The Obama-Geithner Plan will fail

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

World Economic Forum: Experts voice their views on the economy

Below is a good video clip from the recent World Economic Forum in Davos. The speakers are addressing the issue of how they see the global economic outlook going forward. The moderator who begins the discussion is Martin Wolf of the Financial Times, who I quoted in a recent post.

This clip comes in at one hour in length, but is definitely worth a watch because it gives you a good sense of what some very smart, very well-connected people believe. You should note that Martin Wolf himself does not believe the Obama bailout package is going to get it done

Did Tim Geithner blow it?

Politico asked a bunch of pundits from across the political spectrum to size up U.S. Treasury Secretary Tim Geithner’s performance in explaining his plan for rescuing the U.S. banking system. They were asked, “Did Tim Geithner blow it? What should he do now?” One pundit, Jeffrey C. Stewart, had a memorable response (Hat tip Dave): Yes,

Treasury Secretary Geithner explains the bailout package

I will dispense with the commentary and let you judge for yourself

A conversation with Bridgewater Associates’ Ray Dalio

Update: 18 Mar 2008. I am reposting this entry from Feb 10th because it is relevant to the need to liquidate insolvent institutions like AIG that are now getting bailouts

What is an economic depression?

Depression is a taboo word in the English language. Its mention conjures up images of bread lines, shanty towns an general misery from the 1930′s. Yet, the D-word is making a comeback amidst the backdrop of a weak global economy. In fact, a growing number of pundits are calling this economic malaise a depression. But, what is a depression, really

IMF Head Strauss-Kahn uses the D-word Depression

You may have picked up on my change in terminology recently. I have gone from calling this rough patch in the global economy a rough patch, downturn, recession or some other euphemism to labeling it a Depression. Now, I am doing that for effect in part. Thinking of this as a longer-term downturn focuses one on mitigating downside risk rather than waiting for the eventual rebound. I think this is what we need to do.

However, I do believe it will be a depression in all likelihood — although we are not there yet. What I find interesting is that a number of prominent figures have started to voice the same beliefs in public. David Rosenberg of Merrill Lynch was the first. And even UK Prime Minister Gordon Brown let the D-word slip from his mouth. Bond King Bill Gross recently said it was a depression with a small ‘d.’ Now, we can add Dominique Strauss-Kahn to the mix

Bill Gross: This economy requires a check from the government

Bill Gross, the man who controls the largest bond fund in the world, believes that trillions of dollars in government spending will be necessary to get the economy going again. He warns that if the government does not spend trillions of stimulus to boost the economy, the U.S. and global economies could collapse. Now, on

Marc Faber: The economic crisis is a consequence of U.S. government intervention

Marc Faber thinks it would better to nationalize the banks rather than bail them out. In his view, we are seeing special interests feeding at the trough

Seven reasons to be skeptical of Obama’s economic plans

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

Crony capitalism in U.S. banking bailout should end

There is no way to look past the way that the U.S. TARP (Troubled Asset Relief Program) has been administered and not understand we are seeing crony capitalism at work. One only need look at the way the British are doing things to see a true banking bailout which limits moral hazard and regulates against poor behavior.

President-elect Barack Obama has signaled he intends to bring the same methods to the United States. These are issues I have mentioned in prior posts regarding using historical precedents as a guide to administering America’s TARP program and setting up a framework for a comprehensive banking crisis solution. The following steps are what are still needed in the

The problem with comprehensive banking crisis solutions

I have come down on the side of sweeping change when it comes to the banking system in the United States. Basically, I fear a further downward spiral due to the fear and panic that the banking crisis has unleashed. In my view, this necessitates a comprehensive solution, one which we have yet to see. However, there is one problem with comprehensive solutions I would like to highlight: asset confiscation