Via Greg Sargent:

“This is the kind of issue Washington chases like catnip,” David Axelrod, Mr. Obama’s senior adviser, lamented in an interview. “What would be a mistake would be to get so distracted by the catnip-chasers that we lose our own path. We are not going to do that.”

Confirming Axelrod's assurance to the Masters of The Universe, Geithner announces his let's save Wall Street (as opposed to the nation's economy) plan.

Krugman and Atrios speak for me. This is a disgrace and it will not work.

Speaking for me only

Why can there not be shared sacrifice from Wall Street regarding the financial bailout when GM bondholders are calling for it regarding the automaker bailout?

With a March 31 deadline for General Motors’s restructuring approaching, the ailing car maker’s bondholders are continuing to press their case to the public. In a letter to the Obama administration’s autos task force, the unofficial bondholders committee reiterated its argument that the pain in any restructuring of G.M. be shared by all of the company’s constituencies — or risk bankruptcy. . . . “It is unclear why it was decided that GM’s bondholders should bear the greatest risk here,” the letter reads. “Consequently, it is not surprising that others may be ready to accept a deal that severely disadvantages bondholders who had no role in crafting it.”

(Emphasis supplied.) I do not know enough about the particulars of the GM situation to say whether this is a fair complaint, but what bothers me is that the counterparties to the Big Sh*tpile are NOT complaining in the same way. You wonder why they aren't whining like this? Because Tim Geithner has their back. He should have the country's back. Therein lies the problem.

Speaking for me only

Kevin Drum calls criticisms of the Geithner plan "glib." Which takes some real chutzpah when Drum glibly declares:

Obviously, then, there's tremendous uncertainty about future default rates. But the market appears to be valuing most mortgage-backed securities these days at something like 30 cents on the dollar. That's crazy. . . . 30 cents on the dollar simply doesn't represent a reasonable long-term value for most of this stuff.

Let's assume Drum's glib assertions are true. Why in heaven's name then does the government need private sector "skin" at all? Why not just buy these 'obviously' undervalued assets? Why does the government have to give non-recourse loans to private players to get them in? I'll tell you why - because the Geithner plan is about saving Wall Street, not saving the economy. More . . .

Booman writes:

I'm just guessing, but I think this story is going to get a lot more favorable treatment in Left Blogistan than the toxic assets plan received yesterday.

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said...

Let me be the first to disappoint Booman. I do not want the government regulating executive pay, except when the government is propping up a company through a bailout. I do want executive pay to be fairly taxed in the interest of the common good of the Nation. What I do applaud about what is being reported is the intention to prudently regulate an industry, the financial industry, that turns out to be more like a public utility than a typical private sector concern. More.

That's the conclusion of a must read piece in Harper's by Chicago-based labor lawyer Thomas Geoghegan about what our culture of legalized usury has wrought.

Writes Geoghegan:

"Basically, we're all waiters now; we're bowing and scraping and working for the banks. Look closely at any American, and it's even odds that he or she, directly or indirectly, is somehow employed by the 'financial services' industry,' which covers insurance and real estate and financial instruments of any kind."

[More....]

You think you have economic worries? Cheer up, things could be worse. You could be getting divorced and no longer able to afford your weekly expenses of $53,000, including:

• $700 for limousine service,
• $4,500 for clothes,
• $1,000 for hair and skin treatments,
• $1,500 for restaurants and entertainment, and
• $8,000 for travel

And find yourself in court arguing that a $43 million settlement just isn't enough because it would only last 16 years and even though you did agree to accept that amount in event of a divorce, you only did so because your husband preyed on your fears of ending up divorced and childless.

As a result, you could find yourself on the witness stand for days while trying to convince a judge you need $100 million in cash and stock in addition to $130,000 a month in alimony.

Paul Krugman:

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won. The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

. . . [T]hese funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

But we must protect the "Masters of The Universe." This is truly outrageous.

Speaking for me only

Kevin Drum thinks so:

Taxing the million-dollar bonuses is one thing — I may be a little ambivalent about that, but overall I don't think it's all that problematic — but the bill that passed last night taxes away bonuses from anyone with a household income over $250,000. That's a couple of mid-level analysts. This is likely to hit tens of thousands of fairly ordinary workers who had nothing to do with AIG's troubles and who simply don't deserve this kind of treatment.

Memo to Kevin, these "ordinary" AIG employees who make over 250,000 a year would be out of a job if the federal government had not bailed out AIG. The unemployment rate in the country is 8.2% and climbing. Believe me, there are better examples for your concern. Oh by the way, this newfound concern for those ordinary $250K/year earners? Does that mean you now support the Bush tax cuts? Do you oppose rolling them back? Migawd, some of the things we are reading now are just incredible. Finally, if there is a good policy purpose to not taxing the lower ends of the rich employees of AIG, then let's hear it. But to expect sobbing over people who have jobs, who make $250k/yr and who have their jobs thanks to incredible amounts of government money, well, that's just too much.

Out of touch is the proper description of what this exemplifies.

Speaking for me only

Unlike Jeralyn, my distaste for Ward Churchill was manifest. I did not care for his grandstanding and, imo, imbecilic statements about 9/11. Of course, the defenders of the Bush Administration's disastrous Iraq Debacle would use Ward Churchill as a way to demonize all opposers of their catastrophic policies. Today in the NYTImes, Joe Nocera plays a similar game, this time over AIG:

Yes, the $165 million in bonuses handed out to executives in the financial products division of American International Group was infuriating. . . . But death threats? “All the executives and their families should be executed with piano wire — my greatest hope,” wrote one person in an e-mail message to the company.

What is Nocera's motivation in this? To marginalize objection to the financial bailouts and leave the discussion to "Serious People." Of course death threats are outrageous and I will go one further than Nocera - prosecute the e-mailer. But an idiotic e-mail has nothing to do with the real discussion going on here. It is a cheap trick from Nocera. Does he have a point to all this? As best I can make out, it is this:

Kevin Drum quoting DeGaulle - "The cemeteries of the world are full of indispensable men." The point is getting through:

A substantial swathe of policy elites, starting with Hank Paulson and Ben Bernanke and George Bush and now evidently including Timothy Geithner and Larry Summers and Barack Obama really do seem to think that saving the firms is the key. That the world as it existed in the years 1996 to 2006 represents some kind of ideal of economic activity, and that the[ir] job is to put humpty-dumpty back together again. . . . [T]hat’s not what we ought to be trying to do . . .

Brian Buetler finds support from Paul Krugman:

But not over the bonuses. NYTimes:

While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens. A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.

[AIG is suing, in part, over] deals involv[ing] A.I.G. offshore entities whose function centers on executive compensation and include C. V. Starr & Company, a closely held concern controlled by Maurice R. Greenberg, A.I.G.’s former chairman, and the Starr International Company, a privately held enterprise incorporated in Panama, and commonly known as SICO.

What a world.

At daily kos, Lawrence Lessig writes:

As we all know by now, insurance giant AIG sparked national outrage by paying more than $165 million in executive bonuses after receiving a $170 billion taxpayer bailout. What fewer people know is that AIG gave more than $9 million in campaign contributions to Congress . . . The Number 1 lifetime recipient of AIG money? Senate Banking Chairman Chris Dodd, who received $281,000 (just edging out George W. Bush).

Lessig promulgates a false implication - that Senator Chris Dodd acted as he did because of AIG contributions. It is clear now that in fact Dodd acted as he did at the behest of the Obama administration. In fact, in last week's issue of The Economist (p. 29) (before the AIG bonus scandal broke), the following was written:

Chris Dodd, who faces a battle to retain his Connecticut seat in 2010, inserted tough new restrictions on bankers' pay into the fiscal stimulus package despite the administration's objections.

Lessig's implied narrative is simply false. Whether Lessig's agenda is good or not, using falsehoods to support it is clearly wrong.

Speaking for me only