Of the $245billion TARP gave to banks, Treasury has recovered about $244billion. Treasury is selling the $140 billion in "toxic assets" it acquired during the financial crisis and expecting a $10billion to $15billion profit. AIG has offered to buy back Maiden Lane II assets AIG transferred to the Fed during the crisis for a $1.5billion profit to the government. Other parties want to bid more. The Federal Reserve reports $80billion profit in investments ranging from the other assets the NYFed took over as Bear Stearns and AIG collapsed to the agency mortgage backed bonds purchased for quantitative easing. GM continues to reopen closed factories. Compared the the Reagan era Resolution Trust Find, TARP is stunning success for the public. We should have been advocating for TARP to be used as a revolving development bank, but instead we got stuff like this:
"Not only are the mop-headed weenie of a Treasury secretary's fingerprints on virtually all the gross giveaways in the new reform legislation, he's a living symbol of the Rubinite gangrene crawling up the leg of this administration. Putting Geithner against the wall and replacing him with an actual human being not recently employed by a Wall Street megabank would do a lot to prove that Obama was listening this past Election Day.The things to notice about this passage is that it is entirely without any liberal economic content and is fully compatible with core Republican messaging.
Let's dig up the points Taibbi is making:
- "mop-headed weenie " - Democrats are effeminate and weak. Classic!
- " gross giveaways in the new reform legislation" - reform is a fraud, how's that hopey changey thing working out for you.
- "living symbol of the Rubinite gangrene crawling up the leg of this administration" - Bill Clinton is responsible for the economic collapse. Also note that, for example, Geithner presided over the auto rescue where the largest unionized industry was saved and bondholders were forced to take a back seat to union health/pension benefits. Hardly Rubinite, so ignored.
- Putting Geithner against the wall and replacing him with an actual human being" - violent and literally dehumanizing rhetoric.
- "replacing him with an actual human being not recently employed by a Wall Street megabank"Geithner actually has never worked for a "Wall Street megabank", he's a career civil servant, but that's the least of it.
- " would do a lot to prove that Obama was listening this past Election Day." - out of touch Democrats don't listen to the public
The losses from the Fed's purchase of distressed/crap Bear Stearns assets (Maiden Lane I) and AIG assets (MaidenLanes II and III) alone were as recently as late July calculated in the $8.6 billion range, and even that number is very conservative. Then there's the trillion or so dollars that the Fed used on buying up mortgage-backed securities and Treasuries; we don't know what their market value is now. And there are untold trillions more the ...All of that was crap but shows the technique: a false claim that the Democratic administration has screwed up which can then be used to show that the explanations offered by the Democratic administration must be lies. The same technique can also see in the following snippet of wisdom from Duncan Black (Atrios). Here's a typical sample of his inspirational and suave approach:
Ponies In The Shitpile Aside from setting up an overly complicated plan to try to disguise what they're really doing, the utility of the Geithner plan rests (or pretends to rest, not sure) on one fundamental premise: that Big Shitpile is greatly undervalued by "the market" and that these mortgage securities really have expected revenues which justify higher prices. One could have reasonably believed this months ago, I have no idea why anyone would believe this now. The housing bubble burst, and now recession is here. There's a lot of shit to be eaten, the question is who will eat it? Timmeh wants to make sure it's not the banksters.Points:
- "Aside from setting up an overly complicated plan to try to disguise what they're really doing" - the Democratic Administration is lying (note the absence of factual material introduced to support this claim)
- "Geithner plan rests (or pretends to rest, not sure)" - Obama's administration is dishonest
- "one fundamental premise: that Big Shitpile is greatly undervalued by "the market" " - The premise of this criticism is that in the middle of a panic "market value" means something about "actual value". Not only have events shown Geithner's analysis to be correct, but this theory would have made J K Galbraith and Keynes laugh hysterically. While followers of the "efficient market hypothesis" have insisted that financial markets have Godlike powers, the liberal idea has always been that financial markets are made up of people who are often motivated by errors, delusions, ideology, confusion, and bad data. Especially in the middle of a bubble or a panic, pricing has no relationship to any rational "value". In a panic, the irrational fears of investors are amplified as falling values for assets trigger demands of creditors for cash which must be met by selling assets which puts even more pressure on the market. Here we see an idea of the far right being used to belittle the programs of an essentially Keynsian centrist.
- "here's a lot of shit to be eaten, the question is who will eat it? Timmeh wants to make sure it's not the banksters." - another plug for the the banker conspiracy theory so fundamental to right wing populism plus that demeaning approach so characteristic of right wing PR.
When the government prints money, it reduces the ability of investors/banks/etc to demand a high price for loans or investments. Amazingly, some of our "progressives" have joined with the Ron Paulists and goldbug nutbars to attack the Treasury and Federal Reserve bank for making money cheaper. Cheap money is the traditional demand of liberals. Cheap labor and expensive money is what the right wants. So, of course prices for high interest rate mortgage bonds have gone up when other sources of income from money have become scarcer - why is that bad? Since Mop Headed Weenie wasn't as stupid as Cool Matt or Cool Duncan, he didn't lose his head and panic too. And that helped us avoid a complete economic collapse. What it didn't do was create a significant initiative to build a fairer and more environmentally sustainable economy. For that you need popular pressure for reform. A popular campaign demanding for example that the public owned AIG offer low cost health insurance might get somewhere. A campaign for an end to the oil depletion allowance and tax credits for companies that move jobs abroad accompanied by demands for making capital available to manufacturers who pay decent wages has some chance of producing good results. On the other hand, a campaign demanding that "Banksters" go to jail and that the Democratic administration fire competent employees based on fake scandals and Republican themes has a good chance of producing good results for the far right. And that's what we got.