Czars, Kings, and Presidents

By James Kwak

Over the years, Tim Geithner has come in for a lot of well-deserved criticism: for putting banks before homeowners, for lobbying for Citigroup when it wanted to buy Wachovia, for denying even the possibility of taking over failed banks, and so on. The release of his book, whatever it’s called, has revived these various debates. Geithner is certainly not the man I would want making crucial decisions for our country. But it’s also important to remember that he was only an upper manager. The man who called the shots was his boss: Barack Obama.

That’s the theme of Jesse Eisinger’s column this week. I’m on Eisinger’s email list, and he described the tendency to focus on Tim Geithner—while ignoring the role of the president—as “If only the Tsar knew what the Cossacks are doing!” I wasn’t familiar with the Russian version, but I’ve always been fond of the seventeenth-century French version. In September 2009, for example, Simon and I wrote this about the financial reform debate: 

“During the reign of Louis XIV, when the common people complained of some oppressive government policy, they would say, ‘If only the king knew . . . .’ Occasionally people will make similar statements about Barack Obama, blaming the policies they don’t like on his lieutenants.

“But Barack Obama, like Louis XIV before him, knows exactly what is going on.”

And I reused that phrase as the epigraph for the short article I wrote for the Harvard Law Review (which I blogged about yesterday).

In his column, Eisinger describes Geithner as a foot soldier in an administration full of hesitant bureaucrats who “compete to see who can bow more quickly to what they perceive as the political realities of the moment.” Obama took particular pains to stand behind Geithner throughout his term as treasury secretary. Whom should we blame for that?

30 responses to “Czars, Kings, and Presidents

  1. You and other financial/econ writers such as Krugman and Brad deLong have certainly opened my eyes to the unseen powers that affect even Democrats (or their appointees) when they consider policies that would actually help ordinary workers/consumers first and foremost. However, using the Louis XIV quote clearly implies something we don’t know and President Obama hasn’t said. You say we are criticizing the wrong man, but you imply the President
    had at least a reasonable chance of succeeding with the policies Geithner is criticized for killing, but simply failed to try.

    It is true that if he wanted to ask for a half again bigger stimulus, he could have. It is true that if he wanted to ask for a plan to bail out underwater mortgage holders as well as banks he could have. Both were clearly better than the alternative, had they passed. But that’s not the same as saying they would have passed over the ‘star chamber’ powers of a Senate filibuster. Or that they wouldn’t have led to some kind of Wall Street backlash. That’s also not the same as saying Obama made the decision not to ask for them simply because he’s a coward.

    I wish he’d tried too, even if he failed. Someday he’ll write a memoir (more honest than Geithner’s) and explain why he didn’t. Until then I’m giving him the benefit of the doubt even if it hurts. I believe he’s too smart to fail to take the actions you advocate without believing something worse would happen somehow. I guess I’ll just have to be disappointed when those memoirs come out. I’ve been a sports fan all my life and I’m familiar with ‘Monday morning quarterbacking’. It’s the next best thing to actually watching the games, and it’s even better than the game when your team loses.

    You may think since we already had the ‘first black president’ he might as well have ‘swung for the fences’ given the low esteem in which Wall Street was held circa January 2009. You may think caution was the last thing Obama should have cared about when confronting the klepto/plutocrats. He thought otherwise. It’s fun to speculate about, especially when you know on the facts your policies would have worked. What you won’t know until those memoirs come out is what the Gucci-booted thugs really told him in confidence when he considered those policies. For Obama’s sake I hope it’s pretty scary.

  2. Moses Herzog

    If you believe in Unions, and fighting for “the little guy” please “follow” this courageous young lady on Twitter:

    https://twitter.com/Adriana_4812

    You can also follow:

    https://twitter.com/fightfor15

    There are people who are being very courageous right now, fighting for a LIVING WAGE for their families while TBTF banks are racking up debt to pay for bonuses YOU will pay for when the next crisis hits, so TBTF bankers throw these people out of their homes when the next crisis hits, as Republicans like Paul Ryan try to demonize people like Adriana for not paying their mortgage and/or rent.

  3. Moses Herzog

    Check it out:

  4. Moses Herzog

    These people have families. UNfortunately, Adriana won’t be invited to the White House a la Jamie Dimon, a la TBTF banker crony Geithner, ANYTIME soon to ask her how she feels about economic policy (or lack there of). President Obama has “important” things to do like host WhiteHouse Correspondents’ Dinner and yuk it up with George Clooney. :

  5. Anonymouse

    That’s too bad for Adriana, perhaps she will exact sweet revenge some day real soon.

  6. But what about all those tenured finance professors who should know that risk-weighted capital requirements for banks seriously distorts the allocation of bank credit…but never said a word about that to Czars, Kings or President, nor taught that to cossacks or to the Timothy Geithners of this world?

    http://subprimeregulations.blogspot.com/2014/05/how-come-xxx-who-graduated-as-financial.html

  7. Bruce E. Woych

    http://wallstreetonparade.com/2014/05/charges-of-lies-swirl-around-tim-geithner%E2%80%99s-new-book-%E2%80%9Cstress-test%E2%80%9D/

    Charges of Lies Swirl Around Tim Geithner’s New Book, “Stress Test”
    By Pam Martens: May 12, 2014
    [Excerpts]
    “The interesting thing about those Wall Street big-bank “terrorists” and the regulators who “didn’t design the fire system right” is that they’ve gained more power and ability to bankrupt the nation since the flaming aircraft landed on the runway foamed with the human suffering of evicted families who were robo-signed out of their homes.”

    “When President Obama nominated former Citigroup executive, Jack Lew, to succeed Geithner as Treasury Secretary, the President said: “When the history books are written, Tim Geithner is going to go down as one of our finest secretaries of the Treasury.”

    President Obama must have been contemplating Geithner’s own revisionist history book and the mega Wall Street-styled road show planned to instill this revisionist history as the accepted wisdom of the age.

    The Geithner road show includes a “town hall” and events featuring former Fed Chairman Ben Bernanke, former Treasury Secretary Hank Paulson, an event at Harvard with David Gergen and various other moderated events.
    Given that the raging debate today is just how badly the financial markets are rigged by these same untamed Wall Street behemoths, Geithner’s book will hopefully be relegated quickly to the discount rack while he moves on to collect his winnings on Wall Street in his new job as President of private equity firm, Warburg Pincus.”

  8. Moses Herzog

    @Kurowski
    I often disagree with your take on the crisis and regulations (especially as they relate to capital reserve ratio requirement for the largest banks). And often I will take the side of education. But on this aspect, I have to AGREE 100% with you. Higher education was a grand failure in giving a “heads up” on what was going on. I don’t know if this is because many economics professors are positioning themselves for jobs at the regional Federal Reserve banks, or because of banks, natural gas frackers and the like awarding higher education (Universities) business departments’ endowments to STFU about industry abuses and to keep quiet and mute their inner moral compass. But what you said is dead on right.

    As cynical as I do get sometimes, I do find some hope in the energy of youth. I think if Miss Alvarez (below) ever musters the resources, or finds a friendly benefactor, she has the raw intelligence necessary to get herself a college education. In which case, I hope she can use her education as a tool/jumping board to help other high potential youth such as herself:

  9. Bruce E. Woych

    President Obama’s Mother worked under Peter Geithner :

    http://www.wnd.com/2010/08/186677/

    “On April 27, 1981, Dunham applied from Jakarta, Indonesia, for a U.S. passport, indicating that she was in Indonesia working on a two-year contract from the Ford Foundation, from January 1981 through December 1982.

    At that time, Dunham was working on a microfinance program for the Ford Foundation, which was overseen by Peter Geithner, the father of Timothy Geithner, the current U.S. secretary of the treasury.”
    Read more at http://www.wnd.com/2010/08/186677/#AoK0C0Vy3Pc5LKx2.99

  10. Bruce E. Woych

    http://www.economicpolicyjournal.com/2011/11/nyt-comes-pretty-damn-close-to.html

    Posted by Robert Wenzel at 3:41 PM
    Sunday, November 13, 2011
    “Born two weeks apart in August 1961, the president and Mr. Geithner each spent childhood years in Asia because each had a parent working for the Ford Foundation on overseas development.

    As I have reported many times, I suspect Geithner’s father is/was high level CIA and used the Ford Foundation as cover to travel Asia.

    What NYT fails to mention is that Geithner’s father was in charge of microfinance in Asia for the Ford Foundation and the Obama’s mother ran microfinance for the Ford Foundation in Indonesia.
    [and]
    “My guess is that it was a lot more than once and this sheds a lot of light on who Barack Obama and Tim Geithner really are.”
    (excerpted from: http://www.economicpolicyjournal.com/2011/11/nyt-comes-pretty-damn-close-to.html) by Robert Wenzel

  11. Bruce E. Woych

    http://www.theatlantic.com/magazine/archive/2010/04/inside-man/307992/?single_page=true

    The Inside Man
    The Atlantic
    Profile April 2010 ATLANTIC MAGAZINE
    =========================
    (2)
    Dean Baker
    Timothy Geithner Saved Wall Street, Not the Economy
    Posted: 01/28/2013 2:55 pm

    http://www.huffingtonpost.com/dean-baker/timothy-geithner-saved-wa_b_2568358.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

    (3) ——————————————————————————-
    Richard (RJ) Eskow
    Grading Geithner – and Waiting for Obama
    Posted: 01/28/2013 11:55 pm

    http://www.huffingtonpost.com/rj-eskow/grading-geithner—and-wa_b_2571341.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

  12. We should blame Obama, of course. It’s been clear that Obama is an economic conservative for years now. The commentary surrounding Geithner’s self-serving book only underscores it. But if we put the blame where it belonged we might have to elect a liberal president.

  13. Anonymouse

    Good stuff Bruce. We already knew who they were and what they were about, it seems to me to be a Kennedy situation beginning in finance rather than politics. The depression was brought about by a lack of promised tools, and the disappointment which accompanies it. By the time the tools arrived, there was a need to get rid of them, hence the underground economy. These youngsters Tim and Barack have no idea of the extent of the problems they carried the torch for, and the elders (or the Fed for that matter) are in such denial or disbelief that they can no longer even talk about anything other than the status quo and their options. Keep your eye on the Fed, once that experiment fails in grand fashion, there will be cause & effect, trickle up or trickle down, consequences. We get closer to it each and every day, but so do the time police.

  14. And why stuff like the “Holocaust” happened starts making sense….

    SAS (spiteful ass syndrome) – the economic genocide the FRB concocted…

    This economic genocide is every bit as horrific as the holocaust….that’s what is going into the history books.

  15. Craiger, why do you think that it is praiseworthy that Obama attempted only that which he knew he could achieve? In my day that was the definition of mediocrity. In my day we dared to risk failure in pursuit of greatness.

  16. Probably because the requirements for political capital have fallen in the hands of the same kind of silly risk adverse regulators like those who came up with risk-weighted capital requirements for banks.

    http://subprimeregulations.blogspot.com/2009/07/risk-in-not-running-risk-of-risky.html

  17. Anonymouse

    Not to mock Paul during his illness, but who is the silly one.

  18. Paul’s new wife has run him into the ground rather quickly….nothing like concert ticket sales being “laundered” into supporting liceform “derivatives” since so many previous hosts have being sucked dry….

    I agree, Per, go suck “risky” dry for a change – although how risky is it to invest in outhouses in India that are equipped with free wifi…?

    To paraphrase the Bard, “…economic genocide, by any other name, would still smell just as _____….”

  19. Tony Foresta

    These last two articles are indicitave of the futility of any kind of meaningful response, or remedy to the predatorclass and their minions in the TBTF oligarchs relentless robbing and pillaging of Amerika’s poor and middleclass for profit. Reminding all these erudite commentators and our humble hosts that there has never been a wider divide between thehaves and thehavenots in America’s history. The only possible solution to these systemic and endemic evils, and they are wanton evils, (wherein the predatorclass alone, profit from, and are excused and removed from any accountability for grotesque crimes and failure) – is vigorous enforcement. Personally, the Chinese model is most effective. Executives, managers, anaylists, traders, et al., that are tried and convicted of abuses, or wanton failure are sentenced to long jail terms, and crippling fines, or – my preferred remedy – executed!!!

    Without enforcement – there is no ruleoflaw. GM recently paid a $35m fine for knowingly covering up and potentially lethal design flaw in their ignition manufacturing processes. This is not even a handslap to an oligarch like GM, – no one went to jail. Ditto, BofA, Goldman Sachs, Citi, Credit Suisse, et al, whose rank criminality (Mexican cartel drug money laundery, fraudulent robosigning operations, misleading and betting against their own investor, tax evasion, systemic Libor manipulation, endemic mortgage fraud, many less destructive infractions, and the ridiculous monsterous PONZI scheme that is the entire derivatives market, – where no individual was punished, – no one including the oligarchs admitted to any wrongdoing – and the socalled fines were so minimal that effectively – NO PUNISHMENT was administered. Handslaps or minor thips incentivise systemic wanton abuse and criminality. Real punishments would de-incentivise the systemic failure, abuse, and wanton criminality of the TBTF oligarchs.

    Punish abusers and criminals with long prison sentences, (like we heap on our poor and middleclass notwhite, notrich fellow Amerikans for minor pot infractions), and the dread certainty of execution for the most heinous criminal activity and/or failure would immediately

    If there were real harsh punishments, there would be less promogulating or tolerating systemic criminal activity and grotesque failure of, and by the predator class and the financial oligarhs.

    A second critical remedy involves preventing and prohibiting the revolving door profiteering of regulators, judges, and politicians. The constant shapeshifting from spaniel and proponent, protector, and shielder of TBTF oligarch interests in positions of political power, and then slithering back into exhorbidantly high paid oligarch board or management positions, – only to shed their reptilian skill and slink back into political positions or appointments to further advance and protect the very oligarchs enriching and providing the means of wanton profiteering of these predatorclass individuals. That satanic beast, lying slithering reptile, and fascist dick cheney is the perfect example and flagbearer of this most grotesque wrong and evil tolerating the relentless intermingling, shielding, and advancing of of oligarch, by socalled government. Geithner, Summers, the entire bushfamily crime cartels, and a lengthy abominable list of shapeshifting manipulators and wanton profiteers present additional glaring examples of systemic criminal activity shielded and advance throught the evil machinations of revolving door politics and oligarch malfeasances.

    No politician, regulator, appointed offical, judge, or repesentative of the socalled government should ever be allowed to WORK FOR, LOBBY FOR, promote, advocate, or in any way profit from any oligarch or industry they formally promoted, shielded, oversaw, regulated, adjudicated, or advanced. Shut the revolving door. Destroy it. Make it impossible. Ruthless punilsh any attempt at profiteering from any political, lobby, or government position or appointment, and the evil incentives will be instantly and radically altered!

    Of course – like these last to articals, – we all know these are rhetorical discussions and that NOTHING meaningful will ever happen to right these horrible wrongs, because the spaniels in the socalled government are owned, controlled, and abject tentacles of the monsters in the fascists predatorclasas and the oligarchs the predatorclass owns, controls, shields, extracts otherworldly profits from systemic criminal activity, systems, and processes.

    Burn it all to the ground!!! Reset!! It’s the only hope for real freedom, and the best interests of the 99%!

  20. Genocide against the “risky”….

    from wiki – “….Lemkin defined genocide as follows: “Generally speaking, genocide does not necessarily mean the immediate destruction of a nation, except when accomplished by mass killings of all members of a nation. It is intended rather to signify a coordinated plan of different actions aiming at the destruction of essential foundations of the life of national groups, with the aim of annihilating the groups themselves. The objectives of such a plan would be the disintegration of the political and social institutions, of culture, language, national feelings, religion, and the economic existence of national groups, and the destruction of the personal security, liberty, health, dignity, and even the lives of the individuals belonging to such groups….”

    Like I said before, ultimately the rinse and repeat schtick is revealed and stuff like the “holocaust” becomes understandable – how long can you watch them laugh with glee that they got away with it….?

    As for GM, THAT story reveals how one embedded ideologue in C-suite management uses DURESS against the employees to NOT SOLVE THE PROBLEM AS SOON AS IT APPEARS.

    The TRUTH is that that personality type of manager is LAZY. Yes, the REAL psychological diagnosis is LAZINESS – too LAZY to fix the problem!

    Kwak raises the debate that he does NOT want the sycophants of GLOBAL War, Drug and Slave Lords to make important decisions – financial and otherwise – for him by the Timmy’s and Barry’s of the world.

    Power is maintained and empires grown when everyone who reports to the LAZY “manager” is forced to become a LIAR about stuff like the part defect (GM) because then they all blackmail each other.

    Ironically, the only way to get rid of the virtual-reality crabs in the pubis in the USA is to bring them up for espionage that was conducted FOR THE GLOBAL WAR, DRUG, AND SLAVE LORDS with economic genocide as their final goal.

    Go ahead and laugh and call me crazy, but parents need to stop forcing their kids to take on debt for the kind of “education” that does nothing other than brainwash you in how to NOT call a spade a spade…

    IT IS GENOCIDE. Seriously, every law on the books was broken with the Wall Street Mantra that accompanied the robosigning – “…Not everyone DESERVES to own a HOME….”

    Haven’t witnessed enough of it here, yet, Tony F…? Get on the anti-wha’ever list (they make it up as they go along, almost a new niche group every day) and the dreaded Feminist List. Well they are on MY list – the bat-shit crazy list – any one of them can become an Adam Lanza at any minute now that some of their backs are up against the wall – so GOVERNMENT FORCE to contain them is LONG overdue….oh wait, the GOVERNMENT is using their force to go after the cattle that belong to the last rancher in Clark County NV – like the rancher is WRONG when he calls the people coming after him “thieves”….???!!!

    ARGUE how this “crash” was NOT genocide – Per has been making the case for how the “risky” were targeted by Swiss Bankers for decades for a suck out to themselves – the “not risky”…

    “….It is intended rather to signify a coordinated plan of different actions aiming at the destruction of essential foundations of the life of national groups, with the aim of annihilating the groups themselves. The objectives of such a plan would be the disintegration of the political and social institutions, of culture, language, national feelings, religion, and the economic existence of national groups, and the destruction of the personal security, liberty, health, dignity, and even the lives of the individuals belonging to such groups….”.

    Genocide is genocide.

    I still want to know WHO has such virulent hatred of USA Middle Class – the LABOR who EARNED their standard of living through HONEST WORK….?!

    Check the news footage for how Timmy kissed the hem of his Saudi masters the first time he went to their tents after he got the keys to the economic kingdom of derivatives. Timmy was an unmitigated DISASTER, but so typical of the HISTORY that the ENTIRE GEN-X is leaving behind as a legacy – internet liceforms…..

    Happy Memorial Day

  21. “Now we can whine about it. We can whimper. Or we can fight back. Me? I’m fighting back.

    This is a fight over economics, over privilege, over power. But deep down, this is a fight over values. Conservatives and their powerful friends will continue to be guided by their age-old principle: “I’ve got mine, the rest of you are on your own.”

    But we’re guided by principle, too. It’s a simple idea: We all do better when we work together and invest in our future.”

  22. Anonymouse

    The laws of nature dictate the rule of human law. Just don’t be on the wrong side of nature, it’s that simple.

  23. A blogger on the internets :-) explains it this way about the Global War, Drug and Slave Lords:

    “….Most of the industrialized Asian nations are creating new national wealth for themselves so that a portion of that some of their new National wealth can be confiscated by their governments via taxation to pay for their government activities, instead of borrowing money to pay for their government activities as the USA is doing!

    US citizens are selling (or mortgaging as collateral for US treasury bonds) title to everything of privately owned national wealth with any value in the USA that was created by previous working generations of their citizens in order to pay for our government activities and our foreign made consumer products.

    This creates a constant flow of title to US privately owned wealth generating assets transferring to individuals in the wealth creating industrialized nations.

    Foreigners are immigrating to the USA as they purchase title to our US located assets and then they will eventually become the major (or maybe the only) source of employment for US citizens after they redeem their US treasury bonds and US dollar (electronic) credits for title to and control of all of the businesses located in the USA….”

    “Foreigners”….? Don’t you just gag at that kind of political correctness?

    And the deep dark secrets of the 1% keep bubbling up:

    http://rt.com/op-edge/161020-prince-charles-strikes-blow/

    Prince Charles vs Putin is not worth throwing a bag of popcorn in the microwave….there’s no contest….

  24. “…The laws of nature dictate the rule of human law….”

    Yeah, always knew the little head rules – witness over-population….

  25. Bruce E. Woych

    Try to Contain Your Laughter: Prince Charles and Lady de Rothschild Team Up to Talk About ‘Inclusive Capitalism’

    http://wallstreetonparade.com/2014/05/try-to-contain-your-laughter-prince-charles-and-lady-de-rothschild-team-up-to-talk-about-%E2%80%98inclusive-capitalism%E2%80%99/

    By Pam Martens: May 28, 2014

  26. http://rt.com/business/162200-russia-bealrus-kazakhstan-union/

    Sorta like USA, Canada and Mexico…? And how did that work out for the “middle class”….?

    The GLOBAL War, Drug, and Slave Lords’s sycophants – the Wall Street banksters – are still winning the economic genocide war against “middle class” with their troika of derivatives – nihilism, anarchy and worship of self-hood…,

    More misery for others = More $$$$ for ME ME ME

    In 3, 2, 1 let “The Hammer” propaganda machine loose about how well “financial sanctions” against dead Russian oily-garths (like Berezovsky?) are working….

    http://www.theguardian.com/world/2014/mar/27/boris-berezovsky-inquest-open-verdict-death

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