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Geithner plan: Let them clip coupons
Posted by WARREN MOSLER on March 24th, 2009
The Geithner plan is the latest move in what is shaping up to be the largest upward distribution of real wealth in US history.
Its stated purpose is to provide high enough risk adjusted returns to attract ‘private capital’ at a time where risk perceptions are elevated.
This means ‘market forces’ will offer ultra high returns for the investor class and the financial sector in general to attract the desired private sector participation.
High unemployment will ensure real wages remain ‘well-anchored’.
This means that as productivity and output increases, those gains in real consumption necessarily flow upward.
As the populist administration ironically moves to support investors and the financial sector at the expense of those working productively for a living.
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March 24th, 2009 at 8:28 pm
Warren, if they tax all your wealth away in the future, will you still believe their agenda is about distributing the wealth to the likes of you? Can’t you see they have let slip the dogs of war on the white collar and have j6p foaming at the mouth for your blood? The are going to drive the masses into such a frenzy that no white collar salary or group of assets will escape the taxes that are coming.
I was under the belief that a lot of these CDO’s being auctioned still suffer from the problem that the investor can’t drill down to the underlying house and take possession and force the deadbeat tenants to get out of dodge. Already you have sheriffs in certain counties who will not HONOR eviction laws because their cousin living in the house is more important than that foreign investor.
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March 24th, 2009 at 9:37 pm
don’t confuse the agenda with the outcome- can be two very different things
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March 25th, 2009 at 6:43 am
http://www.econlib.org/library/Leggett/lgtDE5.html#Part%20II,%2016.%20The%20Bankrupt%20Banks
The game never changes Warren, just the players ;)
Turn a deaf ear then, reader, we entreat you, to all these fraudulent attempts to cajole you into the belief that the banks, though broken, are as good as ever. They may be as good as ever, but they never were good. They were conceived in corruption. They were the spurious offspring of fraud and folly, and their whole career has been illustrative of their parentage. Attempt not, then, to heal the wound inflicted upon their credit by their own suicidal act. Set your face firmly against any legislative resuscitation of the exanimate brood of exclusively privileged money-changers. Now is the accepted time to overthrow forever the ignoble order of rag barons. Now is the auspicious moment when, by an energetick exercise of the popular strength, we may sunder forever the fetters of the paper money feudal system. The utter fatuity of legislative guardianship of the currency is signally illustrated by the present disruption of the links of the most strongly concatenated chain ever fastened by arbitrary power on the limbs of trade; and it is the part of wisdom to see that the broken fragments are not rivetted anew.
Let the banks rise from their ruins, if they can, by the recuperative force of what little vitality is left in them. We would neither render them assistance, nor oppose the slightest hindrance. But let us, in the meanwhile, embrace the lesson taught by their prostration, to insist that our legislative servants should immediately emancipate trade from arbitrary restrictions. If men of capital were at liberty to act, a system of free banking would arise on the ruins of monopoly which would dispense all the good that has ever been performed by the privileged institutions, and would be liable to none of their manifold abuses. The financial facilities which the community requires, in the prosecution of trade, are themselves a branch of trade, and perfectly within the influence of its natural laws. Let us then insist upon the divorcement of legislation from banking. Let us demand commercial freedom. Let us require that politicks shall confine itself to the affairs of government, and leave trade to manage its own concerns.
II.16.5
On the very day when the banks of this city and Brooklyn declared themselves bankrupt, stocks rose in price some fifteen or twenty per cent. This was in the confidence of a new inflation of paper money trash. But will the community consent to this? Will they tamely be imposed upon by a spurious, irresponsible, unredeemable paper currency, not worth so much as the ink wasted in recording the lying promises on its face? Will they witness a fresh series of fluctuating prices; new enterprises of mad speculation; and the prostrate fabrick of monopoly credit, now confessedly without a basis, again reared up to the clouds, to fall again, sooner or later, with more disastrous ruin?
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Ralph Musgrave Reply:
March 26th, 2009 at 4:21 pm
Re “Let them clip coupons” there is a witty and scathing attack on the UK government for making pretty much the same mistake as the US govt at: http://www.guardian.co.uk/commentisfree/2009/jan/21/treasury-banking-keynes-demand
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