FROM WALL ST. TO PENNSYLVANIA AVE . . . AND BACK AGAIN (AKA, THE N.Y.-D.C. SHUTTLE)

As seen in this piece from Bloomberg, Nobel Prize winning economist Joseph Stiglitz joins the growing ranks of mainstream voices criticizing Obama's handling of the economic crisis, along with a sharp attack on his economic team. (H/T Yves). What little I know about Stiglitz doesn't leave me among his supporters (and it's worth noting that he seems to have a personal grudge against Loathsome Larry Summers), but what he says sure has resonance. A highlight or two:

All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent."

* * *

The Public-Private Investment Program, PPIP, designed to buy bad assets from banks, “is a really bad program,” Stiglitz said. It won’t accomplish the administration’s goal of establishing a price for illiquid assets clogging banks’ balance sheets, and instead will enrich investors while sticking taxpayers with huge losses. “You’re really bailing out the shareholders and the bondholders,” he said. “Some of the people likely to be involved in this, like Pimco, are big bondholders.”

* * *

Stiglitz said taxpayer losses are likely to be much larger than bank profits from the PPIP program even though Federal Deposit Insurance Corp. Chairman Sheila Bair has said the agency expects no losses. “The statement from Sheila Bair that there’s no risk is absurd,” he said, because losses from the PPIP will be borne by the FDIC, which is funded by member banks. “We’re going to be asking all the banks, including presumably some healthy banks, to pay for the losses of the bad banks,” Stiglitz said. “It’s a real redistribution and a tax on all American savers.”

Stiglitz was also concerned about the links between White House advisers and Wall Street. Hedge fund D.E. Shaw & Co. paid National Economic Council Director Lawrence Summers, a managing director of the firm, more than $5 million in salary and other compensation in the 16 months before he joined the administration. Treasury Secretary Timothy Geithner was president of the New York Federal Reserve Bank.

“America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street,” he said. “Even if there is no quid pro quo, that is not the issue. The issue is the mindset.”

Might as well read the rest of the article, though I repeat that I don't agree with at least half of what he says. Nonetheless, I wanted to note that yet another generally-respected voice weighs in against Obama's economic team & its policies, and still nothing changes.

No one likes or supports the current economic policies except the Wall St. Masters and their servants in D.C., yet they continue unabated. With the deeply-conflicted core of individuals making the same rotton decisions over-and-over again. It's exactly the same arrogant combination of “we know best, shut your mouth” and “yeah, well what are you gonna do about it” that we saw from the Bush Administration for 8 years.

The field of “battle” switched from Iraq to Wall St., but the game is the same. A constant reminder of who runs the show . . . and who doesn't. I only hope that with every day that passes, one more person joins the ranks of those who see what's happening. It's our only hope, and even that may not be enough.