Who Was Right? Geithner Warned Of ‘Systemic Risk,’ While Paulson Claimed ‘Fundamentals Are Healthy’
Who Was Right? Geithner Warned Of ‘Systemic Risk,’ While Paulson Claimed ‘Fundamentals Are Healthy’
Today, President Barack Obama’s nominee for Treasury Secretary — president of the Federal Reserve Bank of New York Timothy Geithner — went before the Senate Finance committee for his confirmation hearing. Geithner “faces a grilling in Congress” after reports surfaced that he failed to pay self-employment taxes on his 2001-2004 returns while working at the International Monetary Fund.
At the hearing, Geithner wasted no time in addressing the controversy about his missed taxes. He said his mistakes were careless and avoidable but “completely unintentional.” He apologized to the committee, saying, “I should have been more careful.”
The right wing has been pushing Senate conservatives to block Geithner’s confirmation due to the tax mix-up:
Michelle Malkin: Will any GOP Senator stand up to failout bailout serial tax evader Tim Geithner, or will they all do the lemming dance now and whine about how nobody could see his shortcomings later?
Newt Gingrich: Senate Republicans should make it clear that they will not permit a tax evader to become the secretary of the Treasury.
But when it came to predicting the economic crisis, Geithner has been much more prescient than the man he has been tapped to succeed, Henry Paulson.
In June 2006, the Senate confirmed Paulson with a simple voice vote. Paulson was called “a very strong choice” and “the right man at the right time” by lawmakers.
Paulson’s tenure was a disaster, and throughout the current economic crisis, he consistently maintained that the financial system was “safe and sound.” Geithner, meanwhile, was warning that financial innovation and a weak housing market were threatening to topple the economy. The Wonk Room has assembled a timeline comparing Geithner’s cautionary statements with Paulson’s public insistence that everything was fine. Here is an example:
Geithner: Financial innovation is creating systemic risk.
There are aspects of the latest changes in financial innovation that could increase systemic risk…The complexity of many new instruments and the relative immaturity of the various approaches used to measure the risks in those exposures magnify the uncertainty involved. [Speech at the Global Association of Risk Professionals 7th Annual Risk Management Convention & Exhibition in New York City, 2/28/06]
Paulson: The world economy is stronger than I have ever seen it.
We are fortunate to face our long-term challenges from a position of strength. As a participant in financial markets for more than thirty years, I say with confidence that over the last couple of years, the world economy has been stronger than I have ever seen it. [Speech at CBI National Conference, 11/28/06]
Read the entire report here.
Cross-posted at The Wonk Room.
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Hank ‘Chicken Little’ Paulson is still running for cover.
Look out, Hank! Those are $1,000 bills falling on your head…
January 21st, 2009 at 12:34 pmWe did allow a military duty evader to become Commander In Chief, didn’t we? Besides, was Geither really a tax “evader” as opposed to making a tax “error”? If we demand perfection from our leaders, then who can we elect? Geither admitted his mistake (a big change!) and took responsibility for correcting it (another big change!) That’s the kind of person I want to head up the Treasury.
January 21st, 2009 at 12:35 pmThe republicans want everybody to fail because they did. It will make them look bad….again…if what they say is proven to be, well, wrong.
January 21st, 2009 at 12:35 pmI have to admit that I am uncomfortable about his non-payment of FICA taxes. Of course, he has now paid the amounts due plus all penalties so he really isn’t a “tax evader” as the right-wing rant-jockeys are claiming. It is just an untidy thing but I certainly don’t think that it should disqualify him from confirmation.
We won’t necessarily know how effective he will be in the role until after he has spent some time in the saddle but — on the face of it — he is a darn sight better choice than that lap-dog Paulson.
January 21st, 2009 at 12:36 pmGeithner will be confirmed easily. Even the Republican obstructionists know he is more qualified for the position than any of the three yahoos who held the job in the last administration. The tax return issue is sloppy but the fact is the guy understands the markets without being beholden to them like Paulson was, does not suffer from the ideological delusion that attaching conditions to government liquidity injections is wrong and does not insist that the bankers get their millions no matter what.
January 21st, 2009 at 12:37 pmI have to say… that is not a good picture of Geithner, TP.
The alignment of elements kinda makes him look like he’s got ears like Puck, for A Midsummer’s Night Dream, or mebbe Klingon ears… jes’ sayin’…
January 21st, 2009 at 12:38 pmtom Says:
I have to admit that I am uncomfortable about his non-payment of FICA taxes. Of course, he has now paid the amounts due plus all penalties so he really isn’t a “tax evader” as the right-wing rant-jockeys are claiming.
________
Not only did he pay them, he did so back in 2006, long before any of this came up.
Another raging non-controversy.
January 21st, 2009 at 12:39 pmConfirm him. He is smart, and we need smarts right now. No one is perfect, he made a mistake, he paid the taxes. Confirm him.
January 21st, 2009 at 12:42 pmI do not care what Michelle Malkin and Newt Gingrich think or have to say.
January 21st, 2009 at 12:44 pmThe republicans are worried about some taxes and penalties that have been paid when some 700+ billion have been handed to banks that wont say where the money went?
I am not a fan of Geithner and this ‘debate’ is over the top silly.
January 21st, 2009 at 12:46 pmAnybody who opposes his nomination should volunteer for a full IRS audit going back ten years. Then I’ll listen to them.
Actually, no I won’t.
January 21st, 2009 at 12:49 pmGEITHNER IS JUST A LESS VIRULENT STRAIN OF THE SAME REPUGLICAN INFECTION.
I AM TIRED OF BEING OFFERED A CHOICE BETWEEN REPUGLICAN AND REPUGLICAN-LITE.
January 21st, 2009 at 12:49 pmtom Says:
I have to admit that I am uncomfortable about his non-payment of FICA taxes. Of course, he has now paid the amounts due plus all penalties so he really isn’t a “tax evader” as the right-wing rant-jockeys are claiming.
He was working as a contractor for an international monetary fund. He made a mistake that a lot of people make not realizing that he owed FICA taxes based on his work for an international company. It was a simple mistake that has been rectified.
I notice that the right has dropped it’s screed about how he employed an “illegal alien”. Once they realized that Geithner would have had no way to know that her visa ran out the last three months she worked for him, I guess they realized that one wasn’t a winner.
It’s like the Republicans have to try to obstruct these cabinet positions just so they can feel like they are still relevant. Unfortunately for them it is hurting the image of the Republican party further when Obama is preaching bi-partisanship and they are being obstructionists.
January 21st, 2009 at 12:49 pmrastaman Says:
GEITHNER IS JUST A LESS VIRULENT STRAIN OF THE SAME REPUGLICAN INFECTION.
Are you so insecure that you think if you don’t yell at us, we won’t listen to what you have to say? The truth is we won’t listen to what you have to say because it’s pure garbage.
January 21st, 2009 at 12:51 pmtom Says:
I have to admit that I am uncomfortable about his non-payment of FICA taxes.
It does seem odd. He is going to be running the IRS…
January 21st, 2009 at 12:51 pmIs anyone suggesting that Geither be arrested, charged, and put on trial for “tax evasion”? If not, then the issue is a red-herring. Next.
January 21st, 2009 at 12:51 pmWhy Bush has pardoned eight tax evaders, where was the outrage then Newt, Malkin?
Just more feigned outrage by the shriekers.
January 21st, 2009 at 12:52 pmKeltoi Says:
It does seem odd. He is going to be running the IRS…
And perhaps he would be perfectly suited to simplify its regulations and/or paperwork. Hasn’t the complexity of the tax code been one of the harpings of the right wing? Have they convenient forgotten that? Do trolls live under bridges?
January 21st, 2009 at 12:55 pmRepublicans don’t understand economics. Really, they don’t.
January 21st, 2009 at 12:56 pmYou should read before posting, as ros has already pointed out:
This is nothing less than obstructionism. If someone can do better it will make the republicans look like the failures that they are.
January 21st, 2009 at 12:59 pmBilbo Hussein Baggins Says:
He was working as a contractor for an international monetary fund.
January 21st, 2009 at 12:49 pm
_____________
Let’s not bury the lead here. He wasn’t working for an international monetary fund, he was working for THE International Monetary Fund – the same Bretton Woods organization whose structural adjustment policies have increased poverty, instability, and debt among many developing nations.
What we should be asking is not whether he misfiled his tax paperwork from 2001-2004, but whether he subscribes to the failed economic policies of the institution he worked at for those four years.
January 21st, 2009 at 1:00 pmThe sooner we dismantle the federal reserve, the sooner we’ll stop having our economy held hostage by the likes of Hank Paulson and Ben Bernanke. Why a government would ever give a MONOPOLY on money printing to a PRIVATE INSTITUTION is beyond me. I fail to see how it benefits anyone who works for a living.
January 21st, 2009 at 1:00 pmThe big money boys rolled the dice and lost. Thus, the taxpayer needs to bail them out. Why should the average person cover the risk for corporate execs and the wealthy?
January 21st, 2009 at 1:01 pmRethug = Corruption
Michelle Malkin Newt Gingrich = Lying Aholes & Corruption
Face it Rethugs, you’re done, cooked, so, SUCK IT.
January 21st, 2009 at 1:03 pmIt seems like the opponents are making up for Geither’s absence of ‘malice’ with their own. I guess they’d have a problem with Mark Phelps being a lifeguard if his Red Cross dues weren’t up to date.
January 21st, 2009 at 1:04 pmSince he’d always done his own taxes and that was the only job where they didn’t deduct his payroll taxes from him and pay them it’s easy to understand how a mistake could have been made. Especially since his checks included the half his employer paid for him instead of him having to pay it all so the totals would be the same amount the employer normally would have paid. He used Turbo Tax so it’s easy to see how a mistake could be made.
January 21st, 2009 at 1:04 pmAs Republic of Stupidity pointed out in post #7, he DID pay those taxes back in 2006–it is a non-issue made into an issue by those who wish to oppose Obama at every step of the way. Heck, I get audited every year because I forgot to file one measly form with my return six years ago (I sent it a few days later but what can you do?). It will happen that he WILL be appointed, the Repugs are just trying to flex their weak political muscles because they know they have nothing to stop the inevitable. Swat the pesky little gnats away and let’s get down to the real business of fixing our country.
January 21st, 2009 at 1:05 pmWhen is Geithner going to be asked the most important questions (are you fun to have a beer with?, are you Christian?, are you straight?, do you wear a flag pin?)?
January 21st, 2009 at 1:09 pmSorry for the OT, but I think this is important:
Israel admits to using white phosphorus on Gaza:
http://www.timesonline.co.uk/tol/news/world/middle_east/article5556027.ece
January 21st, 2009 at 1:11 pmthe brown acid Says:
The sooner we dismantle the federal reserve, the sooner we’ll stop having our economy held hostage by the likes of Hank Paulson and Ben Bernanke.
I agree totally. When I read how much of our taxpayer money the Feds have given to banks, with no authority from anyone, I had to wonder why they even bothered passing the TARP law. They have given banks much more than the TARP money.
January 21st, 2009 at 1:14 pmglezzery Says:
blah…blah…blah
Hey fellow, I have some advice for you. Since the next 8 years are going to be so hard on your psyche, why not try some therapy now? It might help you. If not, there’s always suicide.
January 21st, 2009 at 1:15 pmThe same people who approved Alberto Gonzalas, Donald Rumsfeld, etc. want to hold this guy to some kind of a standard?
January 21st, 2009 at 1:15 pmOT: If trolls “lmao”, how can there possibly be anything left to post anything else later?
January 21st, 2009 at 1:16 pmthe brown acid Says:
Why a government would ever give a MONOPOLY on money printing to a PRIVATE INSTITUTION is beyond me.
January 21st, 2009 at 1:00 pm
_____________
What else would you suggest? Should we all be able to print our own money?
January 21st, 2009 at 1:17 pmglezzery comizerates on the way he wants things to have been although he bends reality about 180 degrees to do it…..
I can’t read another 500+ posts by this troll….
January 21st, 2009 at 1:18 pmEverytime Newt opens his mouth, the first question that he needs to answer is; “Why did you resign the House Speakership right after winning re-election?”
January 21st, 2009 at 1:19 pmMalkin needs to be reminded daily how about lucky she is to have been born in the US, instead of some stinkin dump in the Philippines!
Here’s another question to ask the opponents of this nominee: who do you suggest be the next Secretary of the Treasury? And a follow-up: will you put this person through the same level and type of scrutiny as you are Geithner?
January 21st, 2009 at 1:19 pmHere’s an article debunking glezzery’s false claims:
January 21st, 2009 at 1:19 pmMyths and falsehoods about the purported link between affordable housing initiatives and the financial crisis
http://mediamatters.org/items/200810100022
Bilbo Hussein Baggins Says:
glezzery Says:
blah…blah…blah
Hey fellow, I have some advice for you. Since the next 8 years are going to be so hard on your psyche, why not try some therapy now?
Good advice Bilbo! I would have called it ‘pre-emptive therapy’ if he hadn’t been laughing his ass off at inappropriate instances so much lately that I fear he’s already been affected.
January 21st, 2009 at 1:21 pmgee, you didn’t have any sources except that brown spot that follows you.
January 21st, 2009 at 1:27 pmThe difference is Geithner will accept the criticisms seriously, and use them to become even better, instead of thinking his own view is better than anyone else’s as Paulson did.
January 21st, 2009 at 1:34 pmA little comic relief: this link really has nothing substantial to say about ANY of the points made in President Obama’s inaugural address. . . but that the whining has now extended to include the logistics of the inauguration itself is worth a BWAAAAAHAAA-HAAA! Grow UP, dude!
http://firedoglake.com/2009/01/20/worst-inauguration-ever/
January 21st, 2009 at 1:40 pmhey gleezy,
We don’t have to convince you of the truth… enough people already know it… that’s why an (R) after your name pretty much means you’re retired for the next couple years.
I would tell you to save your breath but I can’t bring myself to.
Keep spinning, gleezy… you look so pretty when all the colors blend together like that…
January 21st, 2009 at 1:42 pmoh, and gleezy?
January 21st, 2009 at 1:42 pmLMAO!!
The CRA was not applicable to investment banks glezz it was applicable to depository banks which are doing fine.
January 21st, 2009 at 1:42 pmThe market itself seems to like Geithner. When is appointment was announced, the market rallied sharply. I am watching the tape and listening to Geithner’s testimony right now, and as the conversation goes to Geithner’s opinions on why the financial system is in crisis, the market is reacting favorably to his testimony.
January 21st, 2009 at 1:45 pmglezzery – reported for spamming the site.
Suck it.
January 21st, 2009 at 1:45 pmYou can always tell who listens to pundits…because they are parrot misinformation. I suppose the sub prime borrowers were also responsible for Enron, right glezz? And they are responsible for Madoff and the hundreds of trillions in the dark derivatives market?
And, you know, those sub prime borrowers held knives to the throats of the investment bankers and made them chop up their loans into pieces and resell them as investment vehicles, right glezz?
January 21st, 2009 at 1:45 pmBoth men were right! Hank Paulson doesn’t know anything about Economics and was doing what he was told. He only knew the plan was to lie to the public while Law Makers in on the plan would go along with it and the GOP could run the debt of the US Treasury over trillions of dollars. Yes many Law Makers and White House people have already put their stolen money in off shore accounts and are laughing their butts off it worked so well. Paulson is only a CEO and they know nothing about finance, that’s the job of the CFO. Now Bush/Cheney knew Paulson would know nothing and could follow directions.
Tim was just calling it as he saw it but no one was listening. Law Makers who only know how to steal really had no idea what Tim was talking about. Paul O’Neill spoke up when Bush appointed him US Treasury Secretary and said this plan would bring a recession, O’Neill was quickly fired. So Tim knows and he did warn Law Makers and Americans but for 8 years no one questioned Bush/Cheney. The Media gave the Bush policies an A+ after getting paid to say that.
January 21st, 2009 at 1:46 pmI watched some of the hearings today – Kyl is grandstanding and trying very hard to play semantic games with Geithner.
Geithner was wrong in the past, admitted so, made restitution, but the question Kyl kept pounding on was a version of “when did you know you were wrong”?, even though Geithner explained himself repeatedly in answering the questions.
We must resign ourselves to the fact that the repugniscum are out of power, but not out of office, and they will continue to create these scenes in the hopes of elevating their status (in their own minds) from that which is lower than a slug.
January 21st, 2009 at 1:46 pmglezzery
You are a liar:
http://www.mcclatchydc.com/251/story/53802.html
laughing my ass off!!!!!!!
January 21st, 2009 at 1:48 pmPaulson has proven to be unequal to the task he was given charge, yet, his successor, who turns out to have been far more correct than Paulson, is being made to look small.
January 21st, 2009 at 1:49 pmThere is certainly an obligation to question these nominees and ask challenging questions – but the repugs use of these venues is inappropriate.
It’s not as if the tax debt is still out there. Geithner paid the taxes owed and his penalty. People make mistakes — even smart people.
BTW, flag that stupid troll for spamming.
January 21st, 2009 at 1:49 pmThe Republic of Stupidity Says:
Not only did he pay them, he did so back in 2006, long before any of this came up.
Technically, he paid in 2006 for the year he was audited, and covered the same mistake for the other years after his nomination was announced. But he’s still paid up, so no big deal.
.
rastaman Says:
GEITHNER IS JUST A LESS VIRULENT STRAIN OF THE SAME REPUGLICAN INFECTION.
I AM TIRED OF BEING OFFERED A CHOICE BETWEEN REPUGLICAN AND REPUGLICAN-LITE.
You know, you just gave me an idea, crazy lefty person. Obama should announce that if Geithner is blocked, he’ll nominate Ralph Nader. That oughtta do the trick.
.
hussein toasterhead Says:
What we should be asking is not whether he misfiled his tax paperwork from 2001-2004, but whether he subscribes to the failed economic policies of the institution he worked at for those four years.
I don’t necessarily agree with your premise, but I do agree that would be a much more worthwhile discussion to be having. That’s probably why the Senate would rather not have it.
.
the brown acid Says:
The sooner we dismantle the federal reserve…
Didn’t we tell you not to eat yourself?
The Fed exists separately from government so that Congress or the President can’t just order them to print more money to improve economic indicators at the cost of inflation.
.
Bilbo Hussein Baggins Says:
Israel admits to using white phosphorus on Gaza:
Buh, buh, but the wingnuts said they didn’t! I know, maybe they were targeted white phosphorus munitions!
I like the Bushian excuses: yes we did it, but it’s not illegal. Never mind what the law says, I’m saying that what we did when we did the opposite of the law isn’t illegal.
I also love this one: “It is the most nonlethal kind of weapon we used. I don’t see any issue with that.” Guess what the most nonlethal weapon we used against Japan’s cities in WWII was?
Oh wait, glezzery still says it didn’t happen.
.
glezzery Says: (poop)
Can you knock it off with the “up is down” stuff? I know you think it’s effective because it’s really hard to argue against, but it’s only hard to argue against because it’s completely batshit.
.
glezzery Says:
Gee, maybe you could find another source that isn’t CAP’s own propaganda wing.
This site is CAP’s “propaganda wing,” ya ‘tard.
Also, I know I’ve said this to you before, but it bears repeating: we disagree with you not because we are unaware of the sources you keep citing and linking to, but because you’re astoundingly, stupendously wrong about everything, and so are your sources. Therefore, exhorting us to read them doesn’t help your case any more than do your LMAO’s and ROTFL’s.
January 21st, 2009 at 1:50 pmNewt Gingrich: Senate Republicans should make it clear that they will not permit a tax evader to become the secretary of the Treasury.
So says the person who got away with tax violations. Mr 84 ethics charges.
http://en.wikipedia.org/wiki/Newt_Gingrich
January 21st, 2009 at 1:50 pmglezzery -
I don’t know if you posted that link to give us all some comic relief, or what, but IBD is the most far right publication in circulation. I worked for Bill O’Neil and I can tell you from personal experience he is a far right wing idealogue who is stuck in the Reagan era. I am still a subscriber to his paper, but every morning, I throw Section A in the recycle bin on my way to the breakfast table. The whole thing is editorial pretending to be news. The fact that Sean Hannity quotes IBD on a daily basis should be another tip-off.
January 21st, 2009 at 1:51 pmI guess you are correct Newt, but I don’t understand how you would think that the kookaide drinkers of the GOP (or anybody else for that matter) would give a damn about what a prolific lying adulterer like you would say! What a hypocrite you are!
January 21st, 2009 at 1:52 pmThose banks are doing fine because all their bad paper were bought up. -=glezz=-
Not true, the depository banks held on to the subprime loans they made.
It is the folks holding the worthless paper that have collapsed. -=glezz=-
Yes, those were investment banks that were highly leveraged. Besides that the subprime borrowers didnt get to keep their homes. The SIV’s are worthless not the homes themselves.
January 21st, 2009 at 1:52 pmglezzery Says:
I will admit there is a big problem with Wall Street and the Banks.
I know what the problem is. Do you? (Hint: it’s at the top of the page) -
That’s as intelligent a description of the problem as I’ve ever heard. The guy who came up with that should probably be given a job or something.
January 21st, 2009 at 1:55 pmLook back thru history glezz and you will see the same thing, investment banks dealing in mortgages, led to the great depression. Blaming the subprime borrowers for the financial mess is wrong. There is simply no way subprime loans add up to the eight trillion dumped into the market.
January 21st, 2009 at 1:56 pmCRAP CRAP CRAP, posted the wrong quote! I meant this one:
The other one is retarded. I hereby slap myself with a fish.
January 21st, 2009 at 1:58 pmWhy does everyone always insult KoolAid?!? -=glezz=-
Its a reference to the nutty nut nuts, Jim Jones, in Guyana who drank the poisoned kool-aid
Really! All that bad paper that became derivatives came from nowhere! -=glezz=-
Derivatives are basically bets, can you say casino?, and yes they do come from nowhere and are traded on private exchanges, there is no transparency which is why they are called dark derivatives. The BIS estimates there are some 600 trillion
January 21st, 2009 at 2:04 pmElBruce Says:
The other one is retarded. I hereby slap myself with a fish.
Maybe the smelt are running.
January 21st, 2009 at 2:04 pmWhy if it werent for the subprime borrowers the price of gas would be 5 bucks a gallon by now!!
/snark
January 21st, 2009 at 2:06 pmglezzery-
Read this, from a Fox Business Channel contributor. There are some Republicans out there that are rational human beings, and this guy is one of them.
Gary Kaltbaum is an investment adviser with over 18 years experience, and a Fox News Channel Business Contributor.
http://www.tradingmarkets.com/.site/stocks/commentary/gkitermi/Hank–Paulson-Savior-78865.cfm
January 21st, 2009 at 2:06 pmAnd yet, those turn out to be the facts…..sucks to be you. Why don’t you go talk to someone who agrees with you. You won’t be convincing anyone here.
Private sector loans, not Fannie or Freddie, triggered crisis
January 21st, 2009 at 2:06 pmThey drank the kool-aid because of some crazy belief…
January 21st, 2009 at 2:11 pmgreaaery, are you afraid of Barney or just everything?
Since you only spout bullshit, I leave you with it. Have fun shoveling your manure. That’s all it is.
January 21st, 2009 at 2:14 pmBoy, are you dense. Derivatives of what? EVERYTHING! Here is the money quote from Kaltbaum’s artice-
January 21st, 2009 at 2:15 pmWhen you hear Paulson and Bush tell you that the reason for the problem we are in is HOUSING, please realize they are lying to you. They are not just mistaken. They are lying to you. They know better. Any investment can drop 20, 30, 40% without causing catastrophe. It is the leveraging up of these declining assets that cause the problem.
Get it?
glezz the mortgages were used to create SIV [secure investment vehicles] they are normally 100 mortgages, of differing grades [Prime, Sub-prime etc] that are bundled together, then given a stamp of aprroval by the SEC and rated by agencies such as Standard and Poor, often a triple AAA rating. These are then sold to investors. Thus is asset backed [homes] paper
January 21st, 2009 at 2:17 pmglezzery Says:
Its hard to make the argument that billions in sub prime mortgages came from nowhere.
I’m really not sure what you’re saying here. If you’re referring to the massive overvaluation of CDS’s and CDS insurance arrangements compared to the underlying value of the real estate arrangements – then yes, that’s pretty much what happened. Not that the money “came from nowhere,” but it was invested in financial “products” whose underlying value was relatively minimal. None of the actors realized it at the time because of the lack of transparency brought about by deregulation.
The Republicans were all for this because they believe in unregulated markets.
January 21st, 2009 at 2:17 pmNYTimes is a joke.
January 21st, 2009 at 2:18 pm—-
Doesn’t that joke have like 100 Pulitzers and hasn’t that joke been around for like 150 or more years? Still why should we question the wisdom of glezzary? Another example of the invisible hand?
glezzery
January 21st, 2009 at 2:20 pmglezzer-ah
glezzery
glezzer-ah,ah,ah,ah (LMAO)
hey glez, how about paulson saying “the fundamentals, etc” want to comment on that? I didn’t think so.
The Nobel’s, of course you will run them down, conservatives are inadequate.
January 21st, 2009 at 2:23 pmXisithrus Says:
glezz the mortgages were used to create SIV…
That’s a great description of much of the leveraging. You can also add CDS Protection, whereby financial institutions insured the value of CDS’s by taking out insurance on it. Interesting thing, they didn’t even have to own the assets being insured, which essentially created a huge gambling ring. Making it worse was that the financial institutions were working both sides of the insurance game (called “hedging”) by taking out insurance on some CDS’s while simultaneously selling it on others. Making it still worse was that each CDS Protection deal was done privately, so in the end no financial institutions knew what other financial institutions it was connected to through these. They were ultimately completely incapable of calculating the risks of their investments.
January 21st, 2009 at 2:24 pmBack in 2000, when Hank Paulson was CEO of Goldman Sachs, he testified in front of the Security and Exchange Commission. Among other things, he lobbied the SEC to enact a “change to self-regulation” for Wall Street. He also urged them to change the “net capital rule” which governed the amount of leverage investment banks could use. The net capital rule was indeed changed in 2004, and is now blamed for the investment banks’ collapse.
January 21st, 2009 at 2:25 pmThe so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers…The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.
Deregulation, pure and simple, led by Phil and Wendy Gramm, Hank Paulson, and the Republican controlled COngress of 1998 to 2004. Thank you very much.
Banks were FORCED to make loans. -=glezz=-
You are not, I think, understanding the difference between Depository and Investment banking. The CRA did not apply to the investment banks that imploded They were not forced to make loans.
You are also confusing SIVs with CDS.
January 21st, 2009 at 2:26 pmglezzery Says:
Left Wing propaganda invades every page of the NYTimes.
The first necessary task of any Vast Right Wing Conspiracy must be to discredit all reputable, nonpoliticized sources of information. That way, the people they’re lying to have no way of confirming whether they’re being lied to. Once all media has been demoted to political opinion, and the people being lied to no longer believe there is a such thing as authoritative truth whatsoever, they will merely side with whichever source confirms their own biases, and thereby complete the transformation from thinking being to wingnut.
January 21st, 2009 at 2:28 pmThat’s a great description of much of the leveraging. You can also add CDS Protection, whereby financial institutions insured the value of CDS’s by taking out insurance on it. Interesting thing, they didn’t even have to own the assets being insured, which essentially created a huge gambling ring. -=ElBruce=-
Yes. They never intended to take possession of the stock. And it was AIG that issued much of the insurance on the bets.
January 21st, 2009 at 2:28 pmFunny, I never read the NYT…
January 21st, 2009 at 2:30 pmElBruce Says:
“The Fed exists separately from government so that Congress or the President can’t just order them to print more money to improve economic indicators at the cost of inflation.”
That’s fine in theory, and to a limited degree. The problem is that the Fed has been printing so much money that the money supply has doubled in just the few 3 months (let that soak in) as shown in the following article (from Nov. I think):
“U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit” — Bloomberg
http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=home
“Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.”
We have yet to feel it’s effects. They are trying everything they can since their old tricks like manipulating rates no longer works.
The problem is that they will never solve this “crisis” until we change the way money works at a much more deep and fundamental level.
This “crisis” is the crash that our financial system should have faced back in the 30’s, but has managed to bounce from bubble to bubble ever since… WWII, Housing, Tech Bubble, Credit Bubble. We are running out of bubbles.
We, as a people, must face the fact that we can not have a system that relies on infinite growth in a world with finite resources.
January 21st, 2009 at 2:36 pmI HAVE to do this. I’ve held it back for WAAAY too long:
Michelle Malkin: Will any GOP Senator stand up to failout bailout serial tax evader Tim Geithner, or will they all do the lemming dance now and whine about how nobody could see his shortcomings later?
Newt Gingrich: Senate Republicans should make it clear that they will not permit a tax evader to become the secretary of the Treasury.
In the English English language of Chaucer’s and then Shakespeare’s time, “malkin” referred to a “wig” often worn by female prostitutes who had shaved their money-makers to avoid lice and/or to hike the titillation factor.
In the language of several centuries and lots of crossword puzzles, “newt” is the four-letter word for salamander. An immature newt is called an “eft.”
The Gingrinch seems to be morphing towards eft, as his rants become even less than juvenile and are approaching outright childishness.
Michelle Malkin? I’m too polite to comment further.
January 21st, 2009 at 2:42 pmWhy hasn’t someone put gleezey-baby out of OUR misery?
January 21st, 2009 at 2:43 pmglezzery Says:
Left Wing propaganda invades every page of the NYTimes.
Gleezey-baby READS?
January 21st, 2009 at 2:45 pmPatrioticLiberalChristian Says:
glezzery
glezzer-ah
glezzery
glezzer-ah,ah,ah,ah (LMAO)
LOVE IT! We’ve got the chorus; let’s try for the verse:
He loves to go a-pandering
among his frothing rants;
but sometimes gets so frotherized,
we know he’s got wet pants. . .
Sing along!
January 21st, 2009 at 2:48 pmnobody reads the NYTimes.
January 21st, 2009 at 2:49 pm—
What a minute what about those magical market forces. 150 + years yet no one reads it. Is that what I am to understand?
glezzary:
January 21st, 2009 at 2:54 pmI have to run a few errands. I’ll check in later. Could I trouble you to list those medias sources you feel are lacking in bias? Thanks.
best-
Al Glezzery…isn’t that some Arabic TV channel?
January 21st, 2009 at 2:56 pmWho Was Right? Geithner Warned Of ‘Systemic Risk,’ While Paulson Claimed ‘Fundamentals Are Healthy’
I’d say the answer to that ought to be delivered with a giant “DUH.”
January 21st, 2009 at 2:59 pmglezzery Says:
telestai2 Says:
“Why hasn’t someone put gleezey-baby out of OUR misery?”
Nicely stated.
Actually, I mis-spoke myself and mis-underestimated the opposition.
What I MEANT to say was that the really heavy misery is now being experienced full-time by those who still cannot understand why their vehement viewpoints did not “save” them from the stroke of doom: the country’s electing a –GASP!!–Democratic administration.
The rest of us experience minor miseries [and, for myself, delicate despair] daily when we read posts from an obviously intelligent blogger who cannot see the proverbial forest for the proverbial trees. Republicans are NOT evil; they do NOT necessarily hate America; they are NOT all motivated by greed; they are NOT all scofflaws; they are NOT all wingnuts; they do NOT all hope that President Obama will fail; they do NOT all ignore the country’s real problems; they do NOT all blame “liberals” for this country’s real problems.
And yet, the furious, factless, hate-filled, accusatory, often sexist, often racial, and regularly petulant posts which some of them continue to contribute on a daily basis simply backfire: those of us who CAN admit the genuine virtues of so many Republicans are becoming weary at having to defend YOUR rights of free speech, while you seem to attack, assiduously, everything that we stand for. To adhere to our own ethics, we MUST preserve your freedom of expression. Speaking for myself, I’m tired of running interference for those who vilify whoever and whatever does not fit their views of what is good and proper.
January 21st, 2009 at 3:12 pm666lattes Says:
The problem is that they will never solve this “crisis” until we change the way money works at a much more deep and fundamental level.
To what? What would your national monetary system look like?
.
glezzery Says:
So ElBruce makes the case the NYTimes is not politicized and biased!
…
Let’s not pretend you are open to any other viewpoints.
I also think the WSJ’s news pages aren’t particularly biased.
Also, all print newspapers are suffering from dwindling readership and are having financial difficulties.
.
glezzery Says:
I do not believe anyone knows for sure how to solve this mess.
Well, the best thing we can do is put people who are actually smart in charge of fixing it and hope they can figure it out.
January 21st, 2009 at 3:30 pmGee, glezzy, it’s going to be a ver-r-r-r-r-r-ry long 8 years for you; have you checked your blood pressure lately…?
Just asking.
January 21st, 2009 at 3:36 pmElBruce Says:
“To what? What would your national monetary system look like?”
That’s exactly the question. It will have to be something we have never known. I don’t personally have the answer, but I can clearly recognize the problem that a lot of economists and people in the financial world seem to be ignoring. Maybe too many people have become too specialized in their focus as to no longer be capable of seeing the big picture. I don’t know.
Either we can fix it or we can find some new temporary scheme to shuffle the problem down for our children or grandkids to solve.
First, people have to recognize that there is a fundamental problem. I’m sure you would agree that not having the answer readily available doesn’t mean that a problem doesn’t exist that needs to be addressed.
January 21st, 2009 at 3:47 pmtelestai2 Says:
Republicans are NOT evil…
I disagree. Every single one of their policies and positions are aimed at making things as bad as possible for as many people as possible. In every possible way, everything that they stand for as a group is the precise antithesis to every movement in history that has been characterized as contributing to the definition of “good” in moral terms.
I don’t presume to know their intent in doing so, only the outcome of their beliefs. And the outcomes are invariably consistent with what we understand the term “evil” to mean.
It might be more accurate to say that Republican-ism is evil (in the identity sense of the term “is”), but no one is forcing these individuals to subscribe to it. Being a Republican is a lifestyle choice. Whatever their individual intent in subscribing to, voting for, and endorsing a program of pure moral evil may be, the fact remains that they may be said to be evil for doing so.
January 21st, 2009 at 3:47 pmNo real need for discomfort, Tom. Geithner’s mistake is not uncommon — he’s right, though, when he says the mistake was careless and avoidable. I was a Social Security Claims Rep for 14 years, and I can’t tell you how many times I had to tell someone that no “wages” were recorded in a particular year because their so-called “employer” considered them to be self-employed “independent contractors.” The outcome varied. Sometimes I determined that an employer-employee relationship existed (not always a cut ‘n dried, black & white issue), and SSA pursued the employer for the unpaid taxes. Other times I found no such relationship and the worker had to file amended returns and pay the Social Security taxes on his self-employment income (in addition to the income taxes already paid on the earnings). But the bottom line seldom varied. Each party wanted to avoid the extra burden of Social Security taxes taxes and thought/hoped the tax liability rested with the other party, no one was trying to evade the taxes. And, yes, there is a difference between avoid and evade, only the latter is a criminal offense.
January 21st, 2009 at 4:18 pmIf you REALLY cannot fathom why Geithner is a flawed candidate, you are a mind numbed, ideological, robot. The repubs have been very malleable on a lot of these appointments. I never dreamed they wouldn’t howl at the moon over Hillary. It would have been entirely reasonable to make a fuss over Geithner. Stop being a bunch of blind lemmings.
January 22nd, 2009 at 12:34 pmElBruce, I speak of you. You’ve become a classic libtard. You are a left wing loony. Republicans consciously set out to make things as bad as possible? Their policies are crap but they don’t apply with the express intent of making things “as bad as possible for as many people as possible”. You can attack their ideas but you sound inept when you write this stuff. I’ve seen enough of your stuff to know you are very bright. Try and bring it into the realm of reality rather than Nazi strawmanning.
January 22nd, 2009 at 12:39 pmIn June 2006, the Senate confirmed Paulson with a simple voice vote. Paulson was called “a very strong choice” and “the right man at the right time” by lawmakers.
Paulson’s tenure was a disaster, and throughout the current economic crisis, he consistently maintained that the financial system was “safe and sound.”
The tax issue does cause some concern, however, look at the job Paulson did. The man who EVERYBODY said was soooooooo qualified. Now we have a strange turn of events where things are the opposite. Maybe we should give this guy a chance.
January 22nd, 2009 at 7:27 pm