A condition of conflict or anxiety resulting from inconsistency between one’s duty as regulator and one’s actions
Martin Wolf of the Financial Times has issued a damning assessment of the Geithner bailout package. His main criticism is that Geithner’s aims are the same narrow set of goals set out by the Bush Administration of working through this without nationalization and bondholder losses. Add in another new constraint of no new funds from Congress and you have disaster in the making. Apparently, the markets agree: stocks and commodities sold off on the news of the package.
Below is the heart of his argument followed by a link to the full article.
I will dispense with the commentary and let you judge for yourself.
Caroline Baum has a good column today at Bloomberg.com regarding public anger in America. She correctly states that the American public is not just angry at Wall Street, but at what Wall Street represents in terms of special interests, favoritism, privatized profit, and socialized risk. The U.S. Congress should not misread public anger as an opportunity to get on their […]
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.
I watched the proceedings of the UK Treasury Committee with HBOS and RBS this morning on Bloomberg UK TV and it was a dismal sight. It had the feel of the Nuremburg trials, honestly. The clip below doesn’t do justice to how tense the atmosphere was.
I will say this: these men from HBOS and RBS ran very aggressive organizations, piling in to all manner of risk at the top of the market. While they dissemble and prevaricate, it is plainly obvious that they did not see the risks in their actions, nor did they want to.
This video from the Wall Street Journal demonstrates what happens when governments go bankrupt.
Nouriel Roubini, nicknamed Dr. Doom by the media for his accurate but downbeat calls on the economy, is not presenting a very upbeat scenario here. He says that even if everything goes well, growth in 2010 will be very poor. It will feel like a recession. The Bloomberg journalist interviewing him in this video is skeptical. You can see that […]
It seems that the Obama Administration is playing hardball with GM and Chrysler. They may force the companies into bankruptcy to protect American taxpayers from having to pony up yet more money for the beleaguered automakers. I see this as a positive development — although a pre-packaged Chapter 11 solution is the way this should end (a messy bankruptcy could […]
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?
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.
Last week, Willem Buiter sized up the U.S. and the U.K. and found their desire to enact deficit-financed fiscal stimulus not credible. The attached video does a better job of summing up the mood Buiter invokes and the need for prophylactic protection from so much stimulus.