From last night’s “All Stars.”
On Geithner’s new bank plan:
When you get some very smart economist saying it won’t work and another smart economists saying it will, that occasions in me what is a rare experience. It’s a moment of humility.
And the way I look at it is that the logic of the plan is there, but the problem is the execution. The logic makes sense. The reason the assets are toxic is because they carry a huge amount of risk and uncertainty.
The government by lending at very favorable terms to private investors and guaranteeing huge amounts of losses is taking a disproportionate share of the risk and the uncertainty out. So it creates a market and creates a chance of the banks offloading these assets.
The problem is the execution. After the performance of the president and the administration and the House and the Senate last week on AIG, it’s hard to imagine anybody is going to want to be a partner of the government.
There’s going to be either huge upside in these investments, or huge downsides. Either way, you can see the headlines attacking the vultures who made the money or the vultures who lost the money.
You can see Congress acting the way it did right now with the retroactive bills of attainder, punitive taxation, and notorieties that these people would inherit.
That doesn’t mean nobody will join this, but it reduces the number of people who will. If you reduce the number of partners, that means the government is going to have to assume a lot more risk and give away a lot of the profits than it otherwise would had we not had the AIG hysteria.
On Obama’s “60 Minutes” interview:
He has an easy laugh and one of the great presidential smiles of all time, so why not deploy it. I found that OK.
What I found interesting is when he asked about governing, how he likes to govern. He says he likes it and it comes naturally to him.
Well, I’m glad he thinks so. There are 299 million other Americans who aren’t quite sure yet eight weeks in. I hope it’s natural, because he has no experience at all. He has never managed a candy store.
But it tells you a bit about him. He is the man who does not lack for self-confidence. There is always the issue of hubris. That was always an issue in the campaign, and it remains so.
In the interview, he tried to offload a lot of his problems onto George Bush, but after you pass a stimulus budget and a Geithner plan of over $2 trillion, you now own the economy, so that’s not going to work.
And despite all the foibles and the gaffes and the missteps, everything is going to hinge on the Geithner plan. If it succeeds, he succeeds. If it doesn’t, he fails.