I’d say Simon Johnson has it about right when he says the G7 are asleep at the wheel. A combination of mild squabbling and feel good statements about how wonderful Geithner is can’t conceal the fact that they don’t actually have anything like a unified plan of action. Part of the issue seems to be that no one is taking control and leadership.
Krugman spoke at the Thinking Big, Thinking Forward Conference on the economy. He started by debunking the idea that this isn’t as bad as the 82 recession because the US hasn’t lost as many jobs, first quipping “just wait a couple months” then noting something more important: the 82 recession was caused by the Fed.
Rendell spoke and he noted that the House bill is much better than the Senate bill, but that the Senate bill is better than nothing and that means keeping the support of the 3 Republican Senators. He’s particularly concerned with Specter, because Specter is back up for reelection in 2010 and very vulnerable to a primary challenge.
I’m down in DC attending the “Thinking Big Forward” Conference on the economy. The second speaker was Alan Brinkley, who summed up the history of the New Deal, it’s successes and failures. Perhaps of most interest was his list of the first things Roosevelt did:
Seriously. Per the NYTimes:
Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.
It’s on, tell us what you think. I’ll post the transcript briefly.
The final vote will come tomorrow, but in effect, it’s done. This is the Gang of Four Compromise which cuts millions of jobs from the budget (600 thousand per Krugman). Collins, Snowe and Specter voted yes. Kennedy was brought in to vote as well. Final vote 61-39, otherwise straight partisan. After the vote tomorrow, the next step will be a conference between the House and Senate to determine a final version to be voted on by both bodies.
Treasury Secretary Geithner has pushed back his announcement of the details of his plan to stabilize the banks to Tuesday, wishing to not throw another controversy into the middle of Congress’s debate on the stimulus.
The details of Geithner’s plan are as important as the details of the stimulus. This crisis was precipitated by problems in the financial sector and the contraction of credit makes a real recovery difficult, if not impossible.
With Geithner set to announce his plan for fixing the banks on Monday it’s time to look at one of the biggest issues in the financial crisis: the fact that no one knows how bad the damage is. Not only is the situation getting worse, but a lot of securities either really have no market (they’re hardly ever sold) or the market price is actually below their probable long term value. If the government is going to take over banks, or insure the securities, or set up a bad bank, they need to know how to value them.
The Senate approved a Coburn amendment 73-24 that states,
None of the amounts appropriated or otherwise made available by this Act may be used for any casino or other gambling establishment, aquarium, zoo, golf course, swimming pool, stadium, community park, museum, theater, art center, and highway beautification project.
For the purposed of a Keynesian stimulus it doesn’t matter if it’s spent on a park or a highway beautification project.