Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (164475)	3/27/2009 1:37:01 AM
From: Asymmetric	Read Replies (1) \| Respond to of 361726

Geithner Deals Wall Street a Can’t-Lose Hand: Margaret Carlson . Commentary by Margaret Carlson / Bloomberg / March 26, 2009 I feel like Rush Limbaugh now, because I really want certain people to fail: George W. Bush’s former economic adviser, Lawrence Lindsey, Nobel Prize-winning economists Paul Krugman and Columbia University Professor Joseph Stiglitz. All of them say the U.S. Treasury’s plan to buy troubled bank assets will lead to wrack and ruin. And when the trillion dollars to pay for it is gone, we won’t be able to afford the printing press to make more. These are smart people who must be proved abject failures at economic forecasting or else the future is as bleak as that tent city of unemployed men and women pitched atop a landfill in Sacramento, California. The once-Golden State, the world’s seventh-largest economy, governed by a movie star who’s married to a Kennedy, has more than 10 percent unemployment. Bankruptcy isn’t out of the question. There’s an old saying that everything that happens, happens first in California. As of last Monday, I’m rooting for Wall Street and conquering hero Timothy Geithner. What the Treasury secretary had to do for the market was shift from planning to have a plan to actually having one. What a beautiful sight to see that small arrow in the corner of the television screen tracking the stock market as it pointed up, not down, while the man with the fate of our finances in his hands spoke. Suddenly, Geithner’s boyish hair brushed so high you could run a tickertape across his forehead was less a callow youth than a child prodigy. The rapid torrent of words weren’t coming from the smart kid who’s done his homework but from a fiscal genius so full of answers they pour out fast. Cut the Testimony I’m always happy when the man who can move markets pulls up his socks and makes a good impression. Yet for everyone’s sake, his appearances before Congress have to be shortened. It isn’t good for us to have the secretary of the Treasury being asked inane questions by lawmakers who last week put their pitchforks down long enough to use the tax code like a guillotine. The anger at rewards going to people who got us into this mess is understandable. The solution isn’t. To love Geithner’s plan, you have to embrace his philosophy that what’s good for Wall Street is good for America. Under it, bad banks and the bad bankers who run them will get bailed out, bonused up and bankrolled for another roll of the dice at the high-stakes table in what’s called the “legacy securities” program. Different Casino This casino differs from those in Las Vegas in that the bank plays with Other People’s Money and if anyone loses, it’s on the house. And oh yes, dear taxpayer, we’re the house. Without even the momentary thrill of placing chips on the table, the taxpayer picks up the tab. The individual investor can’t play at that table called legacy securities, where toxic assets are rebundled into megamillion-dollar chunks, unless he has a brother-in-law who works at Goldman Sachs Group Inc. or a hedge fund, and maybe not then. You can’t go up to the teller’s window or call a broker and spin the wheel. Easy credit, huge upside and limited downside are for high-flyers only. The big worry of Krugman, et al., is that the government is kicking the can down the road on pricing these toxic assets for fear of finding too many insolvent banks they will have to take over. That day will come in spite of Geithner’s plan. Leveraging Other People’s Money got us in the trouble we’re in. A year from now, members of Congress besieged by angry constituents suckered again may lock and load anew trying to do something about the windfall that went to Wall Street while the economy remained frozen for Main Street. Rooting for Geithner Still, we’ve got to hope Geithner prevails. In an op-ed in the New York Times yesterday, “Dear A.I.G., I Quit!,” Jake DeSantis, an executive vice president at American International Group Inc., argued that he shouldn’t be hammered for his after- tax $742,006.40 bonus because he wasn’t involved in the toxic credit-default swaps. Dear Mr. DeSantis: I sympathize -- with these reservations. We’re all paying for the sins of others, especially the ordinary American taxpayer with no hope of getting a dime. The fact you can claim that much money from a company on the brink of collapse is testament that the world is completely out of kilter. The game -- not just the collateralized-debt obligations -- was rigged in your favor, spinning off enough money to pay elected officials not to regulate you. If it weren’t for the taxpayer, AIG would have gone the way of Lehman Brothers and you would get nothing. Nice Gesture It’s a kind gesture for you to give it to charity. But rather than to a charity of your choosing, why not just return it to the taxpayer, or go tent-by-tent in Sacramento passing out your bounty? Life isn’t fair, as you found out, but it’s more unfair to some than to others. Lots of people are rooting for the guys who got us into this fix because they are the fortunate few designated to get us out. We’ll feel sorry for you when we have an ounce of sympathy to spare.