New Yorker Profile of Obama’s Economic Team

This is an interesting article.

6 replies on “New Yorker Profile of Obama’s Economic Team”

The central rationalisation:

“The nationalizers thought that the banks were insolvent—that the toxic assets were worthless. But Summers and Geithner, though they disagreed on some aspects of the stress tests, agreed that the asset prices were simply under attack from the liquidation vicious cycle, and that recapitalizing the banks and restoring confidence would stem the panic and restore some value to the bad assets.”

The article unfortunately makes no mention of evaluations of the risks around the zillions in OTC derivatives, or of a run on the dollar, apart from the discussions around the size of the initial stimulus.

I also wonder what thier reactions were to the massive bonuses handed out..

In a similar behind-the-scenes vein, there’s this:

– – – – – http://news.yahoo.com/s/politico/20090409/pl_politico/21053

The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis.

The two-day event near Ft. Meade, Maryland, had all the earmarks of a regular war game. Participants sat along a V-shaped set of desks beneath an enormous wall of video monitors displaying economic data, according to the accounts of three participants.

“It felt a little bit like Dr. Strangelove,” one person who was at the previously undisclosed exercise told POLITICO.

But instead of military brass plotting America’s defense, it was hedge-fund managers, professors and executives from at least one investment bank, UBS – all invited by the Pentagon to play out global scenarios that could shift the balance of power between the world’s leading economies.

. . . . .

Participants described the event as a series of simulated global calamities, including the collapse of North Korea, Russian manipulation of natural gas prices, and increasing tension between China and Taiwan. “They wanted to see who makes loans to help out, what does each team do to get the other countries involved, and who decides to simply let the North Koreans collapse,” said a participant.

There were five teams: The United States, Russia, China, East Asia and “all others.” They were overseen by a “White Cell” group that functioned as referees, who decided the impact of the moves made by each team as they struggled for economic dominance.

At the end of the two days, the Chinese team emerged as the victors of the overall game – largely because the Russian and American teams had made so many moves against each other that they damaged their own standing to the benefit of the Chinese.
. . . . .

– – – – –

Central rationalisation seems to be:

“The nationalizers thought that the banks were insolvent—that the toxic assets were worthless. But Summers and Geithner, though they disagreed on some aspects of the stress tests, agreed that the asset prices were simply under attack from the liquidation vicious cycle, and that recapitalizing the banks and restoring confidence would stem the panic and restore some value to the bad assets.”

v interesting background stuff.

similar but different background stuff here:

http://news.yahoo.com/s/politico/20090409/pl_politico/21053

==========
The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis.

The two-day event near Ft. Meade, Maryland, had all the earmarks of a regular war game. Participants sat along a V-shaped set of desks beneath an enormous wall of video monitors displaying economic data, according to the accounts of three participants.
. . . . .
There were five teams: The United States, Russia, China, East Asia and “all others.” They were overseen by a “White Cell” group that functioned as referees, who decided the impact of the moves made by each team as they struggled for economic dominance.

At the end of the two days, the Chinese team emerged as the victors of the overall game – largely because the Russian and American teams had made so many moves against each other that they damaged their own standing to the benefit of the Chinese.
. . . . . .
==========

Good article Philip. It could have been a bit more critical and ask some hard questions regarding his last two years with Clinton.

Don’t know where else to put this but a very interesting interview by Max Keiser with Janet Tavakoli. She does a great job of explaining what caused the crisis in plain English.

http://www.youtube.com/watch?v=MFMK9uHm5gE

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