Tuesday, March 31, 2009
Sunday, March 29, 2009
Saturday, March 28, 2009
Friday, March 27, 2009
Making Sense of the Geithner Plan
http://blogs.harvardbusiness.org/haque/2009/03/geithnerconomy_redux.html
Making Sense of the Geithner Plan
Umair Haque
Thought my Geithnerconomy post was over the top? Let's do a reality check. Here's the score, just three days in: the Geithner plan is morally bankrupt, economically toxic, and ethically questionable.
1) Banks are already gaming the plan.
2) Why? Because Geithner has just written a put option.
3) Using your money.
4) Will the government sell you a put option? Nope, you're not rich enough. Only hedge funds are eligible. It is a transfer of wealth from you...to the guys that need it least.
5) That's not economic democracy. It's economic feudalism: the heart of a new cold war.
Sound harsh? Joe Stiglitz, one of my idols, is even more direct: he calls it robbery.
6) How did the robbery go down? Wasn't the plan cooked up by Nobel-prize winning economists, IMF dudes, civil servants, Tim Geithner, Barack Obama, and other relatively impartial folks?
Lulz. Not a chance: The Geithner plan was designed by the world's most important banker, the world's most powerful equity investor, and the world's biggest bond investor.
If you think what I'm writing sounds like sci-fi, try that on for size. Whose idea was the "government" bailout plan? Why, it was the idea of the three most significant players in the financial markets.
Robbery, indeed. If you're under the age of 30, your future just got mortgaged.
Like I said before, it is a weapon of economic, political, and social mass destruction. The outlines of that should be much clearer now — just three days in, the cure is already promising to be worse than the disease.
It is economics 1.0: two step backward, instead of one step forward.
7) Barack Obama let this go down, and his political capital will be sapped by it. Rightly so, because it's poor management, and terrible leadership.
NB — Yes, the assumptions in the quant analysis linked to are questionable. But the basic logic still holds. And read TPM, because it's awesome.
Making Sense of the Geithner Plan
Umair Haque
Thought my Geithnerconomy post was over the top? Let's do a reality check. Here's the score, just three days in: the Geithner plan is morally bankrupt, economically toxic, and ethically questionable.
1) Banks are already gaming the plan.
2) Why? Because Geithner has just written a put option.
3) Using your money.
4) Will the government sell you a put option? Nope, you're not rich enough. Only hedge funds are eligible. It is a transfer of wealth from you...to the guys that need it least.
5) That's not economic democracy. It's economic feudalism: the heart of a new cold war.
Sound harsh? Joe Stiglitz, one of my idols, is even more direct: he calls it robbery.
6) How did the robbery go down? Wasn't the plan cooked up by Nobel-prize winning economists, IMF dudes, civil servants, Tim Geithner, Barack Obama, and other relatively impartial folks?
Lulz. Not a chance: The Geithner plan was designed by the world's most important banker, the world's most powerful equity investor, and the world's biggest bond investor.
If you think what I'm writing sounds like sci-fi, try that on for size. Whose idea was the "government" bailout plan? Why, it was the idea of the three most significant players in the financial markets.
Robbery, indeed. If you're under the age of 30, your future just got mortgaged.
Like I said before, it is a weapon of economic, political, and social mass destruction. The outlines of that should be much clearer now — just three days in, the cure is already promising to be worse than the disease.
It is economics 1.0: two step backward, instead of one step forward.
7) Barack Obama let this go down, and his political capital will be sapped by it. Rightly so, because it's poor management, and terrible leadership.
NB — Yes, the assumptions in the quant analysis linked to are questionable. But the basic logic still holds. And read TPM, because it's awesome.
Thursday, March 26, 2009
Wednesday, March 25, 2009
Monday, March 23, 2009
Thursday, March 12, 2009
Wednesday, March 11, 2009
An Economic Roadmap for the End of the American Era
Once the embodiment of prosperity, the United States now finds itself in a precarious position. With its financial system in shambles and global standing on the wane, many believe we are witnessing the end of the American era. In When Giants Fall, author Michael Panzner puts the coming age of post-American dominance in perspective, and addresses the far-reaching effects it will have on our lives, as well as the economic opportunities that will arise from it.
Tuesday, March 3, 2009
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