not been content to let others make important decisiosn for him in a deliberate fashion. He has wanted results, badly. Obama wanted results like hell, and he got them like hell.
Consider two recent stories:
“Big Bonus Plants at AIG”
American International Group, the insurer that has received more than $170 billion in taxpayer bailout money from the U.S. Treasury and Federal Reserve, plans to pay about $165 million in bonuses to executives in the same business unit that brought the company to the brink of collapse last year.
“US bank withdraws offers from H-1B grads”
It did not take long for the chilling effect of new restrictions on hiring skilled foreign workers on H-1B visas to be felt. Bank of America has withdrawn job offers to foreign MBA students set to graduate from U.S. business schools.
If you read down in the stories, you see the AIG story happens because the Obama administration, in spite of simultaneously being the company’s largest shareholder and largest credtor, has no leverage in this circumstance. The Bank of America story happened in response to the two “Buy American” bills that Obama has signed into laws.
Of course, Obama did not plan these outcomes. Obama did not plan Treasury actions that give hundreds of millions to people who did the worst job in the history of the world and publicly high-skilled kick foreigners out of the country. What Obama plans has little relation to what he plans.
Obama is an incomeptent in a hurry. Obama wants to fix the economy like hell. That explains why Obama is fixing up the economy like hell.
This weekend, Newt Gingrich went on Meet the Press and said polls don’t matter: Obama is maintaining his popularity but losing his credibility.
With stories like that, such may be true:
Barack Obama ‘too tired’ to give proper welcome to Gordon Brown – Telegraph
Sources close to the White House say Mr Obama and his staff have been “overwhelmed” by the economic meltdown and have voiced concerns that the new president is not getting enough rest.
British officials, meanwhile, admit that the White House and US State Department staff were utterly bemused by complaints that the Prime Minister should have been granted full-blown press conference and a formal dinner, as has been customary. They concede that Obama aides seemed unfamiliar with the expectations that surround a major visit by a British prime minister.
But Washington figures with access to Mr Obama’s inner circle explained the slight by saying that those high up in the administration have had little time to deal with international matters, let alone the diplomatic niceties of the special relationship.
Allies of Mr Obama say his weary appearance in the Oval Office with Mr Brown illustrates the strain he is now under, and the president’s surprise at the sheer volume of business that crosses his desk.
Hopefully not, or we could have the world’s first underpants war.