As the incoming president introduced his economic team and said there isn't "a minute to waste" in putting them to work, there was a brief, almost ghostly sighting of George W. Bush and Henry Paulson on cable news to promote the Citibank bailout, which Bush said he had discussed with Obama before it was announced.
"My commitment is to do what is required," Obama said at his Chicago news conference today. "President Bush has indicated that he has the same approach, the same attitude."
The President-Elect added that he has asked his new team to consult with Congress, the Bush Administration and the Federal Reserve on economic developments over the next two months.
So much for one president at a time, but the cooperative effort is not going to solve the main problems. The Citibank bailout was needed but drew immediate criticism from economists for being too large. too generous and without adequate supervision.
No matter how hard both Administrations try to deal with it, the two-presidents trap is going to be messy and expensive from now until January 20th.
Showing posts with label Henry Paulson. Show all posts
Showing posts with label Henry Paulson. Show all posts
Monday, November 24, 2008
Wednesday, November 19, 2008
Bailouts: The Game Show
TV news is beginning to look like the mother of all game shows with Washington contestants competing to pick a jackpot for the economy.
Here is Henry Paulson wavering between the curtains marked Toxic Loans and Bank Capital, some members of Congress wanting to take a flyer on Detroit, Sheila Bair of the FDIC choosing Foreclosure Relief as the audience of lobbyists cheers them on and the rest of us wait anxiously for someone to come up with a winner.
Mitt Romney, whose family money comes from the car industry, shows up today to opt for Big Three Bankruptcy while a nearby New York Times editorial urges Congress to open the curtain marked Modifying Home Loans.
The Bailout Show so far is not getting stock-market ratings like the Neilsens of such classics as Deal or No Deal, but changing the host in January may make a difference. Meanwhile we're all watching, remote in hand, hoping that no one shows up to repossess the TV set.
So far, the show looks far from ready for prime time.
Here is Henry Paulson wavering between the curtains marked Toxic Loans and Bank Capital, some members of Congress wanting to take a flyer on Detroit, Sheila Bair of the FDIC choosing Foreclosure Relief as the audience of lobbyists cheers them on and the rest of us wait anxiously for someone to come up with a winner.
Mitt Romney, whose family money comes from the car industry, shows up today to opt for Big Three Bankruptcy while a nearby New York Times editorial urges Congress to open the curtain marked Modifying Home Loans.
The Bailout Show so far is not getting stock-market ratings like the Neilsens of such classics as Deal or No Deal, but changing the host in January may make a difference. Meanwhile we're all watching, remote in hand, hoping that no one shows up to repossess the TV set.
So far, the show looks far from ready for prime time.
Wednesday, November 12, 2008
Making Book on Paulson
An editor once proposed a picture book titled "They Must Know What They're Doing or They Wouldn't Be Where They Are," featuring the captain of the Titanic, the designer of the Edsel, LBJ running the Vietnam war and other disaster-prone people in high places.
Add Henry Paulson to the list. After pushing Congress into a panic to let him buy toxic mortgage assets, Bush's Treasury Secretary today said maybe not, announcing the plan is on hold.
At a news conference, Paulson said the $700 billion will be used instead to bolster the financial markets and, in turn, make loans more accessible for creditworthy borrowers:
“During times like these with a slowing economy and some deterioration in credit conditions, even the healthiest banks tend to become more risk-averse and restrain lending, and regulators’ actions have reinforced this lending restraint in the past.”
Four federal agencies, including the Federal Reserve and the FDIC, joined in by issuing a statement practically begging banks to step up: “Lending to creditworthy borrowers provides sustainable returns for the lending organization and is constructive for the economy as a whole.”
Paulson's turning on a dime is analogous to what the Bush Administration might have done five years ago if, after getting Congress to authorize invasion of Iraq and starting the shock and awe, they suddenly decided to stop and bomb Iran instead.
No wonder, in the face of all this fumbling, the stock market keeps going down, waiting for a signal about where all this confusion is heading.
The naming of Obama's Treasury Secretary, along with a clear statement of intentions about the financial markets, gets more urgent with each passing day.
Add Henry Paulson to the list. After pushing Congress into a panic to let him buy toxic mortgage assets, Bush's Treasury Secretary today said maybe not, announcing the plan is on hold.
At a news conference, Paulson said the $700 billion will be used instead to bolster the financial markets and, in turn, make loans more accessible for creditworthy borrowers:
“During times like these with a slowing economy and some deterioration in credit conditions, even the healthiest banks tend to become more risk-averse and restrain lending, and regulators’ actions have reinforced this lending restraint in the past.”
Four federal agencies, including the Federal Reserve and the FDIC, joined in by issuing a statement practically begging banks to step up: “Lending to creditworthy borrowers provides sustainable returns for the lending organization and is constructive for the economy as a whole.”
Paulson's turning on a dime is analogous to what the Bush Administration might have done five years ago if, after getting Congress to authorize invasion of Iraq and starting the shock and awe, they suddenly decided to stop and bomb Iran instead.
No wonder, in the face of all this fumbling, the stock market keeps going down, waiting for a signal about where all this confusion is heading.
The naming of Obama's Treasury Secretary, along with a clear statement of intentions about the financial markets, gets more urgent with each passing day.
Tuesday, October 14, 2008
The Financial 9/11
Yesterday's stock-market surge is at least a temporary all-clear for millions of Americans to emerge from the shock and awe that has devastated their financial lives. As they look around at the rubble of savings, 401ks and home values, what are they thinking and feeling?
Across the country, there are reports of victims. "In some places," CNN reports, "mental-health hot lines are jammed, counseling services are in high demand and domestic-violence shelters are full."
In this disordered emotional climate, the wounded will be asked to decide on whom to trust to heal the national economy. Barack Obama and John McCain are offering band-aids, George W. Bush is dispensing bromides, but there is no national figure to "feel their pain."
In tomorrow night's debate, the presidential candidates will be under great pressure to posture as economic saviors in a situation ripe for demagoguery. McCain will no doubt promise to fight our way out and Obama to think through the disaster, but what voters will be searching for, more than ever, is empathy and trust.
The financial rescue farce of the past two weeks has made politicians of all stripes look foolish and impotent. Congress wasted valuable time arguing over Hank Paulson's now-abandoned plan to buy bad mortgages, then loaded the bill with pork and, only incidentally, added provisions that now are seen as the best answer to the crisis--putting money into banks and taking equity positions in return.
How much of the market panic could have been avoided if American politicians had acted with the ultimate good sense of Gordon Brown and the British, who have led the way out of the mess, at least temporarily?
There is no time now for postmortems, but McCain and Obama would do well this week to offer, not nostrums, but convincing evidence that they will rely on the best experience and judgment when the next disaster strikes.
Across the country, there are reports of victims. "In some places," CNN reports, "mental-health hot lines are jammed, counseling services are in high demand and domestic-violence shelters are full."
In this disordered emotional climate, the wounded will be asked to decide on whom to trust to heal the national economy. Barack Obama and John McCain are offering band-aids, George W. Bush is dispensing bromides, but there is no national figure to "feel their pain."
In tomorrow night's debate, the presidential candidates will be under great pressure to posture as economic saviors in a situation ripe for demagoguery. McCain will no doubt promise to fight our way out and Obama to think through the disaster, but what voters will be searching for, more than ever, is empathy and trust.
The financial rescue farce of the past two weeks has made politicians of all stripes look foolish and impotent. Congress wasted valuable time arguing over Hank Paulson's now-abandoned plan to buy bad mortgages, then loaded the bill with pork and, only incidentally, added provisions that now are seen as the best answer to the crisis--putting money into banks and taking equity positions in return.
How much of the market panic could have been avoided if American politicians had acted with the ultimate good sense of Gordon Brown and the British, who have led the way out of the mess, at least temporarily?
There is no time now for postmortems, but McCain and Obama would do well this week to offer, not nostrums, but convincing evidence that they will rely on the best experience and judgment when the next disaster strikes.
Sunday, September 28, 2008
The Money Pit and Cat in the Well
After pulling an all-nighter, the low-approval gang in Washington this morning will give us their new, improved version of the $700 billion gamble nobody understands but practically all are sure is needed to keep the sky from falling.
The 1980s Tom Hanks movie, "The Money Pit," comes to mind as Congress and the Administration enthuse over the financial structure we're buying with a $250 million down payment that may or may not stand up until their successors move in next January.
House Speaker Nancy Pelosi congratulates the negotiators for "the great work they have done" to "insulate Main Street and everyday Americans from the crisis on Wall Street” while Treasury Secretary Henry Paulson gets up off his knees to celebrate "a deal which will work and be effective in the marketplace.”
But as the happy couple prepare for the Housewarming, the grumpy former tenant Newt Gingrich stands outside bitching that "it’s probably impossible, without the president getting a new secretary of the treasury, to get to a good deal...We’re taking an immediate tummy ache, and we’re in danger of turning it into cancer.”
So much for the mixed metaphors, but perhaps the most apt commentary might be that of a voice from the past, the 1960s Senate Leader Everett Dirksen, who may or may not have said, "A billion here, a billion there and pretty soon you're talking about real money."
Dirksen had all kinds of folksy anecdotes to warn about wild-eyed government spending, including the one about the schoolboy asked to figure out how long it would take for a cat that had fallen into a well 100 feet deep to get out if it climbed up one foot and then fell back two feet.
After reams of calculations, the answer was, "If you give me another 30 minutes, I'm pretty sure I can land that cat in hell."
Dirksen is long gone, but he may have a good sense of direction about where Washington spending was heading.
The 1980s Tom Hanks movie, "The Money Pit," comes to mind as Congress and the Administration enthuse over the financial structure we're buying with a $250 million down payment that may or may not stand up until their successors move in next January.
House Speaker Nancy Pelosi congratulates the negotiators for "the great work they have done" to "insulate Main Street and everyday Americans from the crisis on Wall Street” while Treasury Secretary Henry Paulson gets up off his knees to celebrate "a deal which will work and be effective in the marketplace.”
But as the happy couple prepare for the Housewarming, the grumpy former tenant Newt Gingrich stands outside bitching that "it’s probably impossible, without the president getting a new secretary of the treasury, to get to a good deal...We’re taking an immediate tummy ache, and we’re in danger of turning it into cancer.”
So much for the mixed metaphors, but perhaps the most apt commentary might be that of a voice from the past, the 1960s Senate Leader Everett Dirksen, who may or may not have said, "A billion here, a billion there and pretty soon you're talking about real money."
Dirksen had all kinds of folksy anecdotes to warn about wild-eyed government spending, including the one about the schoolboy asked to figure out how long it would take for a cat that had fallen into a well 100 feet deep to get out if it climbed up one foot and then fell back two feet.
After reams of calculations, the answer was, "If you give me another 30 minutes, I'm pretty sure I can land that cat in hell."
Dirksen is long gone, but he may have a good sense of direction about where Washington spending was heading.
Tuesday, September 23, 2008
Warren Buffet Shows the Way
While Chris Dodd et al in Congress arm-wrestle with Henry Paulson on how to invest taxpayer money to rescue the financial system, the 78-year-old sage of Omaha is putting $5 billion into saving Goldman Sachs and getting a nice deal for the money, preferred shares and a 10 percent annual dividend, thank you very much.
Wall Street, which respects Buffet in the extreme, will undoubtedly be buoyed by his move on the theory that the master investor, unlike the bipartisan bumblers in Washington, knows what he's doing and is taking action rather than debating about it.
It might settle the impasse if the government could persuade Buffet, who has more money than he will ever need and plans to leave most of it to charity, to come to Washington and help oversee the $700 billion portfolio that taxpayers are being urged to acquire.
That would inspire confidence well beyond Wall Street.
Wall Street, which respects Buffet in the extreme, will undoubtedly be buoyed by his move on the theory that the master investor, unlike the bipartisan bumblers in Washington, knows what he's doing and is taking action rather than debating about it.
It might settle the impasse if the government could persuade Buffet, who has more money than he will ever need and plans to leave most of it to charity, to come to Washington and help oversee the $700 billion portfolio that taxpayers are being urged to acquire.
That would inspire confidence well beyond Wall Street.
Monday, September 22, 2008
No Blank-Check Bailout
The bill for decades of American greed has just come due, and deadbeats at every level of society are trying to avoid paying their share.
From street-level avaricious buyers of bigger homes than they could afford with zero down and mortgage brokers and banks willing to bilk them to the covetous upper-echelon insurance companies, Wall Street houses and hedge funds that packaged all-but-worthless indebtedness at a markup for free-lunch investors, all eyes are now on Congress to pick up the tab with taxpayer money--to buy all that trash for cash without any safeguards.
Moreover, it has to be done in a super-hurry with no questions asked or the freeloaders in the markets will go into a swoon, as they did today.
Before Congress gives the Bush Administration an economic blank check comparable to the 2002 carte blanche to shoot up the Middle East, saner Senators are asking for more supervision of the Treasury handouts, more equity from the Wall Street casinos that lost their bets and more emphasis on helping responsible home owners who got caught in the squeeze.
Henry Paulson may tell them the sky is falling, but that doesn't mean that our lawmakers have to respond like Henny Pennies in a panic.
From street-level avaricious buyers of bigger homes than they could afford with zero down and mortgage brokers and banks willing to bilk them to the covetous upper-echelon insurance companies, Wall Street houses and hedge funds that packaged all-but-worthless indebtedness at a markup for free-lunch investors, all eyes are now on Congress to pick up the tab with taxpayer money--to buy all that trash for cash without any safeguards.
Moreover, it has to be done in a super-hurry with no questions asked or the freeloaders in the markets will go into a swoon, as they did today.
Before Congress gives the Bush Administration an economic blank check comparable to the 2002 carte blanche to shoot up the Middle East, saner Senators are asking for more supervision of the Treasury handouts, more equity from the Wall Street casinos that lost their bets and more emphasis on helping responsible home owners who got caught in the squeeze.
Henry Paulson may tell them the sky is falling, but that doesn't mean that our lawmakers have to respond like Henny Pennies in a panic.
Sunday, September 21, 2008
The Irrelevant Presidential Candidates
As they prepare for their first debate, Barack Obama and John McCain will be upstaged this week by people who will be out of power in four months--members of the Bush Administration and Congress, many of whom retire voluntarily or otherwise at year's end.
No matter what the candidates say, our economy will be on the operating table in Washington, with the surgery being performed, if not by quacks but lame-duck politicians, few of whom have shown any aptitude for making life-and-death decisions (see "War, Iraq" and "Children, Health Insurance for").
With bipartisan urgency, Congress will give Treasury Secretary Henry Paulson power to buy up to $700 billion in distressed mortgage-related assets from private holders.
“I hate the fact that we have to do it, but it’s better than the alternative,” Paulson said in his round of appearances of the Sunday morning talk shows. “This is a humbling, humbling time for the United States of America.”
The alternative would be an unthinkable meltdown of the financial markets that would eventually throw millions of people out of work as well as their homes.
On Meet the Press, New York Mayor Mike Bloomberg admitted that "nobody knows exactly what they should do, but anything is better than nothing. You've got to restore the public's belief and the market's belief that we will go on. And this is not just an American problem, it's financial markets around the world that are all interlinked and they're all collapsing."
That's the emergency agenda for this week, but Bloomberg, who made a fortune providing instant information for the money world, points out that "we're paying the price for the last years where we all wanted something for nothing, where we took risks because we were convinced that we would never have to pay, somebody else would pay on the downside, but we'd keep the profit. Congress has been unwilling to address the fundamentals of this country--an energy policy that makes sense, infrastructure, health care..."
All this will land in the lap of the next president and Congress that Americans will be voting into power six weeks from now. There will be no shortage of promises and finger-pointing in the campaigning until then, but to get us there, the lame ducks will have to get it right in the next few days.
No matter what the candidates say, our economy will be on the operating table in Washington, with the surgery being performed, if not by quacks but lame-duck politicians, few of whom have shown any aptitude for making life-and-death decisions (see "War, Iraq" and "Children, Health Insurance for").
With bipartisan urgency, Congress will give Treasury Secretary Henry Paulson power to buy up to $700 billion in distressed mortgage-related assets from private holders.
“I hate the fact that we have to do it, but it’s better than the alternative,” Paulson said in his round of appearances of the Sunday morning talk shows. “This is a humbling, humbling time for the United States of America.”
The alternative would be an unthinkable meltdown of the financial markets that would eventually throw millions of people out of work as well as their homes.
On Meet the Press, New York Mayor Mike Bloomberg admitted that "nobody knows exactly what they should do, but anything is better than nothing. You've got to restore the public's belief and the market's belief that we will go on. And this is not just an American problem, it's financial markets around the world that are all interlinked and they're all collapsing."
That's the emergency agenda for this week, but Bloomberg, who made a fortune providing instant information for the money world, points out that "we're paying the price for the last years where we all wanted something for nothing, where we took risks because we were convinced that we would never have to pay, somebody else would pay on the downside, but we'd keep the profit. Congress has been unwilling to address the fundamentals of this country--an energy policy that makes sense, infrastructure, health care..."
All this will land in the lap of the next president and Congress that Americans will be voting into power six weeks from now. There will be no shortage of promises and finger-pointing in the campaigning until then, but to get us there, the lame ducks will have to get it right in the next few days.
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