Obama’s Economists: Just a Palace Revolution?
By Jake Blumgart - Jan 30th, 2009 at 10:27 amThe man I wish was Treasury Secretary had this to say yesterday:
As the Obama administration apparently prepares to launch Hankie Pankie II — buying troubled assets from banks at prices higher than they will fetch on the open market — it occurred to me that an updated version of an old Communist-era joke may be appropriate: under Bush, financial policy consisted of Wall Street types cutting sweet deals, at taxpayer expense, for Wall Street types. Under Obama, it’s precisely the reverse.
Meet the new boss, same as the old boss.
I fear that Tim Geithner will turn out to be Paulson Lite (similar feelings underpinned Bernie Sanders’ vote against his confirmation). Admittedly, Obama’s nomination had an initial soothing effect on the easily flustered markets, but that was a temporary balm and I don’t think Geithner is ready to deliver what we really need. This crisis calls for some fundamental readjustments of our economic system, not just a palace revolution. Paulson choose to refinance the very banks that got us into this mess, without any guarantee that they start lending, and without any governmental oversight, public seats on the board, or votes at the banks.
Now we have economists from this very same neo-liberal school (Lawrence Summers and Geithner) presiding over a breakdown of their own ideology.
At least Geithner talked some sense at one time:
A genuine solution means closing down the hopeless institutions and creating a more democratic system based on small to medium-sized banks, financial intermediaries that are less imperious and closer to the real economy of producers and consumers . . . [T] he bailout is proceeding backward. Instead of saving Wall Street first, government should devote its heavy firepower to reviving jobs, incomes and business enterprises. The banks will not get well or begin normal lending until there is overall economic recovery.
Perhaps he isn’t a total lost cause.
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