The question answers itself, almost.

Geithner and Summers are doing exactly what they were expected to do.

The real question is, whose expectations are they fulfilling?

Why did Obama hire them?

The dudes should be fired — should never have been hired — less because of their bad judgment on the adequacy of the stimulus than becauase of their compromised ethics regarding the bank bailouts and continued support of a toxic securities market.

Yeah, there’s that too.

Hi Scarecrow,

“So why aren’t we all calling for the resignations of Obama’s top economic advisers, starting with Larry Summers and Tim Geithner? And why shouldn’t the country insist on their replacement by people dedicated to putting Americans back to work, maintaining vital services and relieving the suffering?”

I don’t know why we’re not. Maybe, for some, the honeymoon’s still not over. But I’m another calling for their replacement and accountability for being wrong. See: http://kmci.org/alllifeisprobl…../#more-221

They came with the money Obama took from Wall Street, kind of like when you move into an already furnished place….you take whatever you’re given and make the best of it.

But you can’t get rid of the owner’s shit.

Which prestigious university will close first?

Brandeis, because so many of its big donors invested with Madoff?

or

Harvard, because Summers directed the leveraging of a 37 billion endowment into a 6 billion debt? (his hires managing the endowment made around 30 million in bonuses)

Whatever positive change may come will happen in spite of Obama, not because of him.

Good question, and I am curious about your source for the Madoff/Brandeis connection. I believe I posted this on the Harvard swindle back when there were discussions about canning Geithner and Summers, but it is worth a second look in the context of Scarecrow’s OG.

http://www.forbes.com/forbes/2…..print.html

Harvard: the Inside Story of Its Finance Meltdown
Bernard Condon and Nathan Vardi 03.16.09, 12:00 AM ET

Stocks were tumbling last fall as the new school year began, but at Harvard University it was as if the boom had never ended. Workers were digging across the river from Harvard’s Cambridge, Mass. home, the start of a grand expansion that was to eventually almost double the size of the university. Budgets were plump, and students from middle-class families were getting big tuition breaks under an ambitious new financial aid program. The lavish spending was made possible by the earnings from Harvard’s $36.9 billion endowment, the world’s largest. That pot was supposed to be good for $1.4 billion in annual earnings.

Behind the scenes, though, a different story was unfolding. In a glassed-walled conference room overlooking downtown Boston, traders at Harvard Management Co., the subsidiary that invests the school’s money, were fielding questions from their new boss, Jane Mendillo, about exotic financial instruments that were suddenly backfiring. Harvard had derivatives that gave it exposure to $7.2 billion in commodities and foreign stocks. With prices of both crashing, the university was getting margin calls–demands from counterparties (among them, jpmorgan Chase and Goldman Sachs) for more collateral. Another bunch of derivatives burdened Harvard with a multibillion-dollar bet on interest rates that went against it.

It would have been nice to have cash on hand to meet margin calls, but Harvard had next to none. That was because these supremely self-confident money managers were more than fully invested. As of June 30 they had, thanks to the fancy derivatives, a 105% long position in risky assets. The effect is akin to putting every last dollar of your portfolio to work and then borrowing another 5% to buy more stocks.

continued at link above~

Oh boy, how many times do we have to go through this elementary stuff. The monetary crew were proven disasterously wrong in the events preceeding & succeeding the October ‘29 crash. Demand based economics took the fore and maintained prominence till LBJ’s Great Society/Vietnam War led to overstimulus, inflation, the exodus from the gold standard and the collapse of Bretton Woods under Nixon.

Proving that you can’t keep a good dog down, these allowed the Chicago Boys to re-emerge from their hole just in time for their false ideology to be hoisted by the ‘great satan’ (Reagan). The rest is history: the final crippling of the unions by breaking of the Air Traffic Controllers in ‘81, the emergence of gigantic, forced, forex speculation by FASB rule #52 – a preulede to the emergence of the ‘quants’ as computer technology allowed in the late 80’s & early ’90’s and the rapid U.S. de-industrialisation as the FIRE sectors seized the commanding heights of the economy (with the resulting colossal upward transfer of national wealth) since the early ’90s.

Surprise, surprise, surprise: crash, bang, boom – South American/Mexican debt defaults (80’s), Thrift fraud & collapses (80’s), Thailand/Far East/Russian defaults (late ’90’s), Long Term Capital Management (’98), leading to our very own Enron/Worldcom & Sub-Prime messes. Sorry that I missed a few on the way – e.g. Summer’s great success (sic) in helping ‘manage’ the Baltic states’ conversion to a capitalistic economy(early 90’s), the mess left behind, post-Allende, in Chilie and, of course, the catastrohic economic collapse Argentina in Dec 2001, leading to 3 successive presidents in just 30 days. Stop me if I’m getting boring listing all these monetarist ’successes’!

The question is NOT why are these guys still here. [deleted by sc: threats are not permitted here, ever] there again maybe it’s not just sh*t that floats upwards?

Scarecrow – valuable piece, just one thing – can you double check your second link there, after Krugman’s “that ’30’s show,” the one referencing “unpersons,’– that sounds intriguing, but the link is the same one to the “honor roll of economists.”
thanks.

I wrote an oxdown diary back in February. In it, I figured that a $700 billion a year stimulus for two years with a 90/10 split between spending and tax cuts would create 8.8 million jobs.

We have already lost 6.5 million jobs. There is another 2.7 million jobs that the economy needed to produce to account for population growth (19 months of recession X 120,000 jobs a month). That makes our current job short fall 9.2 million. Even if another job was not lost, we would still need to create 2.6 million jobs (the 18 months out to January 2011 and the end of the stimulus) to cover population growth. So we are talking to 2011 about a job shortfall of 11.8 million already built in plus however many jobs are lost between now and then. We could easily see another 2 million jobs lost between now and the end of the year. I wouldn’t even hazard a guess about next year because I don’t know what Obama and the Congress are going to do or not do. So leaving out possible job losses in 2010, the job short fall currently looks like 13.8 million jobs.

Now consider the number of $700 billion a year in stimulus I mentioned above. Jobs created in the first year have to also be funded in the second year and so reduce the amount for new job creation in the second year. The ratio for $700 billion a year is roughly 3 jobs created in the first year for each one job created in the second. But I digress.

Just eyeballing it without running the numbers, if a $700 billion a year stimulus for 2 years creates 8.8 million jobs over two years then a stimulus that was 50% larger $1.05 trillion a year would create around 13.2 million jobs. This at least puts us in the ballpark with the 13.8 million job number I came up with. Kick it up to $1.1 trillion to get us the rest of the way and you have a base figure for what is needed (and remember this is a 90/10 split between spending and tax cuts not the 60/40 of the first stimulus package).

Now Obama and his dream team have already wasted or will waste around $240 billion in tax cuts over two years over and above my scenario. So divide by two and add that in and we are talking $1.2 trillion a year stimulus needed for 2 years and hoping that there will be no further job losses in 2010 which would push our $1.2 trillion number higher.

Look again at the first Obama stimulus. $787 billion minus $240 billion in extra tax cuts (over my 10% figure) = $547 billion over two years or $274 billion per year.

Now compare $1.2 trillion and $274 billion. See the difference?

If your eyes have not glazed over yet, consider that after 2 years this all goes away unless there are added funds in 2011 and beyond to support these jobs. Can we afford it, both the initial outlay and the ongoing job maintenance? The answer is yes but it will not be easy. My final consider this is that the government has already laid out $6.788 trillion to banks and other financial institutions in 2008 to June 2009. Our resources are not infinite and they are in fact under considerable stress but there is still a window where if we re-allocate resources to the real, productive economy we can salvage the situation.

This is the prime reason why Geithner, Summers, Bernanke, Goolsbee, and Orzag have got to go. They are committed to funneling what resources we have into the most unproductive and corrupt segment of our economy, its financial system. That system needs to be put into bankruptcy and reorganized. That won’t be cheap. But as it is, we are putting nearly all of our resources into it with no real result and at the cost of devastating damage to the rest of the economy. We need a real fix for banks and real aid to the rest of the economy.

To date, I have seen no indication that Obama has rethought or even understands any of this. Politically the window for changing his team is relatively brief to the end of this year. After that, 2010 is an election year and a shakeup would likely not occur until after the election in November 2010 which will probably be too late for all of us.

thanks for catching that. I’ve fixed the link, which goes to Krugman’s blog. The link is:

http://krugman.blogs.nytimes.c…..unpersons/

Thanks! Very prompt of you, Scarecrow!

btw, I hope you don’t mind that I’m cribbing your link list to past into a reply to an email from a linked-in connection disdaining the need for another stimulus. *g*

I remember your earlier posts. Couple of things more: (1) the unemployment numbers are substantially worse than what they publically predicted, and with that come other miseries and economic impacts. (2) the states are in far worse shape, and their efforts to close budget gaps are creating a counter- or ”anti-stimulus.” See the last link on the list for some numbers.

So the case for an additional/better stimulus is even more overwhelming than your updates reflect.

My own view, expressed months ago, was that this “recession” was not only worse than previous but different — that it could take years to climb out, and that in the meantime, we’d need extended jobs programs and state support to get through it without massive human misery. For that reason, I also thought that the supposed limitation on “shovel ready” projects was shortsighted, because it assumed a relatively quick recovery. It now looks like the quick recovery scenario is fantasy, and that we should have been planning and funding longer-term, multi-year projects. Instead, the Admin argued that there’s only so much you can do that’s shovel ready in the next two years, so a larger stimulus package would have been impractical. Sigh.

Ooh, I’d missed that Krugman posting – I love the man. As he says, without his perch at the NYT, you wouldn’t know from MSM that anybody was arguing for a bigger stim at the time.

Crib away. That’s one of the values of blogs and links. Those are all worthwhile articles, IMO.

As for how quick I was, I wasn’t. Our terrific mods saw your comment and alerted me.

I am no economist, but I was paying attention — how could it not be obvious that states and locals, which depend heavily on property taxes, would be heavily hit by the bursting of the housing bubble alone?
To quote you, Scarecrow – sigh.

Wow–the mods are terrific, aren’t they?

Not only that, but we don’t even know who they are. We suspect they’re actually from other planets.

Well, as Dean Baker keeps pointing out, most of the “experts” and economists that the MSM keeps quoting, including some who know advise our govt., all missed the risks/dangers in the housing bubble.

I agree about the states for two reasons. First, it is correct that state deficits with tax raising and job cuts undercut what stimulus there is. Second, the federal government outside entitlements and defense is only something like $450 billion in size. It isn’t big enough to funnel the stimulus needed. The states and cities on the other hand are perfect conduits for funneling large amounts of money through.

But we also need an overarching plan. We need a short and medium term fix building up infrastructure. But we also need to re-industrialize the country and do it in a sustainable way. Optimally, these two could be melded together directing money into mass transit, clean energy, conservation, community planning, education, and low cost national next generation highspeed internet, like above 100 MBs.

Yeah, yet another thing we’ve all been bitching about and slamming our heads against the wall about…I still don’t quite understand why being wrong 100% of the time doesn’t disqualify them….
yeah, I know. That must be the millionth time someone has made that complaint around here.

This will only get worse as people seem to be welded to the conventional economic wisdom that “employment is a lagging indicator” even though some economists are now say it’s a leading and lagging indicator. I saw another good news diary over at Dailkykos.com. It’s hard to imagine why people think things are turning around with no fundamental changes in the infrastructure as Geithner and Summers do their best to re-inflate a debt bubble.

Excellent post, scarecrow.

But Obama and his failed economic team are also largely to blame for ignoring the best economists’ warnings that his stimulus would be too little and poorly focused. His advisers denied these problems, but they were wrong, again.

We were attacked and ridiculed by some who thought Obama could do nothing wrong when we dared to speak up in January and February. We were right.

Summers and Geithner do well by banks and banksters, but not for working people. It’s their history and who they are.

Yes, I saw that and commented in it that “I find your posts less and less credible, since you told us similar things back in March. Duh, the freefall may be over, but things are not good.”

http://www.dailykos.com/commen…..0/380#c380

Come on people, how long are you going to continue asking this question, when you know the answers already;

Larry Summers and Tim Geithner work for the same folks that Obama works for, only they are farther up in the organizational tree.

Larry Summers and Tim Geithner stand at a figurative event-horizon beyond which we aren’t allowed to cannot see, unless we decide to believe our lying eyes.

We’re going to have to adopt a mature attitude about this issue if we hope to affect any real change, otherwise we’re just making believe.

It seems to me states receiving funds from fiscal stimulus allocations will be using them to reduce debt and recover losses. The net effect is little to no stimulus to the economy as a result of any type of fiscal policy. Fiscal policy effects are usually short-term in any event. The concurrent monetary policy takes much longer to have any impact. When that impact is felt, it will be a difficult time, most likely marked by a return of stagflation.

The GOP and the MSM (who all server the same depraved masters) keep harping on the $785 Billion supposedly spent on stimulus.

Doesn’t anyone think it important to remember that’s $785B over two years, = $392.5B per year, allocated 60/40% tax cuts/spending = $157 in actual spending, much of which is caught up in same corrupt partisan system that derails every effort to help the average person.

Every night I hear Brian Williams ask why the $785 Billion isn’t doing anything to get our economy back to ‘normal’, isn’t anyone ever going to correct this obvious deception?

Of course when you have Mrs. Greenspan working for your organization there’s ample evidence as to why the reporting is so twisted, but it’s still a mystery why we hear so little push-back on this propaganda campaign.

Could a policy mandate be any clearer, or the public need any more compelling?

no matter how clear or how compelling the policy needs or mandates, the powers of make believe on the part of Democratic Party supporters are incredibly strong.

good post from April 30, btw . .. I hope more people see it and absorb some implications from it.

Read this story on Al Jazeera English “Laughing All the Way to the Bank”. http://english.aljazeera.net/f…..10179.html

We are being robbed and they are all in on it. These are not good people.

Taxpayers’ cash

As Robert Hunter Wade, professor at the London School of Economics, told me this week; regulation is now coming into play that will allow banks to become even more reckless with taxpayers’ money, because they have become too big for any government to allow them to fail.

Read more columns
Money and power makes for a toxic bond
Why America is a bank-owned state
Banking time bombs
Greed and low wages

There were 15 big global banks before the financial crisis hit. During the crisis, however, the collapse of Lehman Brothers led governments to encourage other banks – by means of large amounts of taxpayers’ cash – to buy up the not-so-well banks.

The Bank of America’s purchase of Merrill Lynch is a case in point.

So we went from having 15 banks to having around six. And these remaining banks have more power as their importance is now set in regulatory stone – and they know it.