Eugene Robinson on Tim Geithner, Obama Coverage, Bailout Anger
Tuesday, March 24, 2009; 1:00 PM
Washington Post columnist Eugene Robinson was online Tuesday, March 24 at 1 p.m. ET to discuss his recent columns and the latest news.
Submit your questions and comments before or during the discussion.
Eugene Robinson: Another day, another economics seminar. The markets reacted well yesterday to Treasury Secretary Timothy Geithner's plan for rescuing the banks (from their own idiocy), but nobody is going to predict ultimate success or failure on the basis of one trading day on Wall Street. President Obama meets the press -- and the nation -- tonight. The pitchfork mob outside AIG headquarters seems to be dwindling. All in all, a lot of movement on the economic front. But are we getting anywhere?
Washington, D.C.: How much economic expertise do you think one needs to be able to fairly judge the administration's banking crisis plans? It seems like 90 percent of pundits have no idea what they are talking about and are just reasoning emotionally based on their pre- existing views on responsibility, government invention, and Wall Street.
My own rule of thumb is that if someone is 100 percent sure about what to do about the banking crisis, he or she doesn't really understand the problem.
Eugene Robinson: Your estimate of 90 percent may be low. Of course, pundits write and talk all the time about subjects in which they are less than expert. There are exceptions -- Paul Krugman, who won the Nobel Prize in economics, is the most prominent exception. He doesn't like the Obama administration's bailout plan for the banks, to put it mildly. But there are equally esteemed economists who disagree. I think your assessment is right: Anyone who is certain of the solution probably doesn't fully appreciate the complexity of the problem.
I'm cautiously optimistic that one day we will pull positively out of the economic mess that we are in. But I must say that I don't have much faith in either the media or much of Congress. I don't think that on aggregate they are mature enough to help in the process. There are no more Cronkites, Murrows, Rayburns or O'Neils or Dirksens out there that could tamp down the juvenile bickering and get down to serious business. If I have to hear another story about Michelle's arms or Barack's laughing during an interview, I am going to spontaneously combust!! Same with the GOPs stupid responses to administration policies...just stop it already, you're making me nauseated!
The immaturity is breathtaking and would be amusing if the situation was not so dire.
Eugene Robinson: There are plenty of reasons to criticize the media, and even more reasons, in my opinion, to criticize Congress. But I can't entirely agree with your view that no one should be allowed to talk about anything other than the economic crisis. A little relief every once in a while can be a good thing.
Washington, D.C.: What Geithner (and even Mr. Pearlstein) don't get is that we WANT systemic overhaul, not an "improved system" where taxpayers shoulder the loss and Wall Street gets all the gain.
I'm with Krugman, and I don't see this working in the long term. It may get Obama into a second term, but the systemic problems remain (greed is good, expansion can be sustained indefinitely)...reality will hit us again 7-10 years down the road when all this happens again and we have a $20 trillion deficit.
Still "hoping" for "change."
Eugene Robinson: I agree that band-aids are an inadequate response. In fairness, I should mention that when I talk with administration officials, they talk about the succession of bubbles and crises we've had over the past few decades and say that more fundamental change is needed to put the economy on a more sustainable course. Stay tuned, they say.
Galesburg, Ill.: I can't understand why anyone would want to participate in Geitner's toxic asset offer. The only way for the investor to come out ahead is at government expense since Geitner's plan requires the government to offer extraordinary incentives to potential investors. And what investor after seeing what happened to AIG employees is going to trust the Congress? If the extraordinary profits promised by this plan end up coming from the treasury no doubt our esteemed U.S. Congress will demand a refund. Count me out!I want nothing to do with any government bailout program.
Eugene Robinson: The reason for investors to participate is that their risk is minimized and their potential gain is maximized. The profits wouldn't come from the Treasury, they'd come from appreciation of the purchased assets. It was designed to be a sweet deal for private investors, and it is.
Alexandria, Va.: Do you think the Wall Street Fat Cats are going to keep puting barriers in the Obama Administration way by spending excesses, bonuses, retreats, jets, remodels or will they finally catch a clue and start trying to use all the bailout money in an efficient manner. I'm amazed that after putting their companies on the brink of ruin that they continue wasteful practices and they don't realize that the average American salary is much less than 50% of their salary, bonus not included.
washingtpost.com: Banking on What? (Post, Feb. 24)
Eugene Robinson: Wall Street justifies its mega-salaries and mega-mega-bonuses by claiming they're necessary to lure and retain the brightest of the bright. But would people who were really so smart behave in such a stupid way? There are CEOs who get it -- who understand that these excesses are no longer acceptable and that the culture of Wall Street has to change. But these sentient executives are not, alas, close to a majority.
Tim the Plumber: Your "repairman" analogy is apt. Right now we don't have the time to design and build a whole new house.
Let's fix what we have and get the, er, "credit" flowing again. Then we can start the renovations.
washingtpost.com: The Repairman's Burden
Eugene Robinson: That was my analysis of what Geithner is trying to do. I wonder whether the administration should be tougher in demanding systemic change on Wall Street, but obviously it would be counterproductive to make changes in a way that hampered efforts to get money and credit flowing in constructive channels.
Rhode Island: Hi Gene,
What, if anything, can be done when we have a week of hysterical focus on 1/10 of 1 percent of a serious problem? And when most of what is bandied about is just plain inaccurate? I just had to tune out after a while, I was so disgusted.
Cable bloviators should be required to pass a test proving that they have read and comprehended Steven Pearlstein's columns before opening their mouths on national TV.
I don't mean you, of course. I love seeing you on "Morning Joe," though I'm getting increasing weary of Joe. His sole purpose these days seems to be flinging poo at Obama instead of hosting any rational discourse. Good thing you're there at least once a week.
Thank you. I feel better now.
Eugene Robinson: I feel better, too.
Austin, Tex.: What is your take on Paul Krugman's ideas? Personally I respect him and always listen to him with interest, but it seems that to implement his plans would require huge government expense and responsibility. Is the public really ready for that? Frankly at this point no one except Wall Street might care if the government nationalized say, Citibank for example. Who are the economists who agree with Geitner's plan?
Eugene Robinson: Krugman believes that these "toxic" assets are pretty close to worthless, or close enough to make the banks that own too much of the stuff technically insolvent. The logical thing for the government to do, then, is either buy up all these assets, relieving the banks from this blight on their balance sheets -- and federalizing the entire loss; or take over the insolvent banks, clean out the sludge and then return them to the private sector. My view -- and keep in mind that I haven't won the Nobel in economics -- is that it's reasonable to do what the administration is doing, which is to set up a process to try to determine what these assets are actually worth. Seems to me that if you unload, say, even half the stuff through this public-private process, you're better off than before.
Chicago: Watching cable TV news and reading on-line news and reader comments is so disheartening. I have to say, though, that I think the American public actually "gets it" -- and I don't mean the pitchfork anger. It is gratifying to read the polls that find a majority recognize that (1) Obama and team did not create this mess since Jan 20; (2) it will take time to fix; and (3) until further notice, give the team a chance. And, by the way, this is the only team we have. Everyone else needs to pipe down the noise level, think before spouting off, and focus on a patriotic (not politics of the moment) response.
Eugene Robinson: The general public has been much more reasonable throughout the whole crisis than the political class, which has been pretty hysterical.
Burke, Va.: Hello. It feels like the country is being held hostage by financial terrorists on Wall Street: "Give me taxpayer Billions, or we will destroy the world economy." What is stopping us from replacing management (CEOs) at all the companies making this threat? We should be prosecuting these folks, and claiming all their assets to correct this mess at the very least, just like we seize Iranian assets in response to terrorist support.
Eugene Robinson: The problem is that we could seize all the Wall Street executives' houses, yachts, private jets, etc., and it still wouldn't be a drop in the bucket compared to the mess they have created. I do think, though, that it's wrong to let the people who caused the problem dictate the terms of the solution. The government should use sticks as well as carrots to move this wagon train forward.
Seattle: Is it just me, or does Paul Krugman really have a point?
The problem with the Bush/Paulson plan was it rescued bankers and Wall Street speculators at the expense of taxpayers and home owners. The problem with the Obama/Geitner plan is it also rescues bankers and Wall Street speculators at the expense of taxpayers and home owners.
Why should Joe sixpack get excited about a financial system "rescue" plan that does nothing to rescue him?
Eugene Robinson: It's a hard sell. Obviously, we need a banking system. We can't rescue the banking system without rescuing some bankers, alas. I think the administration should have come out with a mortgage rescue plan to deal with the foreclosure crisis before focusing on the banks, if only for political reasons. The president and his aides also have to explain why fixing the banks is so important to everyone, and they have to assure the country that the worst excesses of the past will not be allowed to recur.
Los Angeles: While AIG's and other bailout companies' bonus payments weren't strictly illegal, weren't they illogical and dishonest? Wouldn't a reasonable bonus payment definition require that they be paid if there are company or business segment profits? Without such profits and with taxpayer bailout funds in play, justifications given for those bonuses aren't credible. What's the market for execs with resumes indicating they helped produce this historic nationwide financial meltdown? If it was their personal money, you think these Wall Street geniuses would pay huge bonuses to those responsible for these company risks and loses?
Eugene Robinson: Right on all counts. In the real world, if the company has a bad year, nobody gets bonuses. That rule of thumb should definitely apply if the company, you know, wrecks the global financial system. The last thing I'd worry about is whether "talent" capable of that feat might get huffy and quit.
Boston: Sixteen million Americans tuned in to watch the President on "60 Minutes." You can bet that tonight will be more of the same. Do your friends in D.C. or on the cable chat shows realize just how out of touch they are on Obama and his "dwindling" support?
Eugene Robinson: The president has been quite successful in talking over the (talking) heads of the commentariat and engaging directly with the American people. We tend to learn that one day and forget it the next.
Wokingham UK: The idea that the "too big" behemoths and leviathans can be happily put back in the sea, guarded by wise conservationists with regulation books, seems hopeless to me. Once they know -- and they really know now -- that they won't be allowed to fail they will grow more reckless, as anyone would. As for regulations, they all get circumvented sometimes.
Eugene Robinson: Before giving up on regulation, let's give it a try. We haven't had any in quite some time, and that didn't work so well.
Baltimore: (submitting my question early because I'll be in a meeting during your chat, darn it) I believe that they're losing sight of the lessons of history. "Too big to fail" should be "too big to exist." Are any of the politicians or treasury officials talking about how they plan to break up the behemoths, even the ones that aren't currently in trouble?
Eugene Robinson: I hear administration officials talking about new regulations that will compel these behemoths to do business in a more conservative fashion. But no, I haven't heard them talking about breaking up the giant firms -- although they're clearly doing just that with A.I.G.
Pittsburgh: How can an investor figure out which "toxic assets" to invest in, in order to make a killing in the market? Seems like there are some great opportunities here, if only one knows how to spot them.
Eugene Robinson: There's a guy here in Washington named Geithner who would love to hear from you.
Boston: Hi Gene,
It is really a shame we didn't follow Bush's lead and put all of the social security money into Wall Street.
Eugene Robinson: Can you imagine? There really would be mobs with torches and pitchforks.
Dunn Loring, Va.: Recognizing that you rarely answer anything questioning the One, but could Obama ever do anything that you would consider too liberal, or do you believe that there is no such thing as too liberal?
Eugene Robinson: Of course there are things that I'd consider too liberal, but I'd be surprised to see Obama doing them. Overally, I'd guess that I'm probably a bit more liberal than he is. Maybe he'll surprise me one of these days.
Eugene Robinson: My time is up for today, folks. Thanks for participating, and be sure to come back next week.
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