Golly, where to start? Guess I’ll begin today’s post with William Greider’s  grim view in The Nation that it’s Time For A Bank Holiday – our financial system is broke. Government officials seem to be playing a new version of “don’t ask, don’t tell,” except now the secret is that problems are so great that the $700 billion bailout budget is just a fraction of the size that it should be. Gulping insolvent institutions could completely swallow up the current bailout budget, while still leaving more than a $1 trillion of dodgy assets.

Greider’s account quotes an unspecified Levy Economics Institute publication that may be found here: Time to Bail Out: Alternatives to the Bush-Paulson Plan, D. B. Papadimitriou & L. R. Wray, Policy Note Nov 2008.

Glance next at a recent profile of the gentleman who will become the 75th Treasury Secretary of the United States: Tim Geithner. Generally speaking, Noam Scheiber paints a favorable portrait in the New Republic’s Obama’s Choice:

• … Geithner was a rising star in the civil service when [in 1993] he met Larry Summers [a Harvard professor and former World Bank chief economist, who] … had just taken over Treasury’s international arm… Geithner assumed his tour as Summers’s special assistant would be temporary and began casting about for a new post.
• [Government] colleagues later learned that Summers had asked …[Geithner] to stay on as his consigliere… Geithner was razor-sharp, but had an easy way about him… Geithner and Summers rose within Treasury, [and] Summers increasingly involved him in the most sensitive issues to cross his desk.
• Geithner generally gets high marks for his stewardship of the Fed over the last five years, particularly his longstanding calls for reforms that… would strengthen the system’s “shock absorbers”…, [and urged that there be] greater transparency in the use of complicated financial instruments, [particularly] …asset-based securities.

Grab your seat, though, because Scheiber identifies one area where Geithner might deserve a “black mark” as one year ago, several indications emerged that US banks were undercapitalized:

• “[W]hy wasn’t Geithner more forceful in urging the banks to raise money–or, if that was impossible, in making the case for government support?”

Given the glorious Wall Street response to Friday’s reports of Geithner’s appointment, it appears that most are willing to set aside capital-associated concerns, and get on with it. Gee, is that a good thing?

(Today’s post was brought to you by the Letter G.)

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I used to work with numbers for a living, but need to get a grasp on things as I  look for a job or at least my next ‘idea’.   Till next time.

REFERENCES [Accessed 21 Nov 2008]

 
W. Greider, The Nation – Time For A Bank Holiday, 12 Dec 2008.

 
D. B. Papadimitriou & L. R. Wray , Levy Economics Institute – Time to Bail Out: Alternatives to the Bush-Paulson Plan, Policy Note Nov 2008.

 
N. Scheiber, The New Republic – Obama’s Choice, 5 Nov 2008.

Title Consultant: Gangsta Josh.