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« The Great Unclog of 2009: Industrial Strength Drano, Anyone? | Main | Bailout Mark To Market Accounting: Jim Chanos Discusses The Geithner Rescue Plan, AIG, And Regulatory Capital Requirements (CNBC Video) »
Tuesday
Mar242009

Nobel Laureate Dr. Joseph Stiglitz Says "The Geithner Plan Amounts To Robbery Of The American People" 

Joseph Stiglitz lambasted the White House bailout plan for Wall Street this morning.  It's a brutal rebuttal to the lies and half-truths we were fed all day yesterday by Timmaaay's minions.  Geithner's plan is a thinly-veiled attempt to funnel even more taxpayer cash directly onto the balance sheets of failed banks.

It is intellectually dishonest and morally bankrupt.  Congress voted a certain amount for TARP, and now Geithner is multiplying that sum without going back to Congress by  experimenting with FDIC guarantees.  That might be a good way of raising lots of cash for the banking system, but it's a very bad way of getting political support.

From the Reuters interview:

The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.

"The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong.

U.S. Treasury Secretary Timothy Geithner's plan to wipe up to US$1 trillion in bad debt off banks' balance sheets, unveiled on Monday, offered "perverse incentives," Stiglitz said.

The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

"Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."

Even if the plan clears banks of massive toxic debt, worries about the economic outlook mean banks could still be unwilling to make fresh loans, while the prospect of a higher tax burden to pay for various government stimulus plans could further undermine U.S. consumers, he said.

Some Republican lawmakers have also expressed concern over the incentives offered by the government, which could end up providing private investors with more than 90 percent of the funds to buy the troubled assets. But President Barack Obama has said the plan was critical to a U.S. economic recovery,

Stiglitz, a professor at New York's Columbia University and a former World Bank chief economist, also urged G20 leaders at their London summit next month to commit to providing greater resources to developing countries and said China should be given bigger voting rights in the International Monetary Fund.

"The voices of developing countries, and countries like China that will provide a lot of the money, are not heard."

China would be hard pushed to reach its targeted 8 percent economic growth this year, but the important thing was that at least the Chinese economy was still growing, he said.

Stiglitz welcomed China's proposal on Monday for an overhaul of the world monetary system in which Zhou Xiaochuan, governor of the People's Bank of China, said the IMF's Special Drawing Right has the potential to become a super-sovereign reserve currency.

Stiglitz has long called for the U.S. dollar to be replaced as the only reserve currency. Basing a reserve system on a single currency whose strength depends on confidence its own economy is not a good basis for a global system, he says.

"We may be at the beginning of a loss of confidence (in the U.S. dollar reserve system)," he said. "I think there is support for some sort of global reserve system."

Dr. Stiglitz Argues For The Creation Of New Banks

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Reader Comments (10)

Mar 24, 2009 at 5:03 PM | Registered CommenterDailyBail
Geithner plan will rob American taxpayers: Stiglitz

http://www.reuters.com/article/newsOne/idUSTRE52N1IW20090324
Mar 24, 2009 at 5:05 PM | Registered CommenterDailyBail
The Geithner Plan

How Taxpayers Can Get Hosed Even When Private Investors Get Rich

http://www.businessinsider.com/how-taxpayers-can-lose-money-even-when-private-investors-get-rich-2009-3
Mar 24, 2009 at 8:42 PM | Registered CommenterDailyBail
Video: From The World Economic Forum at Davos, Nobel Laureate Joseph Stiglitz Discusses 'Bank Management Stupidity'


http://dailybail.com/home/2009/2/15/bank-bailout-news-video-from-the-world-economic-forum-at-dav.html
Mar 25, 2009 at 1:28 PM | Registered CommenterDailyBail
Nobel Laureate Joseph Stiglitz Argues For The Creation Of New Banks (Video And Links 3-22-09)

http://dailybail.com/home/bank-bailouts-nobel-laureate-joseph-stiglitz-argues-for-the.html
Mar 25, 2009 at 1:29 PM | Registered CommenterDailyBail
Commentary: How to rescue the bank bailout by Joseph Stiglitz

http://www.cnn.com/2009/POLITICS/01/26/stiglitz.finance.crisis/index.html?ref=patrick.net
Mar 25, 2009 at 1:29 PM | Registered CommenterDailyBail
Great post - thanks to Mr. Stiglitz for saying it in plain English. Mr. Obama has allowed himself to be TAKEN OVER by his damn Wall Street con-artists, er, Banksters.

#1. (Robert) Rubins & Tim Geithner PRESIDED OVER CATASTROPHE last year - Rubins CITI-Group MELTED DOWN to BANKRUPTCY; and Geithner was just 2 or three men behind Ben Bernanke at the Fed... presiding over the COLLAPSE of the ENTIRE US financial markets!!
WHERE the HELL did Mr. Obama get the idea that these guys had a LICK of "GOOD advice"???

#2. Obama's number two guy at the White House, WH Chief of Staff Rahm Emanuel, was an "investment banker" for a Chicago mini-version of Goldman-Sachs, where Emanuel made $18 million in 3 years using his Dem. DC insider political connections (he came out of Clinton White House as a Senior Advisro in 1998) to help Wasserstein-Perrella leverage Merger & Acquistion deals...
http://www.nytimes.com/2008/12/04/us/politics/04emanuel.html
.... the LBO buyouts that end up firing HALF of a taken-over company's workers to pay off the loans, interest, & BANKER FEES of the LBO sharks!
#3. Obama's SECOND-tier WH officials are ALSO banksters - who got have gotten BONUSES from BAILED OUT COMPANIES this year!!
http://thecaucus.blogs.nytimes.com/2009/03/24/should-white-house-employees-keep-bonuses/
#4. Robert Scheer- "Obama's TOXIC ADVISORS" are - well, like a toxic chemical spill, or a "Toxic" security!
http://www.truthdig.com/report/item/20090325_obamas_toxic_advisers/
#5. David Sirota: Summers "invites" Bankers & Financial execs to $5,000/seat "conference" - AT WHITE HOUSE!
This is almost a DIRECT SHAKEDOWN ("request" for KICKBACKS) of BAILOUT recipients!
http://www.openleft.com/showDiary.do?diaryId=12453

#6. Matt Tiabbi, RollingStone: EVERYONE KNOWS that there was GROSS, BLATANT CORRUPTION in AIG's "Financial Services" Division which drove the ENTIRE staid, conservative company - into mega-bankruptcy
That is, "everyone knows," it appears, BUT President Obama, the centerpice of whose "Economic Plans" is
(see this DailyBail story about Geithner's ROBBERY) is TO GIVE HUNDREDS of BILLIONS of dollars to his (above listed) Banksters & Gangsters friends!
http://www.rollingstone.com/politics/story/26793903/the_big_takeover

Mr. Obama is making a fool of himself, if he can't see how the above players in HIS White House,
A.) HELPED STEER THEIR COMPANIES, and the ENTIRE ECONOMY, into the abyss last year; and
B.) how BLATANTLY CORRUPT it looks !
Mar 26, 2009 at 8:49 PM | Unregistered CommenterVeracity
One admits that life seems to be very expensive, but people need money for different things and not every man gets enough cash. Thence to get good <a href="http://lowest-rate-loans.com">loans</a> and just term loan should be a correct way out.
Mar 30, 2010 at 12:31 PM | Unregistered CommenterMayerBianca30
"Nobel Laureate Dr. Joseph Stiglitz Says "The Geithner Plan Amounts To Robbery Of The American People""

No shit Sherlock. I've been saying as much for over 5 years now; where's MY fucking Nobel?
May 14, 2010 at 3:57 PM | Unregistered CommenterRecoverylessRecovery

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