Archive for June, 2014

Geithner at the Con

Saturday, June 21st, 2014

Timothy Geithner was President of the Federal Reserve Bank of New York from five years before the recent bank crisis until he was appointed Secretary of the Treasury in 2009. In both positions, but especially at the NY Fed, he was a key figure in the government response, particularly the rescue of the financial system in the form of bailing out the big banks.

He has written a book describing his actions in context.

Former congressional staffer Matt Stoller worked on some of the key legislation post-crash, and wrote a fascinating review:

There are two parts to the book. The first is a set of arguments, told through his experiences during the crisis, about why bank bailouts are essential—the financial world according to Geithner. And the second is an autobiographical account of Geithner’s life.

I’ll address both of these, since they are intertwined. For as I read the book, and compared the book with what was written at the time and what was written afterwards, I noticed something odd, and perhaps too bold to say in polite company. As much as I really wanted to hear what Geithner had to say, I quickly realized that I wasn’t getting his actual side of the story. The book is full of narratives, facts, and statements that are, well, untrue, or at the very least, highly misleading. Despite its length, there are also serious omissions that suggest an intention to mislead, as well as misrepresentations of his critics’ arguments.

You can read the entire review here:

Income Inequality Concerns Central Bankers

Monday, June 9th, 2014

One of the big themes in political and economic discussions since the recovery started is the enormous growth in income inequality in the USA and most of  the rest of the developed world.

If it were just a discussion of “fairness”, we could argue about it forever, with no real need to reach a conclusion.

Since it’s a matter of continued good health of the economic system, though, we need focused attention and serious policy discussion.

From the post “Central Banks Channel Piketty Inequality Concerns, Nowotny Says“:

“Monetary policy makers, including also the IMF, are paying more attention to questions of inequality, because we’ve seen that distribution can have effects that are relevant for monetary policy,” Nowotny said. “For instance, it was a key reason for the U.S. financial crisis that policy makers tried to solve the housing problem for lower income brackets not by social housing but by very cheap credit.”

You can read the entire article (short and sweet) by clicking here:

Central Banks Channel Piketty Inequality Concerns, Nowotny Says


The May 2014 newsletter is out

Sunday, June 1st, 2014


I just posted and emailed the May 2014 Capital Drain newsletter. If you’re on the direct mailing list for that, you should be receiving it now.

If you’re not yet on the list, but would like to be, send me an email.
If you just want to read the letter, follow this link: April 2014 CapDrain.

I hope you’ll enjoy it. You can sample from the past several years of newsletters on this page.