Krugman is NOT alone.

[girl gone mad]

Joseph Stiglitz, Nobel Prize winning economist professor at Columbia University, former Senior Vice President and Chief Economist of the World Bank, chair of the President's Council of Economic Advisors in the Clinton administration. Stiglitz is the economist most frequently cited in papers by other economists.

http://www.cnbc.com/id/29848741">Stiglitz says the Geithner plan robs taxpayers:

The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

"Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."

Even if the plan clears banks of massive toxic debt, worries about the economic outlook mean banks could still be unwilling to make fresh loans, while the prospect of a higher tax burden to pay for various government stimulus plans could further undermine U.S. consumers, he said.

James K. Galbraith,The son of renowned economist John Kenneth Galbraith, Chair of Economists for Peace and Security, served as Executive Director of the Joint Economic Committee, professor at the Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin

http://www.businessinsider.com/henry-blodget-james-galbraith-geithner-plan-extremely-dangerous-banks-massively-corrupted-2009-3">Galbraith says Geithner plan is "Extremely Dangerous," Banks "Massively Corrupted"

Professor James Galbraith didn't pull any punches on TechTicker this morning. He hates the Geithner plan, calling it "extremely dangerous." He says the banks may game the plan to bid up the prices for their own crap assets and that getting bad assets off their books won't get them lending again.

Like Paul Krugman, Galbraith thinks the FDIC should just put the banks into receivership and have the banks' subordinated bondholders pick up some of the cost of restructuring them.

These are two economic giants of the left. If you want to destroy Krugman, keep in mind you'll have to slay them, next.

[terisan]

1. Top Liberal economists are sounding the alarm . nt

[truedelphi]

2. NO he's not alone, but he IS marginalized. n/t

[Better Believe It]

13. Conservatives and "centrists" are trying to marginalize Krugman but it's not working!

The more they attack progressive and liberal economists the bigger the hearing they get.

[truedelphi]

54. That is good news to me. n/t

[JDPriestly]

62. Be sure to watch Cenk's interview of Galbraith. It is posted on

the video section of DU. It is excellent.

[ihavenobias]

80. Amen. And funny enough I just wrote a post elsewhere about The Krugman Strawman.

I wrote it before I saw this and I'm glad I'm not the only one.

[katty]

74. yup

[tavalon]

55. Um, no, not really

I don't know if you noticed but our supposed liberal media is using him to bludgeon our President this week, even though that isn't Krugman's intention. A marginalized person wouldn't have that much clout.

[SunsetDreams]

3. So your definition of destroy...

means that just because some do not give a green light to what Krugman or any certain other economist says, we are destroying them?
Krugman is one in a sea of many voices saying what should be done with the economy. It is an opinion.
Just because Obama, or anyone else for that matter, doesn't behold themselves to that person's opinion, doesn't make Obama wrong. It doesn't make Krugman necessarily wrong either. The economy is in dire straights, and who's to say who is right? We know what doesn't work, hence, the last 8 years.

[depakid]

6. "We know what doesn't work, hence, the last 8 years."

Goes back a little farther than that...

A few of us remember when the seeds of this mess were being sown- by some of the very people hired by- and attempting to be hired "to fix it."

Doesn't exactly inspire a lot of confidence.

[truedelphi]

25. I agree with your insight.

Having the same people aboard using the same strategies, without the necessary outright elimination of the financial instruments that got us into this mess (THE SIV'S CDO'S and Credit Default Swaps) That is a recipe for disaster.

And like you, I am not inspired, nor filled with a great sense of confidence.

[KittyWampus]

10. We DO know what doesn't work. The Japanese model that Geithner plan uses.

[truedelphi]

27. It also doesn't help knowing that Geithner pretty much finished off

The Asian economy after the IMF sent him there to help it into recovery (Back in '98 and 99)

Sydney Herald had a whole article about that recently.

[MannyGoldstein]

4. Most Economists And Most Of Europe Strongly Against It

Wait... sounds strangely like another president...

[Phx_Dem]

7. And Europe is doing so well so we definitely want to listen to

them.

[MannyGoldstein]

8. What, Specifically, Are You Referring To?

The fact that a middle class family only needs a single breadwinner?

[TwilightZone]

26. Fewer hours worked, more vacation, better healthcare, etc.

Yeah, sounds horrible.

[depakid]

48. That's one reason why they're balking on stimulus spending

Most European countries have workable safety nets in place.

http://www.nytimes.com/2009/03/27/world/europe/27germany.html

[Political Heretic]

42. Um... yes, actually.

:wtf:

They are kicking our ass on almost every indicator.

http://stateofworkingamerica.org

[Phx_Dem]

5. The difference is that the other two economists said

their piece and didn't continue with an onslaught of criticism AFTER the Geithner's plan was announced. Krugman can't seem to accept that IT'S FUCKING OVER. His plan was not selected.

Some economists agree with Krugman. Other economists agree with Geithner. But Geithner's is the plan that will be implemented.

[MannyGoldstein]

12. Which Economists Agree With The Paulson/Summers/Geithner Plan?

I don't know of any.

[Demeter]

60. Goldman Sachs

but then, it's their plan and their puppet, isn't it?

[cadaverdog]

67. Actually, a very well respected economist does

like the Geithner plan, with reservations. Nouriel Roubini is not a fan of the White House economists, but does have some positive things to say about the Geithner plan.
http://www.nydailynews.com/opinions/2009/03/25/2009-03-25_give_credit_to_timothy_geithners_new_tox.html
Roubini has long been out front on the current crisis.

[bertman]

68. Cadaverdog, go back and read what Roubini said. He put in lots of qualifiers and maybes.

He also said that if those qualifiers don't pan out this plan could be disastrous.

[girl gone mad]

14. The criticisms both came after the plan was announced.

I expect them to continue criticizing this bad policy. Why wouldn't they? Banks will be enriching themselves on the backs of working Americans. This is bad for the middle class.

[truedelphi]

28. Enjoy your $ 19 loaf of bread.

Coming soo to a grocery store near you.

[Hawkowl]

9. Giants.

These economists are simply giants with an almost unbelievable amount of respect among their peers worldwide. A lot of people view economics as simply a game of psychological expectations and irrational behavior. A kind of tinkerbell will live as long as you believe hard enough. To some degree, this is indeed true. However, there is a cold, hard, mathematical ruthlessness to economics. The Malthusian side. Where for example, if the banks simply have no cash reserves to back up any lending whatsoever, and still they pay themselves billions, the "billions" will no longer have any value.

Replacing the credit derivative private sector Ponzi scheme with a government run Ponzi scheme will not save the private banking system. It will simply destroy faith in the United States of America's government-- meaning destroying the worlds faith in the American people.

[LWolf]

11. K & R nt

[PBS Poll-435]

15. Who freaking cares?

THE FDIC IS BROKE. (And managed by either a crook or an idiot. Can't tell which yet.)

Obama/Geithner/Bernanke didn't listen to his suggestions or his plan. (Irrelevant)

[amandabeech]

45. The FDIC is not broke, and it never will be allowed to be broke.

The FDIC may borrow funds from Treasury which will then sell more Treasury bonds.

In addition, the FDIC funds itself by charging insurance premiums to banks, thrifts and credit unions for the insurance that the FDIC gives to their deposit holders. The FDIC sets the rate, and will recoup at least some of its losses by upping the insurance premiums on the banks that didn't get themselves into a real mess--which is too bad.

[PBS Poll-435]

46. The FDIC is broke

Hence Sheila Bair bringing her circus act before the House and Senate Banking/Financial Services Committees earlier this month.

Some member banks weren't even paying their premiums for the last 8 years.

[high density]

16. ????

We share in the profits but Stiglitz seems to ignore that.

The FDIC is going to govern these auctions and the price of the assets but Galbraith seems to ignore that.

Banks in receivership is 100% total risk on the US taxpayer. Geithner's plan ships some risk onto the private investors.

[asphalt.jungle]

20. I also love this line of reason from Stiglitz as to why it will fail

"I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."

so we don't get a reason on a technical level why it will fail. it will fail because there is a lot of anger out there and that will conspire to cripple it? huh? i don't like when academics wade into reading of the political tea leaves because they should be making comments that not any clown reporter writing for a newspaper can come up with. a statement like that should be beneath him.

[girl gone mad]

30. Stiglitz is not making a political argument,

he's making an economic argument.

It was a loss of faith in the banks which led to the run in the NW that triggered this crisis.

The most valuable asset any bank has is its reputation. These institutions are disproportionately dependent on the public trust. As any good value investor can tell you, a bank that's lost the public trust is fundamentally worthless.

ETA: This is the very reason banks are now rushing to give back TARP funds.

[jeanpalmer]

58. We get a small part of the profit

In the one example given by the Treasury on its website, the private investor gets 93% of the profit. The taxpayer gets 7%.

On the surface, it appears the private investor puts up 93% of the money -- the 7% "equity" that he invests and the 86% loan that he obtains from the public that he invests. But since the FDIC will guarantee the loan, the reality is that the government puts up 93% of the money to get 7% of the profit, and the private investor puts up 7% of the money to get 93% of the profit.

With respect to losses, the private partner is at risk of losing his 7% equity investment, just as the government is at risk with regard to its 7% equity. But any losses beyond the equity that would normally fall on the lenders will be borne by the government as the guarantor of the loans.

Again, this outcome is based on the one example given where the government allows 6 to 1 leverage. There are many other possible scenarios depending on the terms of the deal.

So yes, the government gets a small share of the profit for a much larger investment. It's really a misnomer to call such an arrangement a "partnership." As you say, it may not be such a bad deal given the alternative of receivership. And the government does manage to lay off a small part of potential losses onto the private investor. The real downside for me is that the taxpayer will be bailing out the bankers who contributed to the meltdown and who likely perpetrated a huge fraud.

[Pharaoh]

17. REGULATE !!

fricking morons!

[MarjorieG]

18. Why not try this pricing/ridding of toxic assets; we don't have the will, finances.

[MadHound]

19. Hmm. let's see here, two Nobel prize winning economists and one prominent economics professor vs

A couple of DLC/Clinton hacks(who are partially responsible for this deregulation mess), one of whom worked for the Federal Reserve and Council on Foreign Relations and the other who got into scandals involving accusations of racism and sexism.

Hmmm, I've always found it the best policy to follow the advice of those who are the smartest folks in the room. I think in this case that would be Krugman, Stiglitz and Galbraith

[truedelphi]

29. Hear. Hear. Let's support the policies that are efficient and will work

Not those that keep the Corporatist crowd elected.

[Rosa Luxemburg]

21. why don't these people offer to help rather than criticize?

[PBS Poll-435]

22. It's more fun throwing asparagus off of freeway overpasses.

nt

[Luminous Animal]

23. How would you suggest they go about that?

They are not working for the administrations nor have they been offered a job.

[Rosa Luxemburg]

81. no but they could call the admin. up and offer to help

[girl gone mad]

24. Why do you assume they haven't offered to help?

Stiglitz has been an economic adviser to Obama, as has Krugman. I'm certain Galbraith would be happy to advise the President, if asked.

All three of these economists have devoted their time to and expertise to analyzing the crisis and proposing solutions, which they have published freely on the internet and elsewhere.

In light of that, I don't understand your criticism.

[Rosa Luxemburg]

82. in the past why not now?

[depakid]

33. These folks were on the "losing" side of the schism that occurred during the Clinton Administration

Clinton opted for center right economic and regulatory policies- many of which mirrored the old Republican laissez faire attitudes that held that business should be left alone to "innovate" (and abuse consumers and each other) merge with impunity, outsource workers and police themselves.

Those who didn't buy into that line of malarkey found themselves on the outside- and that would appear to be where they're going to remain.

[Raineyb]

35. Probably because they're not being listened to.

Unfortunately it's not that much of a surprise considering the number of DLCers who are on staff. I didn't like most of the treasury picks and I had originally held my tongue on Geithner but I've about had it with him. His plans show exactly where his concern lies and it's not with people on Main Street.

Regards

[Jefferson23]

66. Obama did consult with Stiglitz during the campaign, Stiglitz can't

force Obama to use his advice.

[cliffordu]

31. He sleeps with a cat, as do I, so I guess he has his good points, too....

He is still a self-aggrandizing bloviating ass, unfortunately....

[cadmium]

32. He is the only one being a Dick. On that he is alone.

We have mentioned that a million times in the Krugman noise that other left leaning economists agree on the merits, but Krugman's obvious grudge actually hurts the cause he purports to advocate. Putting people on the defensive does not win people over, in fact it usually makes things worse.

[ArchieStone1]

37. Stiglitz agrees on the merits?

explain. I don't think that a person who describes a move as "robbing the taxpayers" is agreeing on its merits.

I'm starting to believe that this simply a case of hatred against Krugman, judging by the fact that Stiglitz used harshest words yet nobody touches him.

[cadmium]

57. I meant Stiglitz agrees with

Krugman on the merits. I didnt mean that he agrees with the adminstration -sorry if not clear. That is the point I am making. Stiglitz is not being trashed because he has an honest disagreement with the policy.

Krugman seems to have a grudge which undermines his own arguments. He nitpicked Obama and advocated for his rivals all throughout primary season--so there are two messages 1. Is the merits of Krugmans ideal recommendations and laments and the other is the background message that he relishes thrashing the president. I think the meta-message is that Krugman sees a big opportunity to open up on Obama and is going for it.

Good article here on Huff post:

"The Krugman/Limbaugh Nightmare: President Obama Might Succeed" By Frank Shaeffer

http://www.huffingtonpost.com/frank-schaeffer/the-krugmanlimbaugh-night_b_180440.html

[emilyg]

34. kick

[FrenchieCat]

36. Krugman quote.....

...."Real experts, you see, tend to have views that are not entirely one-sided. For example, Columbia's Jagdish Bhagwati, a staunch free-trader, is also very critical of unrestricted flows of short-term capital. Right or not, this mixed stance reflects an honest mind at work. You might think that hacks would at least try to simulate an open mind -- .... But it almost never happens.

Of course, honest men can disagree, and they can also make mistakes. But it's still a good idea to tune out supposed experts whose minds are made up in advance." http://www.pkarchive.org/column/42300.html

[JayMusgrove]

38. So, you don't want to give American capitalism a chance...it's too

rotted that you want to make sure we never have a chance for community banks to make it in America.

You people only read headlines, and small articles, and never read a book, never ask really crucial analytical questions..you are just so happy NOT to be 100% WITH Obama. You don't want him to fail, and you think only YOUR voice will be the one, posting here on the DU, who will convince him he's not as smart as you want to be.


Give me a damn FCKNG break.......you people are pathetic........and so is Paul and Stiglitz and so many others who have never run for office, nor do they have a sense of the full scope of Obama in office.

Believe me, if there needs to be a time to nationalize the banks, Obama will do it, but until that day, you are just making no sense and posting bullshit you read and did not analyze given the America we live in today.

I hope you will go back and study history of the 1920's to the 1940's and figure this out with a real look at how America dealt with threats before, failed to figure it out from 1929 to 1945, and how Obama and others are fully aware of what you posters are NOT fully informed about.

Please stop posting threads that are intended to make us afraid, and post something based upon your reading 3-5 books on the great depression and how you know Tim Geithner and others are NOT aware of page 273.......or something about as ridiculous as this thread title.

Geesh, even Democrats who post here are not as smart as we give them credit for, please, people, grow up and read history, and read 4 or 5 pages of commentary a day before trying to sound an alarm like this thread tries to do.

[Political Heretic]

41. We've given it 30 years and seen nothing but bad results for ordinary Americans

Stagnated wages for the middle class, falling wages for the working poor.

Here's where we stand after thirty years of trickle up economics that have given the top 10% almost 80% of the entire nations wealth:

http://practical-vision.blogspot.com/2009/03/we-are-losing-america-right-before-our.html

It's time for a return to responsible market capitalism and an end to so called "american corporate capitalism" American capitalism is code for PLUNDER capitalism. It is poisoning our country and it is more than time to put ourselves back on a responsible and stable market track.

[JayMusgrove]

43. Shows how little you have read in the last 60 days

How many auto loans, home improvement loans, mortgages, etc have been granted.

You don't really realize that private enterprise CAN work in America, and 88% of banks can now lend money to worthy borrowers.

We won't see the results of this for 3-6 months, but America is already on the foundations of the rebounds, while we watch banks collapse on Wall Street, they probably SHOULD .......what happens on Main street in America, with bankers of integrity, and data of loans granted, we will see some good stories, by Christmas, not all rosey, but better than today.

Look around, don't just take corporate news as the total of reality.........you miss so much that way.

[Political Heretic]

44. You've completely missed my point.

Your post has almost no connection to my post.

How you define "can work" and I how I define it are vastly different.

I have no doubt that American can and will rebound -- right back to the same failed system left to limp along in rampant inequality and exploitation for another generation. :(

[JayMusgrove]

47. No, you need to learn how to headline your post with something more

relevant to your major point.

If you want to say the average worker was screwed, say it, don't talk about 30 years of blah blah blah.

[Political Heretic]

53. I'll talk about whatever the facts are.

And you can keep denying them, that's fine.

[Mojorabbit]

51. There are people on this board

who have posted their business lines of credit have dried up. I have two family members who are small business owners who have had the same thing happen to them which has given them the problem of not being able to buy inventory and they have great credit histories and high ratings. I know many people in the same boat. The banks may be able to lend but they are not doing it. I agree with both Krugman and the others who think this is a horrible plan. I also think that Obama's people may believe that the plan may be the only option at this point to keep from having banks right and left fail and a collapse of the financial industry. Time will tell on whether it works or not.

[eridani]

56. It can't work if it isn't regulated. Let's see the regulations first n/t

[bertman]

69. Jay Musgrove, you must be living in a different part of the country from me. My realtor

friends are telling me that they have buyers with 20% cash for a down payment, sterling credit history, major income and secure job yet the lending institutions keep coming up with more excuses NOT TO LOAN to them. This is not isolated. It is endemic.

[Fire1]

49. DAMN!! You've just got 389 posts but said a freakin mouth full!!!!

NAIL ON THE FUCKIN HEAD!!!!!:applause:

[girl gone mad]

52. Krugman, Stiglitz and Galbraith are all capitalists.

Geithner's plan amounts to Mussolini style corporate fascism more than anything. Socialize the losses and privatize the profits.

Your post is wholly undecipherable to me.

Was there a point somewhere in all of that besides "Shut up and go away because I don't like what you have to say!!"?

[druidity33]

61. wow...

I'm speechless at how much craptitude you just displayed.

:eyes:

[Tigermoose]

64. Nice post.

I too get exasperated with all of the armchair experts. One thing I always realize when watching and listening to Obama is that he is a very smart man. If anyone can get us out of this mess, it is him. He is extremely well educated and listens to many different perspectives before choosing his course of action. I'm sure he has listened to the suggestions by Krugman and others, but just because he didn't choose to go that route doesn't mean he is somehow a corporate stooge or ignoring Krugman and others.

[jenmito]

79. GREAT post, JM!

Good to see you here! :hi:

[Political Heretic]

39. Robert Reich and Robert Kuttner also - important voices on political economy

[BlooInBloo]

40. Nobody wants to destroy Krugman, you melodrama queen.

[PBS Poll-435]

50. SNARF

:rofl:

[antimatter98]

59. We have to get it: Populism and working Americans are under attack. n/t

[SlingBlade]

63. Joseph Stiglitz Chair of the President's Council

of Economic Ad visors in the Clinton administration.

So, Was Stiglitz the one who “Advised” Clinton to abandon what little Regulation was then in effect over Wall Street ?

[girl gone mad]

73. Most definitely not! That was Rubin..

you know, Geithner's mentor.

[Jefferson23]

65. Stiglitz is the one who convinced me this Geithner plan was not

in the best interests of the majority of Americans, not Krugman. Obama did consult with Stiglitz during the campaign. I'm sad to hear his input is not being put to good use.

[bertman]

70. Recommend. Thanks, girlgonemad.

[debbierlus]

71. Totally surreal seeing people on DU champion the same Bush economic policies...

Now that Obama want to implement them...

Although, as of late, it appears many on DU are opening their eyes...Health care & the economy aren't going to give him much luxury of time with the 'base'...

[noiretextatique]

72. predictable, actually

some of the biggest obama cheerleaders here are centrists/moderates and former clark supporters.

[fascisthunter]

75. indeed

[femrap]

76. Geithner worked for the Fed

and he is going to do anything he can to keep the status quo.

I don't see how sticking all of this bad debt with the taxpayer is going to do anything but create a Banana Republic of very wealthy and various levels of poverty.

I believe we're living The Decline of the American Empire. China owns us. Capitalism is dead. The only answer I see is local communities working together in cooperation to take care of basics needs such as shelter, energy, and food. Geothermal, some solar panels for the water and electric. And your own well water.

Our Dollars will be worthless. The rich don't care...they can afford $6.00 for a loaf of bread. The Corporations will own everything...they have put all of their competition out of business.

I need to go look at some pictures of kittens and puppies.

edited for clarity. and requesting pictures....PLEASE!

[Life Long Dem]

77. Okay

:crazy:

[inna]

78. K&R! nt