Citygroup: Palling Around with Clowns

Geithner and his Mentor Summers
by Joachim Martillo (ThorsProvoni@aol.com)

The title of the article Citigroup to cut more than 50000 jobs - Nov. 17, 2008 almost says it all. The article itself goes a little further to ask whether there will be more layoffs.

It should be fairly obvious that Citigroup is verging on collapse and that in August the principle investors changed Rubin's role because they might have begun to realize that he was less than useless.

After the failure of Lehman Brothers, Rubin appeared on CSPAN and defended his completely wrong assessment of the US economy during the previous year by falsely asserting that no economist could have predicted the financial meltdown.* Here is an example Rubin-esque claim that appeared in Fortune Magazine on January 31, 2008:

... the problems now roiling the markets and forcing the Federal Reserve into a defensive posture are "all part of a cycle of periodic excess leading to periodic disruption," and that we are not in fact on the verge of a financial meltdown.

The debacle between Wells Fargo and Citi over Wachovia in retrospect can only be interpreted as an attempt by the US government officials secretly to throw a life line to Citi. I hope that at some point really soon we will learn the roles that Paulson, Bernanke, Geithner, possibly Greenspan, possibly Summers, possibly Rubin and possibly Volcker played in that mess because Geithner is a protege of Summers, who is a protege of Rubin.

Paulson probably exacerbated the crisis by appearing to let Lehman Brothers collapse not upon sound reasoning but on a personal dislike of Lehman's top management.

Greenspan and Bernanke triggered the subprime meltdown by raising interest rates while Greenspan set the stage for the disaster by refusing to regulate the market in CDOs and derivative securities in the 90s.

Not only is Rubin clueless and Summers totally lacking in judgment, but Volcker's history since his appointment to run the Federal Reserve during the Carter administration shows his strong tendency to pick the wrong course under stress.

During the presidential campaign, when Obama sought financial advice, he consulted Volcker, Rubin, and Summers.

If McCain and Palin had had any glimmer of understanding of economics, they would have skipped the Bill Ayers nonsense and accused Obama of palling around with clowns practically guaranteed to give the wrong economic advice and to do much more harm to American.

In a sense, by scare-mongering about terrorist associates when there was a far more serious charge to make, McCain and Palin proved that Obama was minimally more fit to be president than McCain.

Choosing Geithner instead of Summers as Secretary of the Treasury may be the first real evidence that Obama is up to his new job.

[Please note that Summers was not the worst possible choice. Rubin was also under consideration.]

I would have prefered Pimco's el-Arian, who is an Egyptian Arab American. El-Arian truly understands debt, but some would argue in today's coded language about Jews that he might not have given the needed confidence to the market, to wit, to hyperwealthy Zionist Jews.

Fortunately, Geithner is well respected as president of the Federal Reserve Bank of New York. He also may be Jewish as Wikipedia claims. Except for his relationship with Summers, I really could not find any dirt on him.

Because Geithner is already part of the current administration's team working on the crisis, he can unofficially represent Obama and pick up the slack from Paulson and Bush, who appear already to have checked out on the job.

Note

*Nouriel Roubini has become famous for predicting the financial crisis in September 2006, but Sameh de Rosa-Farag, who is like el-Erian an Egyptian Arab American and is formerly of the Ore Hill hedge fund, made the same predictions in March 2006 at an IMN finance conference while I became concerned about the direction of the US economy in 2005 because US government spending for the Iraq occupation was reckless and the new revenue streams never materialized from privatization of Iraqi state assets as the Neocons had promised during the marketing of the war. Sphere: Related Content