Marshall Auerback here.

Unlike Ed, I like to call a spade a spade regarding the Obama Administration’s economic gurus. The more they screw up, the greater the number and depth of the crises, the greater the responsibility/ power Obama gives them. I wonder what he’d do if they ever succeeded? You can’t assume independent probabilities when you have the same actors making policy (and not learning from their past mistakes).

More broadly, you can’t assume independent probabilities even with different policy makers if they share the same theoretical priors and methodological blinders. It is very worrying is that neither Geithner, nor Summers display any obvious remorse or sense that they made contributed to the current mess, thereby making it impossible to believe that they actually understand how to get us out of it. It reminds one of George W. Bush’s reluctance ever to acknowledge an error (and look where that got us).

Geithner and Summers are far more likely to doom Obama’s Presidency. There is no hope for Obama if he continues to embrace neo-Rubinism as his governing creed.

Marshall Auerback here. As Ed lucidly suggested to me by e-mail:
“We see the Fed giving a loan for assets at the price as reported on the institutions’ books. Otherwise, you have to take a write-down just to get the loan. That’s a non-starter. So the Fed is going to take the [...]

James Galbraith, a well-known professor at the University of Texas-Austin has joined Paul Krugman in declaring Barack Obama’s nearly $800 billion stimulus plan too small. Below is a video from the Wall Street Journal explaining why the stimulus is not enough and what needs to be done with the banking plan.

Chris Whalen is a well-respected banking sector analyst who often appears on CNBC and Bloomberg. Below he gives his view on Barack Obama’s stimulus package speech and the need for banking sector restructuring. Below that is a video of President Obama’s speech (he does a lot of thank yous before getting to the [...]

If you recall, a few months ago there was a lot of speculation in Washington about Paul Volcker being named a ‘car czar’ to deal with the problem with the Big Three automakers. That idea has fallen by the wayside. President Obama has named Larry Summers and Tim Geithner to head his auto team.
Obviously, [...]

The title of this post is fairly provocative and categorical. This is by design. For I see Obama’s banking plan as more of the same — not ‘change we can believe in.’ And we all need to be clear about the need for Obama and his team to correct their course of action. Whilst there may be plenty of other reasons to support the President, this is not one of them.

We are barely two weeks into Barack Obama’s tenure and reports are surfacing everywhere that his “team of rivals” is at each other’s throat. President Obama had said just after the election that he was looking to pull together the best and the brightest. However, this strategy comes with a cost as the outsized egos assembled in his team are starting to jockey for political position.

A well-informed reader alerted me to the latest and most depressing story, which involves former Harvard President and Treasury Secretary Larry Summers shunting aside legendary ex-Fed Chairman Paul Volcker. Summers is trying to exclude Volcker, who is legendary for righting the U.S. economy after the stagflation of the 1970s. If he succeeds in sidelining Volcker, we will be the worse for it.

Government policy must be well-crafted in order to avoid negative unintended consequences that arise when the government inserts itself into the private sector. And this is where I am having a problem with the Obama Administration.

Recently, Tim Geithner’s comments about currency manipulation put me over the top; I felt compelled to give you my seven reasons to be skeptical about the policy course now being charted.

Marshall Auerback here. Now that Barack Obama has been inaugurated, we should actually look back to 1933 to get a sense of perspective. How did Americans see the economy at the Inauguration of Franklin Roosevelt? The short answer is that Americans were actually anticipating worse to come in 1933, but Roosevelt delivered on his promises? I do not expect the same from Obama.

You may have already seen the Warren Buffett interview on Dateline from last Sunday. In it, he gives a sober analysis of what to expect from the new Obama Administration in terms of economic policy. The long and short of it is that we shouldn’t expect a miracle turnaround. The recession will be deep and protracted regardless of how well Barack Obama’s team deals with economic issues.

Below is the video of Buffett. The transcript is linked as a source.