Paul Krugman: The Big Dither

Last month, in his big speech to Congress, President Obama argued for bold steps to fix America's dysfunctional banks. "While the cost of action will be great," he declared, "I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade."

Many analysts agree. But among people I talk to there's a growing sense of frustration, even panic, over Mr. Obama's failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.

Here's how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.
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The truth is that the Bernanke-Geithner plan - the plan the administration keeps floating, in slightly different versions - isn't going to fly.
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.. and Krugman explains why.

More at link.

One word: Nationalize!

You talk initially about Pete Peterson but the real story here is AIG.

The AIG story is yet to be told in full.

Here is Margaret Popper with Ernie Csiszar of the University of South Carolina who says AIG cannot pay back the $157 billion plus we have given them.

On 9/15/08 Paulson set the heist in motion. The initial $20 billion was for what AIG owed his good buddies at Goldman.

Here from 9/27/08 is Gretchen Morgenson in the NYT.

Here at Naked Capitalism also from 9/27/08

Here from 9/29/08 is Bloomberg.

Mark Pittman in the Bloomberg article is most expansive. According to him:

AIG held $441 billion in Credit Default Swaps. These were used by the counter parties to create synthetic CDOs. If AIG went down all of these CDOs would have been at risk.

The initial CDS is written against an asset backed CDO, typically a risky tranche. The CDS is used as collateral to create out of thin air another CDO.

This CDO is then sold at face value, the nominal value being used to buy treasuries. The synthetic CDOs were rated as AAA and thus paid the minimum return even though they were predicated on a risky asset.

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Here is Margaret Popper of Bloomberg from Feb 21, '09 in an analysis and discussion with NY Insurance Superintendent Eric Dinallo who is charged with the oversight of AIG.

He categorically states that AIGs losses are from Credit Default Swaps. Their Financial Services Unit is essentially a hedge fund that ran amok.

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This week Dinallo in another interview with Margaret Popper let slip in a tangential fashion that AIG has $475 billion in swaps on their books.

This was a live stream - they haven't released a clip as of yet.

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Pittman in the Sept Bloomberg article expected a forensic examination of what had gone on with AIG.

We are still waiting. This is a swindle of massive proportions.

President Obsma must admit a mistake and take this assclown and fire him. And Summer's, too.

He's clueless on the economy. Now, I can't say how good he is in the men's room, you'd have to ask Ruebens and Peterson. Just sayin... Can we have economist's who might actually have a clue and were right about shit? Like Krugman and Roubini. But, NOOOOOOOOOOOOO!!!

No, instead, you have the water-boy to the rich-kid's in charge of regulating them. He wants to be part of the in-crowd. And his former coach - Summer's.

FIRE HIM!!!
NOW!!!!!!!!!!!!!!!!!!!!!!
And toss Summer's on his fat, fucking ass, too.

I love him, but Obama is way too tied in with the Chicago School of Economic's crowd that was the whole, entire, sole, reason we are in this fucking mess anyway (read "Shock Dctrine" to find out more).