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Fact sheet on Geithner- Obama plan
Posted by WARREN MOSLER on February 10th, 2009
Thanks!
Seems much of the latest proposal is designed to attract private capital by offering investors a sufficiently high level of profit.
This directs income to those with financial capital, who now look to be the main beneficiaries of the new administration.
Hard to expect otherwise from an administration that doesn’t understand how the currency works and therefore believes itself hostage to outside financial capital.
The salary caps on business leaders is in odd contrast with increased returns on private capital.
Final Financial Stability Fact Sheet
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February 10th, 2009 at 3:14 pm
senate passes obama’s $838 billion stimulus plan…is it enough and of the right mix. geithner seems like a deer in the headlights on bailout package, hopefully stimulus will get things going again.
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RSG Reply:
February 10th, 2009 at 3:27 pm
hopefully they get that right.
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February 10th, 2009 at 4:31 pm
W, given the current size of the deficit and what’s coming with the passage of the stimulus plan, what is your macro outlook when the plan takes root?
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February 10th, 2009 at 4:35 pm
it will help some, maybe stop the slide, but fall short of promoting a quick return to anything near potential.
unfortunately it doesn’t put a lot of funds in the hands of people who need it to make their house payments the way a payroll tax holiday would.
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RSG Reply:
February 10th, 2009 at 4:44 pm
enough to revive equity mkts?
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February 10th, 2009 at 4:59 pm
i’ll go on record and say yes.
markets are priced to worst for the most part.
might be awkward politically for wall st to start making big $ again while unemployment stays very high.
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February 10th, 2009 at 11:41 pm
And foreign bank execs getting paid far more than $500k, thanks to the Fed funding their salaries! Just keep getting crazier and crazier!
Saw today how France was giving bailout money to Citroen, Renault and Peugot, all on our dime! Meanwhile, we’re prepared to let our guys fail even though there’s nothing wrong with them.
CNBC trumpeting China’s lead in domestic auto sales over the U.S. for the first time ever, yet they failed to mention that GM is the largest car seller in China. Lawmakers here call GM “not viable.”
Unreal#@!&!!
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Scott Fullwiler Reply:
February 11th, 2009 at 12:32 am
They’re competitive in Europe, too. Heard that section on your show podcast today by coincidence. Good stuff.
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warren.mosler Reply:
February 11th, 2009 at 9:02 am
and the sad but true list gets ever longer.
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February 10th, 2009 at 11:45 pm
Audacity for sure! Entice hedge funds with the promise of huge and guaranteed profits–after they cratered our financial system–to bail out a banking system, which is a quasi branch of the Federal Gov’t. Stevie Cohen’s laughing all the way to the bank!
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warren.mosler Reply:
February 11th, 2009 at 9:03 am
yes
:(
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February 11th, 2009 at 2:20 am
China Needs U.S. Guarantees for Treasury Bond Holdings, Yu Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_dsDz145J_A&refer=home
(who here said the fed was in control?)
By Belinda Cao and Judy Chen
Feb. 11 (Bloomberg) — China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,†said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,†Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.
China may voice its concerns over U.S. government finances and the potential for a weaker dollar when Secretary of State Hillary Clinton visits China on Feb. 20, according to He Zhicheng, an economist at Agricultural Bank of China, the nation’s third-largest lender by assets.
“In talks with Clinton, China will ask for a guarantee that the U.S. will support the dollar’s exchange rate and make sure China’s dollar-denominated assets are safe,†said He in Beijing. “That would be one of the prerequisites for more purchases.â€ÂÂ
“The government will be a net buyer of Treasuries in the short-term because there’s no sign they have changed their strategy,†said Zhang Ming, secretary general of international finance research center at the Chinese Academy of Social Sciences in Beijing. “But personally, I don’t think we should increase holdings because the medium- and long-term risks are quite high.â€ÂÂ
A decline in reserves “isn’t likely because of China’s huge twin surpluses,†Yu said. China “should diversify its reserves away from U.S. Treasuries if the value of China’s foreign- exchange reserves is in danger of being inflated away by the U.S. government’s pump-priming,†he said.
“China can also use this opportunity to get a promise from the U.S. not to make inappropriate requests on bilateral trade and the Chinese yuan,†Lu said. “We can’t afford more yuan appreciation as the economy is facing a serious slowdown.â€ÂÂ
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February 11th, 2009 at 7:59 am
The best “guarantee” would be renewed and robust U.S. demand. Yu should be lobbying Congress for a bigger U.S. fiscal stimulus in that case.
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February 11th, 2009 at 1:37 pm
Gerald Celente, this guy makes allot of good points Scary!
http://www.youtube.com/watch?v=9nJ7LM3iyNg
Warren I was not following your views before the crash, did you believe it would be this bad?
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warren mosler Reply:
February 11th, 2009 at 9:54 pm
No, while the potential is always there, I thought we’d muddle through with 0-2% gdp growth. In q2 08 gdp was over 2% due to the fiscal package but getting gradually weaker over time as it had been since mid 2006.
Then it all went bad in July with the great mike masters inventory liquidation that brought down the energy half of the s and p and started the route in the stock market that accelerated what had been a gradual drop in demand as consumers and businesses crawled into their foxholes.
It’s easy to fix- payroll tax holiday and $300 billion to the states on a per capita basis and it’s as if it never happened.
But no one with any authority gets it, so it’s gotten a whole lot worse than it had to.
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February 11th, 2009 at 1:56 pm
I can’t make sense of what Yu is saying. Diversify into what? Euros? Isn’t China dumping it’s dollar assets cutting off it’s nose to spite it’s face? Confused…
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February 12th, 2009 at 11:13 am
What is very interesting is hat the whole question of who finances who? is getting “explained” by actual world events!
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