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Obama's Treasury Nominee Tim Geithner: Yet More Power for the Federal Reserve
Barack Obama's reported latest cabinet pick shows that even the collapse of the U.S. economy is not enough to challenge the unbridled power of the Federal Reserve. The president-elect's choice for Secretary of the Treasury is Tim Geithner, head of the New York Federal Reserve Bank, the most powerful bank in the system. The nation's leadership in both parties spent the better part of two decades unquestioningly following the man they called "the Oracle"—Fed chair Alan Greenspan--down the road to ruin. Now, they eagerly await the arrival of another Fed insider to lead them back into the light.
Clearly, the new administration and the Democratic Congress do not plan to in any way challenge the fundamentally undemocratic and fatally compromised nature of the Fed, which is not a government agency, but a "quasi-public" system effectively owned and run by the banking industry itself. It's no surprise, then, that the Fed so often operates in the interests of the private banks, even when they run counter to the public interest—as it did under Greenspan, when its policies fueled, rather than reigned in, the credit bubble and accompanying fiscal disasters. What is more suprising is the fact that those sworn to serve the public still show so little inclination to demand more transparency or accountability from this all-powerful institution.
Reformers who want to democratize the Federal Reserve System have suggested bringing it inside the government, where it would at least be subject to some some oversight by elected officials. Some have proposed placing it under the control of the Secretary of the Treasury. Instead, Obama has done just the opposite: He's placed the Treasury Department under the power of a consummate member of the Fed inner circle who, like most of the system's leadership, has close ties to the private banks it serves.
Geithner is credited as the central figure in the Bear Stearns buyout by JP Morgan-Chase, arranging the deal and putting up the money for it. The Fed collateral on that deal included lousy subprime mortgages. He is close to other members of the elite Wall Street club that runs the Fed, whose resumes show the revolving door between the Federal Reserve and the private banks they are supposed to oversee. These include sitting directors of the NY Fed Steven Friedman, former Goldman Sachs CEO and still a director of that company, and Jamie Dimon of JP Morgan-Chase. (Until the Lehman Brothers disaster last spring, Lehman head Richard Fuld also sat as a "public" representative on the NY Fed board.) Geithner's informal network of advisors, according to a May 2008 profile in Portfolio by Gary Weiss, includes Gerald Corrigan, the former NY Fed chief who was later a managing director of Goldman Sachs and now chair of Goldman's bank holding company GS Bank; Pete Peterson, also a former head of the NY Fed, Secretary of Commerce under Nixon, and co-founder of the investment firm Blackstone Group; and John Thain, former head of the New York Stock Exchange, and the last CEO of Merrill Lynch, now at its purchaser Bank of America. The great Greenspan is in Geithner's corner as well, and one of his earliest jobs was doing research for Henry Kissinger.
It's impossible to imagine a Treasury Secretary with Geithner's background undertaking the kind of bold action to save the economy that was outlined by William Greider in the Nation last week. This is far from the free-for-all handout to big banks going on under Henry Paulson, with the support of many Democrats. "A genuine solution," Greider writes, "means closing down the hopeless institutions and creating a more democratic system based on small to medium-sized banks, financial intermediaries that are less imperious and closer to the real economy of producers and consumers." Greider cites the Levy Economics Institute, which argues that "the bailout is proceeding backward. Instead of saving Wall Street first, government should devote its heavy firepower to reviving jobs, incomes and business enterprises. The banks will not get well or begin normal lending until there is overall economic recovery."
MAIN STREET?where is the money
GET the FACTS behind the NEWS
The federal gov't has agreed to spend $300 plus billion on bailouts of various companies plus $750 billion to ease banking liquidity. This does not include $160 billion economic stimulus payment with talk of another stimulus program probably as much or more. This is in addition to a $417 billion budget deficit.
However what is happening is that the large banks are sitting on the public money to protect against their own losses. If financially well off, with the approval o of Treasury Secretary Poulson, they are looking to acquire banks or their assets at bargain prices. .
Now a new complication. On Nov. 3, 2008 the Federal Reserve reported its latest quarterly survey of bank lending practices. The Federal Reserve said that "a high number of bank reported they had made it tougher to borrow across a broad range of loan products". 60% of the banks had tightened credit card debt, 80% had tightened business and commercial loans. 95% raised costs for lines of credit to large and medium size business. 50% of domestic banks said they "were somewhat or much less willing" to make consumer installment loans This report was for Oct. 1-15th. Financial help is not rapidly getting to main street.
WASHINGTON Nov. 19 ? The Treasury secretary, Henry M. Paulson Jr.,on Tuesday rejected pleas to use money from the $700 billion bailout program to help homeowners avoid foreclosure or to stave off bankruptcy by Detroit's Big Three automakers.
Mr. Paulson acknowledged that he had the authority to use bailout money for homeowners, but he insisted that the money should go toward "investment" in financial institutions rather than "spending" on rescue efforts.6
"We have seen that capital purchases are clearly powerful in terms of .
impact for dollar of investment," he said in his prepared testimony.
FEDERAL FINANCIAL HELP IS NOT GETTING TO MAIN STREET.
Next, what are others doing to help.
Don't forget, the top choice as White House chief of staff is Rahm Emanuel?the ultimate hard-nosed corporate Democrat, military-foreign policy hawk and Clinton White House promoter of corporate globalization, as in NAFTA and the World Trade Organization.
Obama's "foreign policy team is now dominated by the Hawkish, old-guard Democrats of the 1990," writes Jeremy Scahill. Obama's transition team reviewing intelligence agencies and recommending appointments is headed by John Brennan and Jami Miscik, who worked under George Tenet when the CIA was involved in politicizing intelligence for, among other officials, Secretary of State Colin Powell's erroneous address before the United Nations calling for war against Iraq.
Mr. Brennan, as a government official, supported warrantless wiretapping and extraordinary rendition to torturing countries. National Public Radio reported that Obama's reversal when he voted for the revised FISA this year relied on John Brennan's advise.
Now, recall Obama's words during the bucolic "hope and change" campaign months: "The American people?understand the real gamble is having the same old folks doing things over and over and over again and somehow expecting a different result." Thunderous applause followed these remarks.
What is meant by the independence of the central bank? This idea of independence is in no way unambiguous.
1. A distinction between target or goal independence from instrument independence? In other words the freedom of the central bank to choose the goals the bank wishes to obtain as opposed to the freedom to choose the instruments by which it will achieve a desired goal or target determined by the political regime. For example the economist Stanley Fisher was of the opinion that a central bank could be defined as being independent if it determined the instruments to be used to achieve politically determined goals (that means politicians determine the goals or political desirables while the central bank determines which instruments will best achieve those goals)
2. Another aspect to take under consideration is who and how the head of the bank is determined and the head of the banks length of stay in office as well as who determines when he or she is to be fired. Here I guess the bank Chief will have degrees of independence based on such criteria.
3. Another question might be how conflicts between the political regime and the central bank are solved. This pushes things in part back to the above mention criteria in regards to who picks the chief and how difficult it is for the political regime to remove the Bank Chief.
4. How is the bank constrained by formal restrictions (like laws regarding the loaning money to the political regime)?
The importance of simply determining something as foundational as the independence of the central bank is critical to understanding the role that the political regime deems important to the functioning of the state and here it would seem that the laws that govern banking and the constitutional understanding of the bank are determinant in the central banks degrees of independence. Yet the ability to simply define what one means by independence does not strike me as being in any way obvious.
While I do not know very much about economics or banks I think some food for thought might be to reflect a bit upon what the Central Bank must have known in 2003?that going to war could not in any way be in the interest to the goals or desires of the central bank. If the central bank has as some of its objectives to maintain control over inflation so as to achieve price stability, increase employment and increase productivity then the decision of going to war means that the bank was not in a position to refuse the policy makers in Washington the money they needed to borrow to finance their war, which means the bank is not "independent" but rather it does as it is ordered to.
The central bank is obviously not free in regards to the global economy but if politicians make decisions that affect the global economy?such as going to war means borrowing money to fund it, which means the value of the US dollar will of necessity go down because the money market is a system of floating exchange rates and budget deficits correspond to an automatic devaluation of the currency (it could have been possible to hike interest rates but here I think the central bank desired to maintain control over the housing market which had started to fall as well as the fact that we were in a recession in 2003, which means the central bank ought to have refused to borrow money on a war that would threaten its objectives as a banking system. They ought to have told the President to stuff it. But we must ask was this really possible? Does the central bank have that degree of independence from the political machine?
If yes then we know that the FED has independence but that its leadership was either threatened by the White House or was incompetent to see that it was not possible to wage a war and meet the downturn in the economy simultaneously without creating a contradictory set of outcomes which would ultimately result in a state of chaos. Still the Central Bank had to have known that going to war would have meant not just a devaluation in the US dollar, but that it also would mean inflationary expectations in all goods sold in the international market valued in US dollars?in particular oil, which means the Central Bank knew with certainty that a war would result in higher prices on all goods imported?especially oil (thus the balance of trade might worsen). All in all the "independence" of the FED to act in its interests do not seem to materialize?so does this mean the bank ought to be more independent or more dependent upon political whim?
MAIN STREET?where is the money
GET the FACTS behind the NEWS
The federal gov't has agreed to spend $300 plus billion on bailouts of various companies plus $750 billion to ease banking liquidity. This does not include $160 billion economic stimulus payment with talk of another stimulus program probably as much or more. This is in addition to a $417 billion budget deficit.
However what is happening is that the large banks are sitting on the public money to protect against their own losses. If financially well off, with the approval o of Treasury Secretary Poulson, they are looking to acquire banks or their assets at bargain prices. .
Now a new complication. On Nov. 3, 2008 the Federal Reserve reported its latest quarterly survey of bank lending practices. The Federal Reserve said that "a high number of bank reported they had made it tougher to borrow across a broad range of loan products". 60% of the banks had tightened credit card debt, 80% had tightened business and commercial loans. 95% raised costs for lines of credit to large and medium size business. 50% of domestic banks said they "were somewhat or much less willing" to make consumer installment loans This report was for Oct. 1-15th. Financial help is not rapidly getting to main street.
WASHINGTON Nov. 19 ? The Treasury secretary, Henry M. Paulson Jr.,on Tuesday rejected pleas to use money from the $700 billion bailout program to help homeowners avoid foreclosure or to stave off bankruptcy by Detroit's Big Three automakers.
Mr. Paulson acknowledged that he had the authority to use bailout money for homeowners, but he insisted that the money should go toward "investment" in financial institutions rather than "spending" on rescue efforts.6
"We have seen that capital purchases are clearly powerful in terms of .
impact for dollar of investment," he said in his prepared testimony.
FEDERAL FINANCIAL HELP IS NOT GETTING TO MAIN STREET.
Next, what are others doing to help.
Don't forget, the top choice as White House chief of staff is Rahm Emanuel?the ultimate hard-nosed corporate Democrat, military-foreign policy hawk and Clinton White House promoter of corporate globalization, as in NAFTA and the World Trade Organization.
Obama's "foreign policy team is now dominated by the Hawkish, old-guard Democrats of the 1990," writes Jeremy Scahill. Obama's transition team reviewing intelligence agencies and recommending appointments is headed by John Brennan and Jami Miscik, who worked under George Tenet when the CIA was involved in politicizing intelligence for, among other officials, Secretary of State Colin Powell's erroneous address before the United Nations calling for war against Iraq.
Mr. Brennan, as a government official, supported warrantless wiretapping and extraordinary rendition to torturing countries. National Public Radio reported that Obama's reversal when he voted for the revised FISA this year relied on John Brennan's advise.
Now, recall Obama's words during the bucolic "hope and change" campaign months: "The American people?understand the real gamble is having the same old folks doing things over and over and over again and somehow expecting a different result." Thunderous applause followed these remarks.
What is meant by the independence of the central bank? This idea of independence is in no way unambiguous.
1. A distinction between target or goal independence from instrument independence? In other words the freedom of the central bank to choose the goals the bank wishes to obtain as opposed to the freedom to choose the instruments by which it will achieve a desired goal or target determined by the political regime. For example the economist Stanley Fisher was of the opinion that a central bank could be defined as being independent if it determined the instruments to be used to achieve politically determined goals (that means politicians determine the goals or political desirables while the central bank determines which instruments will best achieve those goals)
2. Another aspect to take under consideration is who and how the head of the bank is determined and the head of the banks length of stay in office as well as who determines when he or she is to be fired. Here I guess the bank Chief will have degrees of independence based on such criteria.
3. Another question might be how conflicts between the political regime and the central bank are solved. This pushes things in part back to the above mention criteria in regards to who picks the chief and how difficult it is for the political regime to remove the Bank Chief.
4. How is the bank constrained by formal restrictions (like laws regarding the loaning money to the political regime)?
The importance of simply determining something as foundational as the independence of the central bank is critical to understanding the role that the political regime deems important to the functioning of the state and here it would seem that the laws that govern banking and the constitutional understanding of the bank are determinant in the central banks degrees of independence. Yet the ability to simply define what one means by independence does not strike me as being in any way obvious.
While I do not know very much about economics or banks I think some food for thought might be to reflect a bit upon what the Central Bank must have known in 2003?that going to war could not in any way be in the interest to the goals or desires of the central bank. If the central bank has as some of its objectives to maintain control over inflation so as to achieve price stability, increase employment and increase productivity then the decision of going to war means that the bank was not in a position to refuse the policy makers in Washington the money they needed to borrow to finance their war, which means the bank is not "independent" but rather it does as it is ordered to.
The central bank is obviously not free in regards to the global economy but if politicians make decisions that affect the global economy?such as going to war means borrowing money to fund it, which means the value of the US dollar will of necessity go down because the money market is a system of floating exchange rates and budget deficits correspond to an automatic devaluation of the currency (it could have been possible to hike interest rates but here I think the central bank desired to maintain control over the housing market which had started to fall as well as the fact that we were in a recession in 2003, which means the central bank ought to have refused to borrow money on a war that would threaten its objectives as a banking system. They ought to have told the President to stuff it. But we must ask was this really possible? Does the central bank have that degree of independence from the political machine?
If yes then we know that the FED has independence but that its leadership was either threatened by the White House or was incompetent to see that it was not possible to wage a war and meet the downturn in the economy simultaneously without creating a contradictory set of outcomes which would ultimately result in a state of chaos. Still the Central Bank had to have known that going to war would have meant not just a devaluation in the US dollar, but that it also would mean inflationary expectations in all goods sold in the international market valued in US dollars?in particular oil, which means the Central Bank knew with certainty that a war would result in higher prices on all goods imported?especially oil (thus the balance of trade might worsen). All in all the "independence" of the FED to act in its interests do not seem to materialize?so does this mean the bank ought to be more independent or more dependent upon political whim?
Dear gawd! This seems to get worse every day! And, some were relieved it was not Larry Summers---great. Now he is head of the Natl Economics Council...
Just for the sake of argument, who could Obama have picked that would have been a) qualified to handle this unprecedented mess, and b) didn't have a close relationship to power players in the banking industry.
Paul Krugman. Sheila Bair.
Even Rubin or Buffett.
Just for the sake of argument.
Have you heard the rumors of Raul Grijalva for Secretary of Interior--this would be an incredible coup for the national parks.
MAIN STREETwhere is the money
GET the FACTS behind the NEWS
The federal gov't has agreed to spend $300 plus billion on bailouts of various companies plus $750 billion to ease banking liquidity. This does not include $160 billion economic stimulus payment with talk of another stimulus program probably as much or more. This is in addition to a $417 billion budget deficit.
However what is happening is that the large banks are sitting on the public money to protect against their own losses. If financially well off, with the approval o of Treasury Secretary Poulson, they are looking to acquire banks or their assets at bargain prices. .
Now a new complication. On Nov. 3, 2008 the Federal Reserve reported its latest quarterly survey of bank lending practices. The Federal Reserve said that "a high number of bank reported they had made it tougher to borrow across a broad range of loan products". 60% of the banks had tightened credit card debt, 80% had tightened business and commercial loans. 95% raised costs for lines of credit to large and medium size business. 50% of domestic banks said they "were somewhat or much less willing" to make consumer installment loans This report was for Oct. 1-15th. Financial help is not rapidly getting to main street.
WASHINGTON Nov. 19 The Treasury secretary, Henry M. Paulson Jr.,on Tuesday rejected pleas to use money from the $700 billion bailout program to help homeowners avoid foreclosure or to stave off bankruptcy by Detroit's Big Three automakers.
Mr. Paulson acknowledged that he had the authority to use bailout money for homeowners, but he insisted that the money should go toward "investment" in financial institutions rather than "spending" on rescue efforts.6
"We have seen that capital purchases are clearly powerful in terms of .
impact for dollar of investment," he said in his prepared testimony.
FEDERAL FINANCIAL HELP IS NOT GETTING TO MAIN STREET.
Next, what are others doing to help.
Don't forget, the top choice as White House chief of staff is Rahm Emanuelthe ultimate hard-nosed corporate Democrat, military-foreign policy hawk and Clinton White House promoter of corporate globalization, as in NAFTA and the World Trade Organization.
Obama's "foreign policy team is now dominated by the Hawkish, old-guard Democrats of the 1990," writes Jeremy Scahill. Obama's transition team reviewing intelligence agencies and recommending appointments is headed by John Brennan and Jami Miscik, who worked under George Tenet when the CIA was involved in politicizing intelligence for, among other officials, Secretary of State Colin Powell's erroneous address before the United Nations calling for war against Iraq.
Mr. Brennan, as a government official, supported warrantless wiretapping and extraordinary rendition to torturing countries. National Public Radio reported that Obama's reversal when he voted for the revised FISA this year relied on John Brennan's advise.
Now, recall Obama's words during the bucolic "hope and change" campaign months: "The American people understand the real gamble is having the same old folks doing things over and over and over again and somehow expecting a different result." Thunderous applause followed these remarks.
What is meant by the independence of the central bank? This idea of independence is in no way unambiguous.
1. A distinction between target or goal independence from instrument independence? In other words the freedom of the central bank to choose the goals the bank wishes to obtain as opposed to the freedom to choose the instruments by which it will achieve a desired goal or target determined by the political regime. For example the economist Stanley Fisher was of the opinion that a central bank could be defined as being independent if it determined the instruments to be used to achieve politically determined goals (that means politicians determine the goals or political desirables while the central bank determines which instruments will best achieve those goals)
2. Another aspect to take under consideration is who and how the head of the bank is determined and the head of the banks length of stay in office as well as who determines when he or she is to be fired. Here I guess the bank Chief will have degrees of independence based on such criteria.
3. Another question might be how conflicts between the political regime and the central bank are solved. This pushes things in part back to the above mention criteria in regards to who picks the chief and how difficult it is for the political regime to remove the Bank Chief.
4. How is the bank constrained by formal restrictions (like laws regarding the loaning money to the political regime)?
The importance of simply determining something as foundational as the independence of the central bank is critical to understanding the role that the political regime deems important to the functioning of the state and here it would seem that the laws that govern banking and the constitutional understanding of the bank are determinant in the central banks degrees of independence. Yet the ability to simply define what one means by independence does not strike me as being in any way obvious.
While I do not know very much about economics or banks I think some food for thought might be to reflect a bit upon what the Central Bank must have known in 2003that going to war could not in any way be in the interest to the goals or desires of the central bank. If the central bank has as some of its objectives to maintain control over inflation so as to achieve price stability, increase employment and increase productivity then the decision of going to war means that the bank was not in a position to refuse the policy makers in Washington the money they needed to borrow to finance their war, which means the bank is not "independent" but rather it does as it is ordered to.
The central bank is obviously not free in regards to the global economy but if politicians make decisions that affect the global economysuch as going to war means borrowing money to fund it, which means the value of the US dollar will of necessity go down because the money market is a system of floating exchange rates and budget deficits correspond to an automatic devaluation of the currency (it could have been possible to hike interest rates but here I think the central bank desired to maintain control over the housing market which had started to fall as well as the fact that we were in a recession in 2003, which means the central bank ought to have refused to borrow money on a war that would threaten its objectives as a banking system. They ought to have told the President to stuff it. But we must ask was this really possible? Does the central bank have that degree of independence from the political machine?
If yes then we know that the FED has independence but that its leadership was either threatened by the White House or was incompetent to see that it was not possible to wage a war and meet the downturn in the economy simultaneously without creating a contradictory set of outcomes which would ultimately result in a state of chaos. Still the Central Bank had to have known that going to war would have meant not just a devaluation in the US dollar, but that it also would mean inflationary expectations in all goods sold in the international market valued in US dollarsin particular oil, which means the Central Bank knew with certainty that a war would result in higher prices on all goods importedespecially oil (thus the balance of trade might worsen). All in all the "independence" of the FED to act in its interests do not seem to materializeso does this mean the bank ought to be more independent or more dependent upon political whim?
Inflation inflation inflation...
Like Max Keiser says, the dollar is worth it's weight in bananas. And we're all suckers! Bring in the Fed guy. They know how to handle the crisis. Heck they're the ones that invented it!
The Fed Reserve Board is an unaccountable cabal that is empowered by certain laws that give it control over certain fundamentals of the economy, like interest rates and the money supply. They can tinker around with the economy of the country, but do not have to answer to anyone. Nor do they have to explain or show what they are doing to anyone. The "independent agency," as Alan Greenspan has put it, has been in place for many generations now and I can't see what good it has done for anyone.
Your analysis is correct, wheyghey.
What began at Jekyll in 1910, and Woodrow Wilson legitimized in 1913, Obama has odiously embraced.
On the Eternal Infamy of Bill Clinton
The American people trust that Barack Obama will conscientiously address treasury-post issues.
Long Live President Barack Obama!
Barack Obama is a racial-minority individual and does not like racism:
It is opined that Bill Clinton committed terrifying, racist, hate crimes during his presidency, and I am not free to say anything further about it.
Respectfully Submitted by Andrew Yu-Jen Wang, J.D. Candidate
B.S., With the Highest Level of Academic Honors at Graduation, 1996
Messiah College, Grantham, PA
Lower Merion High School, Ardmore, PA, 1993
(I can type 90 words per minute, and there are thousands of copies on the Internet indicating the content of this post. And there are thousands of copies in very many countries around the world.)
_________________
‘If only there could be a BAN against invention that bottled up memories like scent so they never faded & they never got stale.’ (Once again, please consider an illustrative analogy: like scent that is held in or restrained or inhibited or suppressed or bottled up.) It came from my Lower Merion High School yearbook.
Does the central bank have
Does the central bank have that degree of independence from the political machine?