McClatchy: Still no plan from Geithner, Obama
posted at 10:12 am on March 13, 2009 by Ed Morrissey
More than five weeks ago, Barack Obama told the nation that Tim Geithner would unveil the administration’s plan to resolve the banking crisis and restore credibility to the markets the very next day. When the very next day arrived, Geithner arrived with some slogans tied together with hundreds of billions of dollars — and Wall Street ran screaming for the hills. Thirty days later, McClatchy notices that Geithner and Obama still haven’t produced a plan:
The Treasury Department has failed to persuade the world that it has a viable plan to stabilize big U.S. banks, and unless and until it does so, the economic downturn at home and abroad is unlikely to bottom out.
Federal Reserve Chairman Ben Bernanke has said as much, telling Congress last week that “restoring a reasonable degree of financial stability will be critical determinants of the timing and strength of the recovery.”
Yet experts warn that each week that goes by without a credible bank plan puts an economic recovery and public confidence in President Barack Obama at risk.
Kevin Hall notes that Geithner and Obama have fallen into the same trap as Hank Paulson and George Bush in the final weeks of the previous administration. They have correctly identified the biggest problem: the toxic assets linked to the massive, government-inspired lending bubble. Instead of spending the TARP monies on that issue, though, Geithner and Obama have instead tried everything but addressing the core issue of the collapse. Hundreds of billions of dollars have gone to floating private institutions that invested heavily or insured toxic assets without actually dealing with the poison itself.
Obama keeps promising to deal with the actual problem, but weeks after saying a plan was imminent, investors have yet to see anything. Instead, Obama seems more interested in Deadbeatonomics, while Geithner has started flacking for Obama’s budget on Capitol Hill. That keeps money on the sideline, since investors who have direct or indirect exposure to toxic assets still have no clear idea what resources they still have to put in play in the markets. The Obama administration keeps losing more credibility on its economic policy the longer it ignores the central problem of the collapse, and those put together have convinced investors to stay on the sidelines and protect whatever they have left.
When will a plan be forthcoming from the Obama administration? Unfortunately, it will probably have to wait until they get senior positions at Treasury staffed and up to speed — and as I reported earlier this week, Obama has sent a grand total of one nomination — out of 18 — to the Senate Finance Committee. That “next day” may well be “next year, despite Obama’s rhetoric about the economic collapse being his highest priority. Thus far, he’s been more interested in staffing his commission on women and girls than the Treasury.
Blowback
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Come on Ed! They are tired. Geez.
carbon_footprint on March 13, 2009 at 10:15 AM
DOING NOTHING IS CHANGE?? IMPEACH OBAMA IS CHANGE!!!
steviedfromnc on March 13, 2009 at 10:15 AM
He knows he will get credit for anything good that happens…so why should he care.
tomas on March 13, 2009 at 10:18 AM
Free fall… The country & the world are “getting it” now. The world is now finding out what the rest of us already knew simply by looking at the facts available to us about Obama, his record, and his associations with radicals.
What does this mean? We are grounded in reality, take the available data, study it, and try our best to make logical decisions based upon available data.
The rest of the country is not grounded in anything but emotion, emotion, and more emotion (feel good) emotion.
Thanks for that dummies!
Keemo on March 13, 2009 at 10:19 AM
The cannot address the core problem because they need the crisis to foist their agenda on the public.
Obama does not want to be the man who saved capitalism.
myrenovations on March 13, 2009 at 10:19 AM
Doogie Geithner – biggest bust in recent political history?
The guy was supposed to be the only one who could save the economy so everyone was supposed look the other way on his tax, umm, issues. As it turns out, he is neither smart nor credible.
Nat Hound on March 13, 2009 at 10:19 AM
I smell a sequel for Rush:
“See, I told you so, AGAIN”
Nat Hound on March 13, 2009 at 10:20 AM
The rats are leaving the ship.
faraway on March 13, 2009 at 10:21 AM
Now that Obama has the taxpayers money for all his social spending plans, there is no longer a banking or economic crisis and he can work on the other things instead.
Or Obama is voting “present”, again.
albill on March 13, 2009 at 10:21 AM
Peggy Noonan Stoking the Fear Embers…what is she drinking? This reminds me of Anais Nin who started writing erotica for money during the Great Depression to wealthy collectors. Peggy Noonan how much did you sell out for? I’m not angry just disappointed.
http://online.wsj.com/article/SB123689292159011723.html
Dr Evil on March 13, 2009 at 10:21 AM
This puts his reaction to the crisis last fall in perspective. They said he was “cool under pressure”. He’s just hiding.
faraway on March 13, 2009 at 10:22 AM
It’s hard putting the genie back into the bottle, after the bottle’s been shattered into a thousand pieces.
fogw on March 13, 2009 at 10:22 AM
It’s kind of hard to save the Economy without a Treasury Staff and a Plan. Unless the Plan is to remake America into a European Socialist Country.
kingsjester on March 13, 2009 at 10:23 AM
I’m sure glad,Obama and Geithner weren’t the
ones that planned the Okinawa Invasion!(Sarc).
canopfor on March 13, 2009 at 10:23 AM
The economy has totally tanked yet. When it hits rock bottom and they have us where they want us, THEN they will come up with the plan to SAVE THE WORLD.
ctmom on March 13, 2009 at 10:24 AM
During the Gore and Kerry campaigns, we heard endlessly about all of these magnificent “plans” they had to instantly fix everything. Never actually saw them.
Then Obama comes along and he has the same promises. A “plan” for this, a “plan” for that and a “plan” for everything in between.
And the media swooned.
Now, we finally get to see what exactly is contained in a Democrat “plan”.
Jackass poop.
Glad we finally got to see one of these vaunted “plans”, it contains what I thought it would have in it.
NoDonkey on March 13, 2009 at 10:25 AM
My plan would start out with prosecution of Frank, Dodd, Waters, Meeks, Reins, Johnson, Schumer, Gorelick, Clinton, Reno, Carter, etc. May not have to do much after that. The market would go nuts in a positive way. Get rid of Freddie/Fannie and then go to a flat tax. And if that weren’t enough, kick out the UN for the cherry on top.
BetseyRoss on March 13, 2009 at 10:25 AM
Of course, there’s alwas the possibility that cramming the economy down the crapper is The Plan, rather than mere incompetence.
I remind you of The Cloward-Piven Strategy of Orchestrated Crisis. Developed at Columbia University, Mbama’s alma mater, of course.
–The strategy of forcing political change through orchestrated crisis. The “Cloward-Piven Strategy” seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.–
–”Make the enemy live up to their (sic) own book of rules,” Alinsky wrote in his 1989 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system’s failure to “live up” to its rule book can then be used to discredit it altogether, and to replace the capitalist “rule book” with a socialist one. (Courtesy Discover the Networks.org)–
Check out this article if you haven’t already. It’s all there.
Akzed on March 13, 2009 at 10:26 AM
Obama plan is SOCIALISM- continue to put government hands in everything, tax people on everything they need to use “cap and trade” When you have 40% of the people living for free and 12% brainwashed that high taxes is patriotic it is easy to win elections. I think that if you do not pay taxes and receive government money, You should not be able to vote.
Tremmy on March 13, 2009 at 10:26 AM
This type of story makes me doubt Obama even more. I made the mistake of trying to rely on Obama’s ego. He kept on talking about how he was Lincoln reincarnated. Trying to compare yourself to the greatest President in US history takes some serious self-delusion. I thought that he would attack the economy full force and turn it around because he wanted the glory for it. The MSM would then tell us all about the omnipotent Obama and how wonderful he was for the next 3 years to ensure that he was elected again.
Instead we have someone who is only concerned about ideology. His plans are not pointed towards recovery but to changing America at a fundamental level. The stimulus, bailouts, cap-and-trade, foreign policy, and the budget are just a few examples. I honestly believe Obama could care less if he gets elected again. He views his Presidency as a chance to completely reshape America into his image.
txaggie on March 13, 2009 at 10:27 AM
Maybe they are taking the laissez-faire, doing nothing and letting the markets sort it out, approach. I would much rather have the administration do nothing than do something. So if they are doing nothing, even if out of incompetence, then good job Bambi and the elf.
WashJeff on March 13, 2009 at 10:27 AM
OT: more corruption from the most ethical congress evah!
Reporting from Los Angeles and Washington — Rep. Maxine Waters, one of Los Angeles’ most enduring liberal politicians, has come under scrutiny because of bailout funds that went to a bank in which her husband had owned stock and served on the board.
carbon_footprint on March 13, 2009 at 10:28 AM
No plan from these eggheads is great news!
John Doe on March 13, 2009 at 10:29 AM
Not to worry. The BIGGER the crisis, the better for Obama getting his agenda through Congress by screaming IT’S AN EMERGENCY! NO NEED TO DEBATE! PASS IT NOW! PEOPLE ARE DYING IN THE STREETS!
Yep, best and most competent administration, evah! But they got ‘style’. Just no substance.
GarandFan on March 13, 2009 at 10:30 AM
Don’t forget Elliot Spitzer, whose role in running certain executives out of AIG has been seen as a major reason the company is in the toilet right now.
There would be a rally on Wall Street just because they all hate him, like when he resigned as Governor over the prostitution scandal.
teke184 on March 13, 2009 at 10:31 AM
Obama’s Economic Plan:
Tax us out of house, home and employment.
Obama’s Energy Plan:
Tax production into extinction.
Check your tire pressure.
Wear a sweater or strip down.
It’s Bush’s fault and Gore knows best.
Obama’s Universal Health Plan:
Government collects DNA.
That means yours, stupid.
Follow China’s exemplary example:!
No holds barred; extract and sell DNA, cells, fluids and parts. Barter and trade for treatment, sucker.
America Answers Obama
Check: We’re all tired of your coercive pressures to squeeze us dry while YOU LIVE HIGH ON YOUR UGLY HOG. Let go of your damned burdensome strangle hold death grip on everything.
Drop Fascism Now!
maverick muse on March 13, 2009 at 10:31 AM
Cut-rate messiah eats waffle. Film at 11:00…
mojo on March 13, 2009 at 10:32 AM
And how many more billions have been spent by the filthy liar in that time as part of this recovery “plan?”
When is this bastard ever going to be held accountable for his corrupt administration and lack of action on anything but forcing through a socialist agenda? Seriously, when?
highhopes on March 13, 2009 at 10:34 AM
You actually think they’re capable of formulating a plan? Let me fill you in. The first step in having a plan is having a clue. If it ain’t squishy and fuzzy, Ogabe’s out of his depth.
I mean really, what did you imagine was going to happen when POTUS is this guys first job!
mr.blacksheep on March 13, 2009 at 10:34 AM
Two-bit Malcolm X knockoff drops ball as the wheels fall off. Film at 11:01.
NoDonkey on March 13, 2009 at 10:34 AM
If Obama goes long enough voting present on the banks he may be doing us a favor and the markets will resolve the situation on their own. He will get the credit but I think that is a small price to pay for a market solution.
Dr. Evil: You must be baby boomer or a porn aficionado to know who Anais Nin is.
jerryofva on March 13, 2009 at 10:34 AM
OBAMA’S WAR ON WORKING PEOPLE
steviedfromnc on March 13, 2009 at 10:35 AM
Give Geithner a break, he is so busy trying to answer the phones that he has little time for anything else.
bopbottle on March 13, 2009 at 10:35 AM
Maybe Geithner peered over the edge of the abyss and realized almost anything he proposes won’t work because the numbers involved are simply staggering. He’s hoping that either something happens elsewhere in the world (collapse of an Eastern European currency which spreads throughout Europe perhaps?) which causes the implosion he fears his plan might cause, or against all odds the banks actually begin to turn a profit and have sufficient cash-flow to offset the losses from the toxic assets. The latter won’t happen because the economy won’t turn around that quickly. Besides, Americans won’t going to engorge themselves on debt again anytime soon, so they can forget about any significant bank profits.
Bottom line: I suspect they haven’t proposed anything because they fear being blamed for the fallout of their plan more than the fallout from having no plan. They don’t know what they are doing.
flyfisher on March 13, 2009 at 10:35 AM
See, one of the reasons you shouldn’t lie is because NO ONE is smart enough to remember all of them in order to keep them straight. Obama, Axelrod and Rahm think they are the smartest people in the room. That was reinforced with this Socialist Agenda parading as Conservative scam during the election. However, now they have to implement their plans and there is more scrutiny, and the scam is starting to unravel. Squirm you Rats.
marklmail on March 13, 2009 at 10:36 AM
It is by will alone I set the economy in motion. It is by the spirit of Obama that government acquires size, the size acquires momentum, the falling markets become a warning. It is by will alone I set the economy in motion. Tim Geithner!
Mr. Joe on March 13, 2009 at 10:36 AM
Tim Geithner!
Mr. Joe on March 13, 2009 at 10:37 AM
That’s the best plan yet, that the silly amateurs in the White House and in the Democrat Congress, don’t do anything to “help”.
NoDonkey on March 13, 2009 at 10:37 AM
The problem is, they are not doing “nothing”, they are doing all kinds of other bad things while not working on the real problem.
If they were doing “nothing” across the board, we might survive this.
myrenovations on March 13, 2009 at 10:40 AM
Good grief. Here’s a plan:
1. Relax mark-to-market rules for all banks and insurance companies to allow them to reprice mortgages and mortgage-backed securities somewhere north of zero.
2. Treasury buys all MBS from same institutions for 10% less than the new book value of the assets.
3. Set up new RTC type entity staffed with hundreds of laid off mortgage industry experts to conduct an orderly auction of the MBS to private entities.
This is not rocket science, folks. But nothing can be done until they fix the mark-to-market problem. What I dont get is why nobody in either Administration has been willing to confront that until this week. Gross incompetence.
rockmom on March 13, 2009 at 10:40 AM
BetseyRoss on March 13, 2009 at 10:25 AM
You can’t leave out Franklin Raines…….
Rovin on March 13, 2009 at 10:41 AM
Why does the treasury need anybody else? We were told Geitner was the only person who could fix this mess that Bush left him. I thought Geitner was our only hope? What were we lied to again?
Hey everybody is saying now that the dow may close up today and the banks are making a profit the worst is behind us. I am confused last week it was doom and gloom. Now what to belive?
Brat4life on March 13, 2009 at 10:42 AM
How long do you think that Geithner will stand by Obama? From the abuse he is taking he has to be thinking cut, run, and hide.
Tremmy on March 13, 2009 at 10:42 AM
H-holding b-breath…gh…gh…t-turning b-b-blue…gasp…
whitetop on March 13, 2009 at 10:42 AM
The media would give this man credit if the sun rose every morning on schedule. But the situation today and the first impression this administration made have left a bad pock on their abilities. You add the earmark spending he so glibly tried to backtrack on and the outrage over you having to pay for your loser neighbor’s mortgage and you have way too many missteps to dismiss when and if the stock market rises inch by inch.
This man will always get credit from his loyal fans but the market, the working middle class, the heavy tax-paying upper class and many world leaders will know the difference and they are the ones who will be speaking out loudly as time goes on.
sherry on March 13, 2009 at 10:43 AM
OK…. how about Romeo’s plan to fix the economic crises?
1. Suspend Mark to Market. We got by for generations without it, isn’t it interesting that we melted down months after it finaly took effect? Oh, and by the way, Congress, in the last stimulus package gave authority to the FED to suspend mark to market, which they have not done.
2. Gov has already seized Fannie and Freddie… use them as vehicles to get toxic mortgages off the market. Attack the SOURCE of the meltdown, not the AIG type insurance fallout from it.
3. Freeze Government spending to last years level.
4. Lower business taxes.
5 Then… and this is the most important part… SHUT UP AND GET OUT OF THE WAY!
Steps 1-4 are fixing things the Government itself screwed up… ie… forced lending and the mark to market changes… then step 5…
Romeo13 on March 13, 2009 at 10:43 AM
Now there is a story on Drudge saying China want’s to make sure we will make good on our debts. I hope they don’t come calling soon for us to pay up.
Brat4life on March 13, 2009 at 10:43 AM
This sounds like a scam,or a player,running a racket,
and somebody got done played real good!
First, create Catostrophic Doomsday Scenario,then
campaign on hope and Change,then paint the other
side as old politics,then ride in on Pelosi Palomino
to save the day,then have Nancy strutt herself to the
well,and real slow like,ask for over 700 Billion dollars,
and at the same time,Republicans are onboard,then blame
the Republicans for 8 years of failed Bush Policies,and
then Stimulus Bill that has to be signed yesterday sits
on Hopey’s desk through the weekend,and now,perplexing as
it seems,
the LIBERAL CRISIS IS NOW OVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
And nobody bats an eye on this!
canopfor on March 13, 2009 at 10:44 AM
Nice one, Mom! The problem with that plan, from Ogabe’s point of view, of course, is he doesn’t get to play with lots of money with no accountability, which is really what he’s about.
mr.blacksheep on March 13, 2009 at 10:44 AM
BetseyRoss on March 13, 2009 at 10:46 AM
Hey, give Obama a break…he hasn’t had a vacation…he has been tackling that pesky Rush Limbaugh, he had to put together Carville and Co. to combat those conservative rascals, he has had parties to attend so he can meet the right people…why he was so busy he even had to sign the most significant economic bill past in the last 50 years, late at night with no one around, in fact so busy he didn’t even have time to read it (or was it that he had to go “line by line”), no one did…plus, going back to that pesky Rush, those everyday meetings to put together a plan to contain him, eats up a lot of time…give Obama a break…
right2bright on March 13, 2009 at 10:47 AM
Yeah, I reread Ed’s post and they are appearently still spending our money the Bush and Hank way. One of those Treasury Deputies need to tell Geithner when you do not have a plan do not “do something”.
Oh wait…no deputies. Well at least they have the help wanted sign out.
WashJeff on March 13, 2009 at 10:47 AM
Perhaps the markets should figure out a way to solve the toxic asset problem on their own. Maybe come to the Fed with a plan, if they need the Fed’s assistance in implementing it.
Since when is sitting around waiting for Uncle Sam to solve your problem the right solution?
Romeo’s plan sounds good to me, though. Do you get the $450 billion in prize money for the idea?
hawksruleva on March 13, 2009 at 10:48 AM
Rockmom, have you considered joining the Treasury Department?
There are positions to be filled and you could be one of the token Republicans that Obama loves so much.
Or maybe you could just cut and paste that in an e-mail to Tiny Tim?
myrenovations on March 13, 2009 at 10:49 AM
Well said RM. Why on earth are they draggin their feet then? It’s either: as someone else said, perpetuate the crisis to ease passage of his agenda; or, they don’t want to/won’t do anything for fear of future blame/failure. I’m inclined to think it’s a mix of both. Perpetual crisis allows him to get Commie-lite enacted; and they don’t have the cajones to make a hard decision w/o endless study and contemplation. Go figure….
volnation on March 13, 2009 at 10:49 AM
Do you think China is watching Obama fiddle while our economy burns and getting a little nervous?
joedoe on March 13, 2009 at 10:50 AM
To simple…and when they “confront” something, then someone is always at the end of the “spear”, and they know that the dems were the ones responsible, and enough Republicans, to allow congress to turn their backs on the most fundamental problems.
right2bright on March 13, 2009 at 10:52 AM
I said it weeks ago and I stand by it:
‘Don’t just do something,
stand there.’
thomasaur on March 13, 2009 at 10:53 AM
LOL… I wish… then I could put my company back together….
As I am now officialy unemployed after running my own IT Consulting company and Development shop for the last 6 years.
Economy sucks, projects have been canceled… I’m not a Woman, Minority, or disabled…. just a Vet… so no set asides for me…
And I don’t speak Pakistani, so I’m not in their “network”.
Romeo13 on March 13, 2009 at 10:57 AM
Yes, and it must be clear to them that O is an idealogue and clearly out of his league. You only ask for addl. security/return when you’re risk factor is uncertain and likely to go up. Even they know that O is a loose cannon.
volnation on March 13, 2009 at 10:58 AM
I heard Obama is going to offer Kalifornia as collateral.
WashJeff on March 13, 2009 at 11:00 AM
O might as well take a dump in a box and stamp it “Guaranteed” – it’d be worth about as much.
volnation on March 13, 2009 at 11:04 AM
And these dimwits had the nerve to accuse Bush of being “incompetent.” Obama is making Bush look like a Mster of the Universe by comparison.
irishspy on March 13, 2009 at 11:08 AM
Those of you calling for suspension of mark to market do realize it has largely been ignored by the creation of Level Three assets? And because those Level Three assets are hard to value, they’ve been marked to model, not marked to market. And it’s in those Level Three asssets where the banks have hidden most of their losses.
I understand the problem mark to market is causing. But perhaps the answer is a change to FDIC rules regarding bank closure instead of accounting rules. The numbers are what they are. We can decide to change how we will react to the numbers, but we shouldn’t pretend they aren’t what they are. From a pure financial accounting standpoint, mark to market seems right to me. Trusting mark to model is like trusting Algore’s climate models. You can make models say anything you want them to.
If a man purchased a home in 2004 for $500k that is now worth $250K, he is only fooling himself if he keeps it on his personal balance sheet for $500k in hopes the market will come back. But there’s no harm done unless he provides said balance sheet to a third party in a business transaction. If I were his potential lender or investor, I would want to know he’d taken a $250k hit to his equity.
In contrast, these banks are publicly traded and investors must know what the assets are worth today, not at some speculative future date. If a bank were to keep the asset on their balance sheet at $500k knowing all they could sell it for was $250k, they are LYING and potential investors have the right to know the truth. Sometimes markets come back, but sometimes they don’t. Japan has been waiting for twenty years for their market to come back.
They must do something to set a market price for these toxic assets. We don’t need the government agreeing to pay for them at the bank’s book value or WE are certain to get ripped-off. The losses are what they are. We need a free market to establish FMV, then write down the balance sheets accordingly and decide what to do about the losses. The reason they haven’t done it is because they KNOW those assets aren’t worth anywhere near book. The banks are walking dead. Right now they are playing games, delaying the inevitable.
flyfisher on March 13, 2009 at 11:10 AM
It’s working and they do not need anymore of your money.
Move on to your next fake outrage.
getalife on March 13, 2009 at 11:11 AM
Look here, lady, you need to read the article before posting your girlish doodles.
It is not working.
myrenovations on March 13, 2009 at 11:13 AM
I’d certainly rather they do nothing than do any of the things they talk about doing, but I’m not sure we can expect the financial system to repair itself from a crisis that was instigated by intrusive government legislation. The conditions that caused the collapse are still largely in place – the worst excesses of unqualified applicants getting ridiculous mortgages are behind us, and the housing boom is over – but many top financial executives and investors must be wondering what the point of recovery would be, if they just stand up and walk right back into the same hail of bullets that mortally wounded them in the first place.
Since Obama and his team say they’re “out of ideas,” maybe Geithner would consider a few suggestions once he comes out of the bathroom and takes the phones off “forward.” Here’s my three-point plan for regenerating the banking industry:
1. Remove Barney Frank and Chris Dodd from office immediately, pursuant to Justice Department investigations. Indict them with anything it takes to get them far, far away from the financial system. Nothing keeps the financial sector more nervous than the presence of the same people who crashed it in the first place, still sitting on banking commissions, with even more power. Realistically, Obama should go too, but the Dow would climb 500 points during Senator-for-Life Frank’s tearful resignation speech.
2. Financial markets hate huge deficits, because they put pressure on the bond market, and those bills are going to come due some day. Repeal the Porkulus bill, apologize to the American people for proposing to waste so much of their money during a financial crisis (a sign that Big Government has learned the error of its ways, which would improve market confidence) and instead finance huge growth-oriented tax cuts by radically cutting government spending.
3. Credit agencies make money by loaning money. What they need to get them booming again is a set of solid applicants for business loans, borrowing money for ventures that are highly likely to produce a good rate of return. Now is the perfect time to abolish the Department of Education and privatize the failed government school system. Private schools are a guaranteed moneymaker – they sell a product everyone wants. Big loans for capital investment would be needed to renovate the awful government schools and build new private schools. Tax cuts would ensue, as bloated government school spending dissolves into healthy vouchers for private education, and the largest, most politically damaging union in the country – the teachers’ union – is dissolved.
Doctor Zero on March 13, 2009 at 11:17 AM
There are plenty of good ideas out there that Timmy could implement now, but they are economic solutions rather than political ones. Even Jim Cramer’s would be a good start. But Obama doesn’t care about restoring the economy; he cares about putting government in charge.
I remember Obama’s presser the day before Geithner’s when he replied to a question about the “plan” and he said he didn’t want to take away from Geithner’s “moment in the sun” at his own presser so he would not comment on it. I thought it was an odd thing to say, like Geitner was a schoolboy about to make his first speech! Now I think Obama refused to answer because there was no answer. They were winging it then and winging it now.
PattyJ on March 13, 2009 at 11:21 AM
I understand what you are saying, but, one of the major problems with this whole idea is that there is no tracking mechanism for value.
Someone, somewhere, holds my mortage. Its a piece of paper whose face value was 190K when I bought years ago. House was up to 325K in value at one point… now in the 250k range, but flucuating… if you go by the neighborhood…
But I have a great view… larger than normal yard, and back onto a Greenbelt with a bike path… 3 blocks from and elementary school, 7 blocks from the highschool, and on a culdesac…
So, just how in the world can they decide the Market value of the mortgage on my property?
I know for a fact that my Loan was sold at least once, and who knows what “funds” now may hold this in some third or fourth derivitive…
Mark to Market is unworkable because of the derivitives. There is no way to reasonably value the asset… no way to track change… They divorced Worth from Market Value…
Which is why it was the first step of the meltdown…
Law of unintended consequence.
Romeo13 on March 13, 2009 at 11:26 AM
I think Geithner is the problem here. Because he was one of the architects of the original TARP, he is loath to admit it has failed and that it was the cure for the wrong disease. Takes a big man to do that, and he isn’t one.
I also think that in a larger sense, the White House gang rolled the dice when they came in and bet that the markets would not get much worse. They thought they could just blame everything on Bush and then move on with their agenda, while the banks muddled through and the financlai markets repaired themselves.
They failed to understand that large investors around the world had already factored in to their decision making that the ultimate fate of the U.S. financial systam is in the hands of the U.S. government. They believe the important decisions are not being made now in New York, or London, or Tokyo, or Beijung, but in Washington. Investors have reacted predictably and badly to the failure of the Administration to produce a plan.
rockmom on March 13, 2009 at 11:33 AM
Here’s some “fake outrage” for ya:
1 out of every 5 dollars of O’bama’s Porkulus plan going to Massachusetts will be spent prepetuating the Kennedy “legacy”. Since when is giving millions to the JFK Library an “economic stimulus”?. Not in my universe.
Boston radio station WBZ did a listener poll about this story yesterday-it was a combination of on-line and phone sampling. Only 14% of the people responded were in favor of this joke. 86% thought it was a waste of money. And these are Democrats talking.
They played one of the clowns from the 14 percent who was in favor. He called it “the Kennedy Liberry”.
Want some more “fake outrage”? Porkulus also gives the state O’bama claims he was born in $30 million to weatherize houses.
That’s so all that nasty warm air won’t get in, I suppose.
Del Dolemonte on March 13, 2009 at 11:34 AM
Bush would’ve been impeached by now
Obama can’t produce a bank plan because it means going back on Clinton’s 1999 easing of Fannie/Freddie lending as well as runs slam into Dodd and Frank (to say nothing of the rest of the hard left Dems and the most corrupt dems). How does a pres putout a plan that his own party will gag on, and make Republicans w YouTube Archives look like they’ve been right all along?
scottm on March 13, 2009 at 11:35 AM
As we inch into spring, I’m so pleased for Ed and AP; They aren’t having to go very far to find this stuff! It’s almost as if the Obama administration is on the Hot Air staff!
anniekc on March 13, 2009 at 11:39 AM
Good point…
One of the things investors need is to have a stable level playing field.
They can’t make reasonable Risk/Reward calculations if the Government is coming in and changing not only the rules of the game, but dictating winners and loosers as well.
I don’t have numbers, but my gut tells me the only ones holding the market where it is now is the 401K and 403B holders… their money is still primarily in because they are not players, and don’t understand whats going on.
Institutional players, and Fat Cats, are all sitting on the sideline waiting for the bottom… and for the rules of the game to quit changing…
Face it… would you even bother to play a game where the Ref can not only change the rules on a whim, but then say who losses?
Romeo13 on March 13, 2009 at 11:40 AM
I understand all too well. I bought my home in 2007. Fortunately I found a seller who really needed to sell, so I paid $50k under appraisal. Even so, I’ve lost money.
Karl Denninger has an intriguing plan. He’s proposed a temporary suspension of MTM combined with a forced sale of 10% of the hard to value assets in order to set a market price. As he said:
I think his idea just might work. I like it better than the government going in now and buying the assets for anywhere current book.
flyfisher on March 13, 2009 at 11:43 AM
What you have described is a Gordian knot that is tying up the world economy. It has to get untied somehow. The free market will not set a value for these assets – if that were possible it would have happened already, and clearly it hasn’t. Nobody has the appetite for risk to make a market in these assets. So they continue to act like a millstone around the neck of the world banking system. The government has to set up a mechanism to get the bad assets off the books of the banks, and the government can’t do that by paying banks for assets that are technically worthless and valued at zero becuse nobody will buy them.
There isn’t a Pareto-optimal solution here. It’s time to bite the bullet and come up with the “least bad” solution. And we will have to live with some imperfect consequences of some aspect of it – i.e. the notion that taxpayers will be “ripped off” if the government “overpays” the banks for the bad assets. One reason nothing has happened so far is the fear of the governmnet officials that they will be accused of selling out to the banks and ripping off the taxpayers.
rockmom on March 13, 2009 at 11:43 AM
If the forced sale of 10% sets the price, the value won’t be much different than MTM, as MTM is based on selling everything in a fire sale – and in the current market, even 10% moving in forced sales are fire sales. Better to allow a percentage of assets that are illiquid to be marked to model, and the more liquid assets to be marked to market.
Vashta.Nerada on March 13, 2009 at 11:46 AM
Geithner and Obama seem to be doing everything to prevent economic recovery while they bide their time until the country collapses … then he can usher in his massive programs for government “help”.
darwin on March 13, 2009 at 11:53 AM
Might be a good plan… but one of the things that makes this whole thing tough is folks like me…
I’m not anywhere NEAR underwater on my loan. Nor am I planning on selling anytime soon… and I make my payments on time.
So, problem is how do you know how many loans in a “derivative” are underwater, and how many are good investments?
And how do you track it?
They’ve been selling and buying Debt… whose worth is only as good as the goodwill and intention of the debtor to repay the debt, and the amount of the loan… it really has nothing to do with the value of the collateral of that loan (the house).
Romeo13 on March 13, 2009 at 11:55 AM
Read this.
Marxist plan for Obama?
moonsbreath on March 13, 2009 at 11:58 AM
I think my home is worth $25k less than I paid, but I’m not underwater on my loan bcause I made a significant down payment. In this environment a $25k equity loss isn’t really worth complaining about. I don’t intend on moving anyway.
flyfisher on March 13, 2009 at 12:12 PM
See Don Surber’s 52 Obama (pbuh) mistakes in 52 days, and then imagine what would have happened if GWB or John McCain had done ANY of them.
On second thot, dont do that. Its too nice a day to get bummed out by such things.
Mike D. on March 13, 2009 at 12:13 PM
Yeah, it is a mess and in a fair world the risk takers take the losses but now we are the risk takers.
The property still has value but now it is low.
getalife on March 13, 2009 at 12:17 PM
The answer is pretty clear isn’t it? They plan to let market forces correct the problem over time responding with spot bailouts to smooth out the really deep potholes in the road. That leaves all their focus and energy to push forward their social programs they know will be harder to implment in a year or two.
Hochmeister on March 13, 2009 at 12:17 PM
“The insurgent, having no responsibility, is free to use every trick if necessary, he can lie, cheat, exaggerate. He is not obligated to prove; he is judged by what he promises, not what he does.”
~David Galula, “Counterinsurgency Warfare: Theory and Practice”
Send_Me on March 13, 2009 at 12:25 PM
It’s tricky isn’t it. I’m not sure there is a good answer. But to me Karl’s plan seems about as good as any because you force a market. There are investors who will buy these things. Trillions of dollars are sitting on the sidelines looking for a place to invest. If there were a free market in these assets some of that cash would suddenly appear. But investors aren’t willing to pay book value, that much has been established.
Because of the way these things have been chopped, sliced, and diced, I don’t know how anyone with a room of computers could ever value the underlying assets. So it seems to me a potential investor would only pay based on a valuation of the current income stream, which would inevitably mean a significantly lower price than current book value. And that tells me these losses, when they are finally realized, will be massive.
There is no easy way around this mess. The losses are real and someone will eventually take the hit. It looks like it will be American taxpayers.
flyfisher on March 13, 2009 at 12:26 PM
just so “getalife” knows, the market is down. does that mean we’re back in a depression?
and thanks to all who write intelligently here on this financial issue. i’m learning alot.
kelley in virginia on March 13, 2009 at 12:36 PM
I said in this post that President Obama needs to figure out which fib he’ll stick with: that we’re facing the greatest economic catastrophe since the Great Depression or the economy that’s suddenly much better than people think.
President Obama’s credibility gap keeps growing.
LFRGary on March 13, 2009 at 12:46 PM
We are far enough into his administration that the right can now legitimately talk about “Obama’s failed policies”.
I love the ring of that.
keep the change on March 13, 2009 at 1:00 PM
Best bet for your money now is to pay down your mortgage.
And under Bammy/San Fran Nanny’s plan, you can also pay your neighbor’s mortgage.
It’s a win-win.
NoDonkey on March 13, 2009 at 1:10 PM
When do we get to talk about “Obama’s regrettably short but thankfully former” Presidency?
NoDonkey on March 13, 2009 at 1:11 PM
It’s time for another crisis to take your focus off of this.
drjohn on March 13, 2009 at 2:48 PM
Well they have peed away an awful lot of money.
So we sit, we wait. If we haven’t gone into a depression yet, I doubt we will. I doubt it. I also doubt a meteor hitting earth.
johnnyU on March 14, 2009 at 11:08 AM
i don’t have a buisness degree but here goes starting monday morning cancel all this goverment stimulus garbage,cut buisness tax in half for ten years drop capital
gains for 5 years stand back from market stop spending money you donot have .thats all you have to do please call it youre plan.or just do what reagan did it works
wade underhile on March 14, 2009 at 11:15 AM
More on Da Bamanomics here …
http://online.wsj.com/article/SB123682426946303905.html
DannoJyd on March 14, 2009 at 6:38 PM
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