text: Treasury Secretary Tim Geithner « TheCenterLane.com
  Geithner Kool-Aid Is All The Rage
  November 15th, 2010 Posted in Uncategorized
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  Treasury Secretary Tim Geithner's "charm offensive", began one year ago. At that time, a number of financial bloggers were invited to the Treasury Department for an "open discussion" forum led by individual senior Treasury officials (including Turbo Tim himself). Most of the invitees were not brainwashed to the desired extent. I reviewed a number of postings from those in attendance – most of whom demonstrated more than a little skepticism about the entire affair. Nevertheless, Secretary Geithner and his team held another conclave with financial bloggers on Monday, August 16, 2010. The second meeting worked more to Geithner's advantage. The Treasury Secretary made a favorable impression on Alex Tabarrok, just as he had done last November with Tabarrok's partner at Marginal Revolution, Tyler Cowen. Steve Waldman of Interfluidity provided a candid description of his own reaction to the August 16 event. Waldman's commentary exposed how the desired effect was achieved:
  First, let me confess right from the start, I had a great time. I pose as an outsider and a crank. But when summoned to the court, this jester puts on his bells. I am very, very angry at Treasury, and the administration it serves. But put me at a table with smart, articulate people who are willing to argue but who are otherwise pleasant towards me, and I will like them.
  I like these people, and that renders me untrustworthy. Abstractly, I think some of them should be replaced and perhaps disgraced. But having chatted so cordially, I'm far less likely to take up pitchforks against them. Drawn to the Secretary's conference room by curiosity, vanity, ambition, and conceit, I've been neutered a bit.
  More recently, a good deal of attention has focused on a November 4 article from Bloomberg News, revealing that back on April 2, Turbo Tim paid a call on Jon Stewart. The disclosure by Ian Katz raised quite a few eyebrows:
  Since that time, we have heard nothing from Jon Stewart about his meeting with Geithner. I expect that Stewart will continue his silence about that topic, focusing our attention, instead, on the controversy concerning a book, which should have been titled, Pedophilia For Dummies, while referring to Amazon.com as "NAMBLAzon.com". If he uses that joke – remember that you saw it here, first.
  The November 13 New York Times article by Yale economics professor, Robert Shiller, raises the question of whether Professor Shiller is the latest victim of the Geithner Kool-Aid. Shiller's essay reeks of the Obama administration's strategy of approaching the nation's most pressing crises as public relations concerns — a panacea for avoiding the ugly task of actually solving those problems. The title of Shiller's article, "Bailouts, Reframed as 'Orderly Resolutions'" says it all: spin means everything. The following statement is a perfect example:
  Yves Smith of the Naked Capitalism website had no trouble ripping this assertion (as well as Shiller's entire essay) to shreds:
  Huh? It's widely acknowledged that Dodd Frank is too weak. In the Treasury meeting with bloggers last August, Geithner didn't argue the point much, but instead contended that big enough capital levels, which were on the way with Basel III, were the real remedy.
  It's also widely recognized that the special resolution process in Dodd Frank is a non-starter as far as the institutions that pose the greatest systemic risk are concerned, the really big international dealer banks. A wind-up of these firms is subject to the bankruptcy proceedings of all the foreign jurisdictions in which it operates; the US can't wave a magic wand in Dodd Frank and make this elephant in the room vanish.
  In addition, no one has found a way to resolve a major trading firm without creating major disruption.
  Shiller's insistence that the public is so dumb as to confuse a windown with a bailout reveals his lack of connection with popular perceptions. The reason the public is so angry with the bailouts is no one, particularly among the top brass, lost his job, and worse, the firms were singularly ungrateful, thumbing their noses at taxpayers and paying themselves record bonuses in 2009.
  Bill Maher's Real Time program of November 12 is just the most recent example of how Bill Maher and most of his guests from the entire season are Geithner Kool-Aid drinkers. The show marked the ten-trillionth time Maher claimed that TARP was a "success" because the banks have "paid back" those government bailouts. Bill Maher needs to invite Yves Smith on his program so that she can debunk this myth, as she did in her June 23 piece. "Geithner Yet Again Misrepresents TARP 'Performance'". Ms. Smith is not the only commentator who repeatedly calls out the administration on this whopper. Marshall Auerback and almost everyone else at the Roosevelt Institute have said the same thing. Edward Harrison of Credit Writedowns wrote this piece for the Seeking Alpha website, in support of Aureback's TARP critique. Will Wilkinson's October 8 essay in The Economist's Democracy in America blog presented the negative responses from a number of authorities in response to the claim that TARP was a great success. With all that has been written to dispute the glorification of TARP, one would think that the "TARP was a success" meme would fade away. Nevertheless, the Geithner Kool-Aid is a potent brew and its effects can, in some cases, be permanent.
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  Senator Cantwell Stands Tough
  February 8th, 2010 Posted in Uncategorized
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  Back in June of 2008, when it became obvious that Hillary Clinton would not win the nomination as the Democratic Party's Presidential candidate, Clinton's despondent female supporters lamented that they would never see a woman elected President within their own lifetimes. At that point, I wrote a piece entitled, "Women To Watch", reminding readers that "there are a number of women presently in the Senate, who got there without having been married to a former President (whose surname could be relied upon for recognition purposes)." One of those women, whom I discussed in that essay, was Senator Maria Cantwell of Washington. Since that time, Senator Cantwell has proven herself as a defender of her constituents and an opponent of Wall Street. Her bold criticism of the Obama administration's handling of the economic crisis as well as her vocal opposition to the influence of lobbyists, motivated me to write a second piece about Senator Cantwell in November of 2009. More recently, she voted against the confirmation of Ben Bernanke's nomination to a second term as Federal Reserve chair and on February 2, Reuters reported that she was taking a stand against loopholes in proposed financial reform legislation.
  On February 7, Les Blumenthal of the McLatchy Newspapers saw fit to highlight Senator Cantwell's efforts at backing-up with real action, her tough stand against Wall Street:
  To hear Sen. Maria Cantwell talk, another economic bubble is building as Wall Street banks — backed by taxpayer bailouts — continue to play the high-risk derivatives markets rather than extend credit to struggling businesses on Main Street.
  Cantwell says that Congress and the Obama administration are just watching it happen.
  "We are trying to keep the focus on what needs to be done to get credit flowing and avoid another bubble," Cantwell said in an interview. "Do I wish the White House team was more attuned to these issues? Yes."
  White House officials have, at least twice, backed off commitments they made to her that they'd push for tougher regulations, Cantwell said.
  "Their economic team is not living up to what they said they would," Cantwell said.
  Her criticism of the financial regulatory reform bill passed by the House — as being "riddled with loopholes" — was reminiscent of the widespread reaction to the disappointing failure of the Democrats to pass any significant healthcare reform legislation:
  If the bills emerging from committees aren't tough enough, Cantwell vowed a floor fight. She said she had support from half a dozen senators, including Democrats Dianne Feinstein of California, Tom Harkin of Iowa, and Carl Levin of Michigan.
  "People are going to have to ask themselves what's better — a weak bill or no bill?" she said.
  At a time when her peers are busy selling out to lobbyists, Senator Cantwell is continuing to reinforce her image as a reformer. Her February 4 exchange with "Turbo" Tim Geithner, during his appearance before the Senate Finance Committee, was an example of the type of challenge that other Democrats are afraid to publicly vocalize when addressing members of the administration. Cantwell emphasized that the President has the authority to act on his own (by issuing an Executive Order) to make $30 billion available to community banks, rather than waiting for Congress to pass legislation for such a rescue. Her home state's Lake Stevens Journal discussed that moment:
  "If we don't implement change right now, we are going to lose more jobs," Cantwell told Geithner. "Do not wait for legislation. Come to terms with the community banks on reasonable terms that they can agree to — and I think that that we will be well on our way to getting Americans back to work."
  Maria Cantwell continues to exhibit a (sadly) unique toughness in standing up to those forces bent on preserving the destructive status quo. As disgruntled supporters of Hillary Clinton wonder whether her intention to step down as Secretary of State in 2012 could signal another opportunity to elect America's first female President — they would be well-advised to consider Senator Cantwell as their best hope for reaching that historic milestone.
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