Geithner Weighs Pace of Job Losses, Defends Stress Tests | Online NewsHour | May 8, 2009 | PBS
When I watch Mr Geithner talk, he is very eloquent about the intent of the policies. This piece gave me an opportunity to learn a lot. It seems to me however that he is not broadening enough the framework within which to effect successful outcomes.
While nationalization as repeatedly advocated by krugman may not perhaps be the best way of handling things, I wonder why there has not been that much on the table about the govt lending directly to consumers and small biz. I wonder why govt is not thinking about market making of troubled assets on the lines I have proposed.
I know they are attempting to do that with student loans and Fannie & Freddy's size of the mortgage market have substantially grown. In my view the scale and scope of these should be more direct and swift.
Such a govt competing force would then force institutional banking to lend under reasonable terms or perish as they should. Almost like single payer being discussed for health care...
Another thing that is part of the common wisdom now is that lack of savings is one of the things at the root of this crisis. To me this is narrow minded. The pb is the failure of asset valuation methods. If you have 100 in assets and 90 in liabilities, it should not be a pb. the pb is when you think your assets are worth 100 when they are actually worth 80. So to me US low savings rate is not really the pb. Mr. Geithner's explanation of the transition out of recession does not challenge that idea...
BICs provide an approach to more coherent and credible assets valuations.
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