Tim Geithner.... It would be nice if he proposed SPECIFIC plans for a change

Maybe Geithner should be more like... let's say, Paul Krugman.

I know exactly where Krugman stands on restructuring banks, in both practical and philosophical terms.

None of us have an equally clear idea of the Obama administration's thinking on banks.

That's understandable, since a blogger has the latitude to be a lot more direct and controversial than a national government. But the idea that Krugman offers no solutions is bizarre.

Here is Mister Krugman's out-put just since last night, which includes some lengthy, substantive additions to his already voluminous, public discussion of his thinking on plans to repair the banking system. He may be right, he may be wrong, but anyone who doesn't know where he stands on banking simply doesn't read him. He favors temporary government control of the handful of largest money-center banks so that the government can guarantee their balance sheets directly without it being a "heads you win, tails we lose" indirect give-away of public money to a handful of wealthy investors:

http://krugman.blogs.nytimes.com/2009/03/21/more-on-the-bank-plan/

http://krugman.blogs.nytimes.com/2009/03/21/cbo-projections/

http://krugman.blogs.nytimes.com/2009/03/21/despair-over-financial-policy/

http://krugman.blogs.nytimes.com/2009/03/20/the-great-recession-versus-the-great-depression/

http://krugman.blogs.nytimes.com/2009/03/20/not-guilty-as-charged/

has been challenged on some of his assumptions

Taking bold stands...for American progressive critics.

Along with Summers.

GTFO you two shills.

the one that Krugman criticized today.

They better tell us how it's going to work.

Easy to find.

Why would this "zombie bank" model be successful where the Japanese model was a failure? This is the ultimate question, on every economists' mind, along with many accountants and investors.

Furthermore, this is an FAQ on the Treasury bailout, not the Fed bailout (greater than the Treasury bailout).

The details are a secret, as Bernanke said during his congressional hearing.

I'm willing to give him a chance. This is the worst situation any Sec of Treasury has been in. The biggest problems ever. He needs a little time to figure it all out.

Unlike Krugman, Geithner has actually been looking at the banks books with the stress test.

"....you need to guarantee their debts, and seize ownership of those banks that don’t have enough assets to cover their debts; that’s the Swedish solution, it’s what we eventually did with our own S&Ls."

I have some questions for you:

1. How much does this plan of Krugman cost?

2. Who exactly will run these banks for the Fedederal Government?
We know that anyone chosen to run any of these banks can't be connected
to private banking industry in any way, or the media would have a cow!

3. Has Krugman ever express the willingness to run one or two of these banks if they are nationalized? Does he have any banking experience that would help him get that done?

I'm just asking, because the solution always seem to be about how to get control of the banks,
but never what to do once one has that control.

4. How do we transition these unsolvent banks into solvent ones, once we own them?

Aren't we then still having to deal with the issue of solvency? So how much less money will it cost to make them solvent, once we own them?

Cause to me, it appears that possibly, the reason that Obama is going the route that he is, is because the money that these banks are getting currently from the new TARP are loans which can be at least paid back. If the Feds own the banks, then those loans turn into investments that aren't guaranteed at all. Then the problem starts, who is going to run those banks, cause there would be public outcry if the folks who are experienced in the banking industry did.

1. How much does this plan of Krugman cost?

Less than $100 billion to seize the 2 most troubled and largest banks. Probably no more than $350 billion to seize them all. Of course, I'm being nice since the FDIC or Office of Thrift can seize them all at $0.

2. Who exactly will run these banks for the Fedederal Government?
We know that anyone chosen to run any of these banks can't be connected
to private banking industry in any way, or the media would have a cow!

Executive officers within the banks, but they will be appointees of the people, not the boards of directors (aka the frauds who got us into the mess)

3. Has Krugman ever express the willingness to run one or two of these banks if they are nationalized? Does he have any banking experience that would help him get that done?

We don't need to run these banks. Nationalization does not necessarily mean operating a bank (I assume you mean operating), only a shift in legal control of management.


4. How do we transition these unsolvent banks into solvent ones, once we own them?

By owning all the banks, we don't need to worry about losses affecting share price. We write down the losses to appropriate levels, thus alleviating the fear so many investors have toward owning a bank which presents fictitious balance sheets. After perhaps a few years, when property prices stabilize, and asset/commodity levels moderate, we sell it back. We also prevent the triggering of credit default swaps, which is the nuclear bomb here.

You don't undo 30 years of bad economic policy that turned this country into a net lending nation into a net debtor nation and turned this nation from a net exporting of finished goods to a net exporter of raw materials quickly.

One that will actually work, rather than this corrupt almost certain to fail garbage that Obama's ceter right eonomic team has come up with- which could easily have come from BushCo.

http://www.thenation.com/doc/20090323/stiglitz?rel=hp_picks

if things don't go according to theory, I find his plan lacking.

Otherwise, I find it absurd to insist that this administration adopts a plan that it
obviously doesn't want to adopt....and then be made to be responsible for it.

I didn't vote for Stiglitz, and so that makes it hard to just "want" what he "wants", when the person I voted for, and who would be ultimately responsible doesn't appear to want to go that route. I don't have the kind of faith in Stiglitz to institute a plan that he would not be on the hook for.

however, I wish he would shoot more straight with the American people on the extent of the problem.

Sad really, because when the "plan" doesn't work, a lot of other progressive issues will be put in jeopardy.

Our entire culture has taken a very bad shift to the right over the past 30 years on economic. The fact that center right policies are the ones that are being proposed is no surprise. I believe there is still a delusion hanging over our government and institutions that this is just another hicup and not the beginning of the end of us being able to borrow and import our way into prosperity.

People have been overly obsessed with making money, with no idea why they even want to make the money. Do we want economic prosperity for a fair or more equitable world or do we want it simply to be comfortable. Its a shame my parents generation who had such promise in the 60s on trying to accomplish that, are the ones who led us down the road of just wanting to be comfortable.

and deals with the root of the problem once and for all- instead of stringing it along for years and years.

we have a unique situation here

No one knows what will work.

the sitch is really bad

and G does have to finish the stress tests

otherwise, agree totally re: K

K has been providing specifics on his daily blog for ages.....

anyone who says differently simply doesn't read K