Let Them Fail …
Below is from a Newsweek piece of Treasury Secretary Timothy Geithner, who seems to be hitting his stride. I’m not a fan of Geithner or Larry Summers being so key to getting us out of the current mess and into a better, more fair economy. Summers is one of the reasons we’re where we are today and Geithner is a product of Wall Street. Every plan the government has come up with has lots for Wall Street, nothing for taxpayers and absolutely no accountability so far for how are money has been spent by the banks and brokerages. In the following passage, Geithner makes his case against those like Paul Krugman who make this case with more weight and eloquence than I ever will.
Their argument – the case made by the politicians who are bought and paid for by the AIGs of the world – is that these institutions cannot fail. Either they’re too big or too interconnected. What’s obvious is that in their size and counterparty risk, they are a menace to society. Let them fail.
From Newsweek:
Out of view of the cameras, Geithner prides himself on proceeding methodically—the markets be damned. He’s dismissive of critics who rail against the more controversial aspects of his plan for a public-private partnership creating government-backed “funds”—which by this summer are supposed to conduct an auction for bad assets. Among those critics is columnist Paul Krugman, who says the plan is another rich giveaway to Wall Street that won’t make banks more solvent. Geithner scoffs at their proposed alternative, what he calls “preemptive nationalization of the big institutions,” saying his critics have no idea what they’re talking about. One big problem, Geithner says, is that the government doesn’t have the resources to do more now, not with political outrage so high. And Washington cannot just take over banks that are not technically insolvent yet. “We would end up killing the institutions and having the government assume right away all those basic losses … There’s no feasible way we could get in and out quickly.”
