Obama is on the road selling his stimulus plan today before heading back to DC for a primetime news conference. That and the day’s other political news in the TPMDC Morning Roundup.
Calling Obama’s new bank rescue plan a “plan” may give Geithner Summers et al. too much credit. Floyd Norris notes in today’s NYT (my emphasis):
Details of the new plan, which were still being worked out during the weekend, are sketchy. And they are likely to remain so even after Treasury Secretary Timothy F. Geithner announces the plan on Tuesday.
That’s reassuring.
Tomasky: “I love the smell of stimulus spending in the morning. It smells like … victory.”
Zack Roth unpacks the allegations involving payments from RNC Chairman Michael Steele’s 2006 Senate campaign to a company run by his sister.
Gov. Crist (R-FL) is joining Obama at his Stimulus Bill event in Florida tomorrow.
How do you wrest control of the banking industry away from the vested elites who got us in this mess? Former IMF chief economist Simon Johnson makes the fascinating point that breaking the back of the elites is a critical stage in crisis resolution in developing and post-communist countries — a stage we have yet to go through in confronting our own crisis:
The elites who run the US banking industry have had a great run of economic good fortune. They used this wealth to further strengthen their political power, both through donations to politicians of almost all stripes and more broadly through taking positions of formal and informal influence throughout the executive and legislative branches.
Our unsustainable debt-fueled boom, in other words, produced both the conditions for a major global financial disaster, and a political strengthening of the people who benefited most from the risk-taking and associated compensation packages that made this disaster possible. Ending the financial crisis is relatively straightforward – a forced recapitalization and change of ownership/management in the banking system – although this will not immediately lead to an economic recovery … But seen in deeper political terms, decisive action to restructure large banks is almost impossible. Such action would require overcoming perhaps the single strongest interest group in the United States today.
How can you do it? The answer must be by splitting this powerful interest group into competing factions, and taking them on one by one. Can this be done? Definitely, yes. In particular, bank recapitalization – if implemented right – can use private equity interests against the powerful large bank insiders. Then you need to force the new private equity owners of banks to break them up so they are no longer too big to fail.
I’m preparing to do one of our video interviews with Johnson later today, and I’m eager to explore the political economics of the bank bailout with him. I should add that Johnson is not optimistic that the plan Geithner is set to roll out tomorrow is the back-breaking proposal we need.
RNC Chief Michael Steele says the people who’ll get relief from the Stimulus Bill are just looking for a little “bling bling”.
TPMtv caught up with Robert Reich, former labor secretary and UC Berkeley professor. He gives us his take on the stimulus package (“Pretty good… Maybe not an A but an A minus”) and talks about how the financial crisis has to be taken as an opportunity to do more than simply get us back on the old track: “That track is filled with potholes and it’s going to eventually be so slippery we fall off the cliff again.”
TPM Reader JC sent me to this interview with Nouriel Roubini and Nassim Taleb on CNBC. Here’s what JC wrote: “In this clip, Nouriel Roubini and Nassim Taleb are still being treated as a circus sideshow by CNBC… They’re predicting the end of finance, and offering the only clear path out of this mess that I’ve seen offered (with the knowledge to back it up), and CNBC keeps asking them for stock tips. It’s ludicrous. Wall Street media — CNBC at least — doesn’t realize how bad this is yet. They’re stuck in a bubble where they think everything will go back to normal in a few months….”
He hits it spot on. These two guys are talking about a deep structural crisis in the world economy. And these CNBC yahoos can’t stop asking for stock tips. Really surreal.
I’m watching it again now. This is a seminal piece of video. You have to see it. I’m not sure I’ve seen anything that captures — albeit unintentionally — the vast disconnect over what is happening today in the US economy.