John Stewart Schools Timothy Geithner In Economics

Watch Jon Stewart at his best: Geithner. It’s a 3-part interview with a 5-part extended interview.

Timothy Geithner is making the talk show rounds plugging his new book. Geithner is a typically, tone deaf political economist who was one of the primary constructionists of two economic policies which led to and has perpetuated the effects of the crash of 2008. Watch his body language as he insists the Obama administration did the only thing possible to help the economy recover while Stewart keeps calling him on his bullshit, requiring Geithner to reset and try to throw it again.

Geithner is not a people person and it shows. He has been around economic theory, growing up living a privileged life; he has never known poverty. Throughout most of his childhood he lived abroad; throughout his education, his focus was on Asia, not on the USA. He went to two universities in China and then majored in and got advanced degrees from two American schools in Asian and international studies. His entire career has put a firewall between him and the average person,. He’s all economic theory and no personal knowledge or experience with or—I think—any true compassion for the plight of the people who suffer as a result of economic policies he put in place.

After the 2008 economic meltdown, what was his primary concern? He wanted to avoid setting off a bank panic, or even making them slightly nervous. That’s why he insisted the banks be given all that free money with absolutely no restrictions or federal controls. He smugly claimed to Stewart that the banks paid back all those loans with interest; therefore, the taxpayers made a profit. Really? Was that profit shared with all those homeowners who lost their home because banks like Bank of America, Citibank, and JP Morgan Chase refused or delayed to refinance homes, denying or delaying applications for refinancing under HARP? Over and over again you see Geithner try to run, but he can’t hide from Stewart.

To him, the economic problems of the poor and the middle class are theoretical. So, no matter how much he tries to argue to the contrary, Stewart is right: TARP gave no-strings-attached money to the banks hand-over-fist, and then allowed them to borrow money at the discount window for 0% interest and make 3% interest on that same money. Yet despite both TARP and HARP (Home Affordable Refinance Program), homeowners were foreclosed on in record numbers—many through fraudulent and illegal means—and the banks were left off the hook by paying plea-bargained fines which amounted to pocket change for them.

Even in the face of overwhelming evidence to the contrary, Geithner insists the Obama administration did the right and the only available thing to fix the economy. Tone deaf, again. And this speaks volumes about Obama because he was the one who hired Geithner as Secretary of the Treasury, to work beside Larry Summers, the Clinton retread who gave us unregulated derivatives and the repeal of Glass-Steagall during the Clinton years which directly lead to the 2008 crash. While Stewart did a great job of nailing Geithner to his own cross, even better than Stewart, I’d love to see Paul Krugman and/or Robert Reich debate Geithner over his book. Both of them would bring along their good friend, John Maynard Keynes (in spirit), who I believe would have loved the opportunity to go a few rounds with Geithner on TV. Talk about REALLY being schooled…

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Paul Krugman Keeps It Simple For Stupid People

I’m going to borrow a phrase from Paul Krugman’s excellent book. “End This Depression Now!”: “Your spending is my income and my spending is your income.”

Yes, it’s that simple.  So when John Boehner claims “We’re broke” and insists on cutting federal government spending, when President Obama buys into this, when the banks refuse to lend out money, when  the Irish and British governments but themselves on an austerity diet, when Angela Merkel of Germany puts the monetary  screws to Greece, Italy, Spain, Portugal, etc., they’re all missing that obvious, simple point.  In order for people to spend money, they have to have money.

So with this simple logic, how illogical is it for Boehner and the Republicans to insist on cutting unemployment benefits, food stamps, cash aid, Social Security, government spending on infrastructure repair, public works projects, light rail and high speed rail projects, and for Republican governors to refuse to accept federal funds for these projects? The answer is incredibly as well as stupid as well as venal.  Boehner’s and the Republicans’ only objective in cutting spending (and the deficit) is to keep unemployment high and GDP low so that Obama is held to a mere four years in office.  Yes, it’s that simple.

In any recession or all-out depression, the only way out is to put money into people’s pockets so they can go out spending—and saving—thus infusing cash into the economic system, which is like filling up a car’s gas tank with fuel so that it can run at top speed for another several hundred miles (or charging up your Chevy Volt to get another 50 miles down the road).  The only reason why the 2009 $787 billion Obama stimulus package was not nearly as successful as it would have been is that it was substantially lower  than the $1.8 trillion that his former chairperson of the Council of Economic Advisors Christine Romer insisted that it should have been—at a minimum.  Think of it this way: if someone hands you $50 or $150, which amount will enable you to buy more stuff?

It’s in vogue for right wing economists to denigrate John Maynard Keynes. That’s because his theories work and theirs don’t, and those right wing economists aren’t working for people, they’re working for corporations who are people too, my friend. They’re working for the Kochs, for the Murdochs, for the Adelsons, for any filthy lucre-rich old white guys you’ve got.

“Your spending is my income and my spending is your income.”  The simple, basic truths in life have a beautiful symmetry to them.  Boehner and Merkel can probably not be taught that the less money government infuses into its economic system, the less money people will plow back into it.  This notion of austerity totally forgets the concept of profits, which is what helps a market grow.  You grow or make something for $5 and sell it for $10, you’ve got $5 more to re-invest in your business or perhaps you take that profit and spend it at someone else’s business, which means they need to buy more product and hire more people to sell it, and more people are hired to deliver the products and more money flows on down the line. And this is what Obama was saying if you look at his complete, in context statement about small businesses not growing by themselves. There’s a whole bunch of interdependencies going on, and infrastructure, security, utilities, and what I’ve already mentioned are all part of it.

I know that people who watch and listen to Fox will never get economic theory but this is a simplified as I can make it. The Republicans and right wing economists, heads of state like Merkel all want to protect a small, wealthy class by keeping as large a class of other people poor.  Poor people do what they’re told so that they don’t lose what little they have.  Poor people look up to wealthy people because they have to be touched by the hand of God to have become so rich. Poor people worship rich people, until that worship turns to envy, which turns to resentment, which turns to anger, which turns to revolution, which results in the overthrow of the ruling class and the redistribution of wealth. Well, mostly anyway.

But we don’t need to take it as far as all that.  Just repeat the simple, friendly mantra to your Fox fan friends and maybe they’ll get it along with all of you: “Your spending is my income and my spending is your income.” Thank you, Paul Krugman.

Obama’s Two Mistakes

I have had my issues with President Obama.  To me, he has caved in so many times he has miners trapped inside him.  (A tip of the hat to John Fugelsang for that line.).  Well, I’m currently reading a book—which I highly recommend—by Noam Scheiber titled “ The Escape Arti$ts: How Obama’s Team Fumbled the [sic] Recovery”.  It’s been eye-opening.

Although it is true that Obama is a better chess player than poker player (although he strategizes long term, he tends to show his hand early) I now believe Obama has always been sincere in wanting to work with both sides of the Congressional aisle because that was his modus operandi in the US Senate.  It’s also very clear where Obama made his mistakes in this administration because he made two huge ones.

First, for some reason he idolized Bill Clinton and thought his economic team walked on international water, the way the averted global financial collapse and all back in the 90’s.  The fact that what Clinton’s team did led directly to the stock market and banking collapse of 2008 either got by him or by that time since he had his team in place all Obama could say was “Oops.”  What bothers me is the fact that Obama, acknowledging he knew next to nothing about economic policy, looked around and he thought he saw the best financial minds in Goldman Sachs, Citigroup, JP Morgan Chase (to Obama, Jamie Dimon is THE guy), and career US Treasury guys.  The fact that these guys all placed the welfare of global economies, Wall Street and the banks over people (so what if a few million people lose their jobs,  as long as investors are happy and their dollars are safe) EVERY time, didn’t give him pause.  Well, he did pause long enough to appoint Christine Romer as his chief economist; she being the only one who didn’t consider John Maynard Keynes the economic  Anti-Christ.  But as it was, Romer advised a minimum $1.8 trillion stimulus but the Obama team decided $775 billion was all they could go and we all know how that turned out.  Like much with the Obama administration, it could have been better.

The 2nd mistake was in figuring that since he was being noble and sincere in his outreach to the Republicans to work with him in a bi-partisan manner, they would be, too.  It’s hard to believe that a politician as astute as Obama could have totally misread the Tea Party, but misread them he did.  Or maybe he thought that when Republican Senate Minority Leader Mitch McConnell publicly stated that Job One would be holding Obama to a single term as president he had his fingers crossed behind his back.  No, he didn’t have his fingers crossed behind his back, he had both hands in front of his body and was sticking the middle fingers on both hands up at Obama.

For me, “The Escape Artists” has rounded out the picture of the man.  I’ve made the mistake of assuming the image presented of Obama was the same as the man.  I believe Obama knows what he doesn’t know (but doesn’t take it to absurd lengths ala Donald Rumsfeld) but he needs to be less trusting that there’s basically only one small group of guys who do know what he doesn’t know and they know it the right way.  Obama chose the wrong Robert among the ex-Clintonites when he went for Rubin instead of Reich.  If Obama can be heard above the right wing noise machine, he should be able to fix his mistakes during his second term.