Niall Ferguson On Fareed Zakaria's Show: Discusses Financial Crisis, Agrees With Paul Krugman (VIDEO)

Eminent British historian Niall Ferguson appeared on Fareed Zakaria's CNN show to discuss the financial crisis and the bank bailouts. Ferguson had tough criticism for the Obama administration's handling of the crisis, saying he does not really see any difference between the actions of former Treasury Secretary Hank Paulson and current Secretary Tim Geithner, and that the real problem has been the lack of a consistent policy towards a pretty fundamental problem: the, "by most serious measures," insolvency of a few major American banks, such as Citigroup and Bank of America.

Ferguson also agreed with advice offered by Paul Krugman (an "unprecedented" event, by Ferguson's own admission) that the "only way to deal with these big insolvent institutions is to take them into temporary conservatorship, let's use that lovely euphemism not nationalization, as happened with Fannie Mae and Freddie Mac, institutions that they quite closely resemble anyway. It's going to happen; we're going to end up doing this. And you restructure them."

[WATCH}

Filed by Nicholas Graham

Comments

[AngieMom57]

10:29 AM on 04/28/2009

History Lesson in what happened to the Banks of Brasil during the various "changing of the guards", what worked, what did not work, why reinvent the wheel?

Repeat...

[ibsteve2u]

05:00 AM on 04/28/2009

"he [Ferguson] does not really see any difference between the actions of former Treasury Secretary Hank Paulson and current Secretary Tim Geithner"

To incorporate my favorite juvenile statement/judgment: "Well, duh. They are from the same pond - the cesspool of American finance, ya know."

But what is America to do? We either use an existing cog of that machine to steer it, or we replace our financial system wholesale.

While I like the idea personally - in particular, the idea of a federal "Bank of America" providing simple and honest credit to average Americans, cutting the banks out entirely - that would be tough to pull off.

Unless, of course, somebody stumbles upon a treasure trove of documents showing a continuing effort by the financial community to manipulate the course of America's future, or something else of sufficient malignancy to arouse the wrath of the American People.

[PhilipTaylor]

03:59 AM on 04/28/2009

Goldman runs Around Waving Big Fake Profits Saying they are Paying Back TARP!

BUT! BUT! BUT! BUT! With $1 Billion in Toxic Debt per employeee is it REAL?

Goldman has over $1 Billion in Toxic Debts/Assets per employee!
____________________________________________________
Goldman has $30 Trillion in Toxic Debts/Assets
Goldman has 27,898 Employees
Goldman has $1,075,345,903 per employee in Toxic Debts/Assets]

JPM has over $390 Million in Toxic Debts/Assets per employee!
___________________________________________________
JPM has Astonishing $88 Trillion in Toxic Assets/Debts!
JPM has 225,000 employees
JPM has $391,000,000 per employee in Toxic Debts/Assets

[Carolab]

12:55 AM on 04/28/2009

KUCINICH: BRING FED UNDER TREASURY

Washington D.C. - Congressman Kucinich made the following statement addressing news reports that President Obama and advisors are considering nationalizing parts of the U.S. banking system. In the statement, Kucinich urges Congress not to nationalize banks, but to place the Federal Reserve under the Treasury Department.

"At a time when millions of Americans are losing jobs, homes, and pensions, our government is prepared to give another trillion to the banks. We are ready to compound the moral hazard by nationalizing banks, which are allegedly profit-making entities.

"This is anti-democratic. Instead of nationalizing banks, we should nationalize the money system by placing the Federal Reserve under the U.S. Treasury, end the fractional reserve system and stop banks from lending credit into circulation. Then instead of borrowing money from the banks and creating debt, government can spend the money into circulation to rebuild and restore America with money for jobs housing, healthcare and education I will soon be introducing legislation to accomplish this.

"Banking is not a proper function of the government, but oversight is. The Treasury Department should not be outsourcing to the Fed its oversight responsibilities. The Fed, which failed miserably to oversee the banks, should be put under Treasury instead.

"Its time for the government to operate in the public interest, not in the interest of private banks. Its time to stop bailing out banks and begin building up America."

http://www.campaignforliberty.com/blog.php?view=9407

[Carolab]

03:49 AM on 04/28/2009

Dennis Kucinich Explains Our Current Economic Situation (C-Span)

http://video.google.com/videoplay?docid=-2864340017700873183

[PhilipTaylor]

04:01 AM on 04/28/2009

Carol,

Was release of the T0RTURE MEM0S a way to take pressure off Geithner's massive $1 Trillion give-away to Wall Street?

Was it also a way to let Wall Street keep SKIMMING Profits off into Massive Salaries as they have been doing for 8 years?

If so the TRICK worked and Goldman would be PROUD!

[treetracker]

10:50 AM on 04/27/2009

Breaking news!

We can't do any of this UNTIL Congress passes laws that provide for the government to step (like the FDIC). Congress is currently working on these laws, but until they pass, we're stuck with what we have.

I wish the authors of the articles would note that whenever they write about this.

[Thucydides Jr.]

03:14 PM on 04/27/2009

Not Correct.

Laws, rules, regs, and guidelines for taking banks into receivership are on the books right now, and it just takes political will to do so.

There is no further legislation that needs to happen. Spine insertion, a medical procedure, is needed however.

[treetracker]

04:09 PM on 04/27/2009

The FDIC has the authority to go into the banks, but there are no laws allowing Treasury to go into securities or insurance firms. Geithner has asked Congress to create these laws and has provided them a broad outline to work from.

But, they cannot move into these companies that are not JUST banks.

[CatoTheCensor]

10:22 AM on 04/27/2009

Failing banks need to be taken into receivership, not conservatorship. The cleanest solution for failing banks is also the cleanest solution for Fannie Mae and Freddie Mac, and what Paulson should have done with the latter in the first place.

A receiver, not a conservator, should have been put in charge of Fannie and Freddie. A receiver could have wiped out the common and preferred shares, renegotiated or ended unfavorable contracts, created a good bank/bad bank structure for isolating the bad assets, and reduced the losses to taxpayers. While a conservator can keep the companies running, it lacks the authority to change the business model, or to break up or liquidate those companies. When the conservatorship ends, the shareholders will regain control. In other words, it goes right back to being a big, expensive cow of a GSE, the worst of all possible worlds, neither corporate fish nor government fowl, with no actual solution to the ongoing problem of its existence. A receiver could whittle them down, preparing them for one of three possible outcomes: nationalization, privatization or liquidation. It's not too late to do that much, even now.

Conservatorship is too limited to do what needs to be done. And if there's a good reason to buy banks' toxic assets rather than simply reinjecting equity into those banks, I haven't heard it yet.

[rblaquinta]

08:49 AM on 04/27/2009

If you have seen him interviewed before, you would know this guy loved BUSH big time!!!! I had to turn this show off...he disgusts me!!!!

[outragedkar]

02:25 AM on 04/27/2009

Umm... has anyone here read Niall Ferguson for his columns beyond economics? He used to (and may still) write columns for the the LA Times and is one of the biggest Bush apologists/cheerleaders. You think he might have an agenda trying to trash Obama's ability to govern under the guise of agreeing with Krugman?
I'm not saying Krugman's criticisms aren't valid, but the biggest problem is he doesn't offer alternatives that actually deal with the political reality of dealing with what will pass through Congress. He has the luxury of commenting without dealing with feasibility.
Ferguson just doesn't care if Obama succeeds, but just won't be overt as King Rush.

[plaidsportcoat]

10:20 AM on 04/27/2009

your arguments are rehashed stale. you need to understand what krugman's saying on a deeper level. krugman is not a second rate mind unable to understand the feasibility issue. Read him again, I think you'll see he makes defensible point regardless of political realities.

[VengeanceIsMine]

03:36 PM on 04/28/2009

Instead of re-reading Krugman, how about reading F.A. Hayek instead?

[PhilipTaylor]

01:18 AM on 04/27/2009

GEITHNER = Member and Overseer of the Finance Club = WS FRIEND!

Timothy F. Geithner=President NY FED=oversaw many of nation’s most powerful WS Banks
Geithner=stunned group proposing Congress give president power to guarantee all Banking debt!
Geithner=Proposal quickly died amid protests-politically untenable to taxpayers for $Trillions
Geithner Proposal=Gov has adopted an array of programs since proposed 10 months ago
Geithner Proposal=Unprecedented amounts of taxpayer money for WS Banks
Geithner=leading architect of bailouts and actively heading pack-most willing to push envelope
Geithner=Rebuild Banking System with more $Taxpayer and Regulatory overhaul
Geithner=Fashioned Bailout to be generous to WS Banks at taxpayer expense
Geithner=Five years @ NY FED=Era of unbridled and ultimately disastrous risk taking!
Geithner=Unusually close TIES with WS Executives=Actions aligned with WS interests/desires

[Carolab]

01:25 AM on 04/27/2009

Geithner = Current board member of the IMF and former board member of the FOMC setting low-interest credit policy with Greenspan.

[PhilipTaylor]

01:31 AM on 04/27/2009

See NY Times article!

http://www.hu_ffingtonpost.com/2009/04/26/geithner-once-proposed-ha_n_191591.html

[PhilipTaylor]

01:31 AM on 04/27/2009

Geithner=Defended himself saying he was “consistently dark voice about the potential risks”
NY FED=is by custom and design, clubby and opaque=charged with curbing risky impulses
NY FED=Board of directors Dominated by CEOs of WS Banks
Geithner=Role involved routine consultation with WS CEOs though predecessors did not
Geithner=Interaction and Reliance on CEOs, Hedge Fund Managers=mix professional+private
Geithner=Lunch CEOs/senior executives of Citigroup, Goldman, Morgan Stanley @ FourSeason
Geithner=casual dinners at homes of Dimon+executives of Citigroup’s Rubin

[iblog]

12:56 AM on 04/27/2009

[Ellen]Brown said she is optimistic that a public banking system will come to the United States, though it will take a economic collapse before it happens.

"They’re never going to change the system when everybody is doing well," she said. "Everybody is ready for change, so we have to scramble in and make sure that change turns out the right way and doesn’t go into fascism and police state."

Lord.

[Carolab]

01:00 AM on 04/27/2009

Lord, what?

[Carolab]

01:15 AM on 04/27/2009

If you mean, Lord, she says the system has to collapse first before we can change things, what do you think? Do you think we can reform anything until it does?

What worries me--and this is very honest because I HATE the Fed--is that it is possible that the system is being deliberately collapsed (along with the dollar) and that the demands to end the Fed will result in its replacement by something even more dastardly -- like the BIS plan.

We need to go back to the Constitution on this -- we need to issue our own Greenbacks, like Lincoln did. And if we preserve the Fed, or a "central bank" of any kind, it must be PUBLIC and not private like the Fed, and not part of any "global banking system" with one world currency. Because otherwise, it will des-troy our sovereignty.

[PhilipTaylor]

12:30 AM on 04/27/2009

With Automation, Economy of Scale is less important than flexibility, scalability, and speed!

Banks do not have to be large to compete! In fact they should be 98% automated!

Insurance should be an automated Insurance Company!

Much of traditional Banking and Insurance is mathematical and can be easily automated and offered through the Internet!

The Trickster/Tradsters side of the business should simply become a well regulated trading house. This is the only part of the business that is difficult to automate since "TRICKS" are a speciality of the BIG THREE (GS, MS, JPM)! On this front you have to force yourself to “think like a cr00ked Tradsters" with an 1vy League Degree! It is called Pure Investment Banking!

[Carolab]

12:40 AM on 04/27/2009

"[Patman] was chairman of the United States House Committee on Banking and Currency, and he investigated the Federal Reserve and discovered that they were printing our money and charging us interest — lending it to the government. He tried to get the Fed nationalized. He wanted to make it a government entity, which everybody thinks it is. He did not prevail in that, but he succeeded in getting them to rebate the interest," said [Ellen] Brown."

""We’re scrambling to save the crooks. Let the crooks go bankrupt. They made a lot of money off free trade. Let them go down. Capitalism made them money. Let Capitalism take them down. Why should we the taxpayers save them? It’s because we don’t think we have any alternative, but we do. The alternative is to set up a public banking system," she said.

Glimpses of Brown’s idea were seen on Democracy Now! when Nobel Prize-winning economist Joseph Stiglitz appeared. Stiglitz said that Congress could have taken that $700 billion bailout money and used it as the basis for loans; then they could have fanned it out 10 times to create $7 trillion in loans."

http://oxdown.firedoglake.com/diary/4175

[PhilipTaylor]

12:42 AM on 04/27/2009

WALL STREET HAS FAILED CAPITALISM - TIME TO HONOR ITS PRINCIPLES!

Definition of Capitalism: An economic system for producing wealth ....without force or fraud...private rights are protected by the rule of law of a regulatory framework....legislative action defines and enforces the basic rules of the market. [edited down from Wikipedia]

1. Notice nothing about Taxpayer BAILING OUT the corporations who want wealth at any cost!
2. Without FRAUD and clearly the corporations did that
3. Rule of Law - They should be investigated and prosecuted
4. Regulatory Framework - Dismantled by Summers, Clinton, Gramm, and Bush
5. Legislative Action - Wall Street gave Congress $5 Billion to buy Votes over last ten years

[PhilipTaylor]

12:44 AM on 04/27/2009

Stiglitz makes too much sense, while Geithner makes NO sense giving away Taxpayer, FDIC, and FED Money to the Corrupt who have FAILED US ALL!

[The Meek]

05:28 PM on 04/28/2009

Automating Banking and Insurance, now that is a most interesting idea.

Where can I get more information on that. Not that i am in a position to do anything about it, but it is a very interesting idea.

[goingnow]

12:28 AM on 04/27/2009

It's too bad a Nobel prize winning genious like Paul Krugman and other outside sources of economic genious weren't consulted about how to handle this disaster instead of having the Wall Street guys police themselves.

[iblog]

12:21 AM on 04/27/2009

O...Tim Geithner sits on the board of the IMF, also.

[Carolab]

12:34 AM on 04/27/2009

Again, not news.

[iblog]

12:03 AM on 04/27/2009

The United States has exclusive veto power in the IMF.

[Carolab]

12:15 AM on 04/27/2009

Row with emerging nations thre-atens IMF's cash call

Russians warn that the IMF must deliver on its power-sharing commitments

A row over giving more say in the running of the International Monetary Fund to countries such as China threatens to jeopardise the lender's bid to raise an additional $500bn to deal with the global economic crisis.

The IMF spent much of its annual summit in Washington, which ended last night, discussing how it will raise the new funds, but the developing countries on which it is depending for much of the money repeatedly warned that they would not contribute more without being given greater control of the organisation.

However, representatives of some of the developing countries most likely to help reach the $500bn target are not yet convinced that the IMF's more powerful members are serious about ceding any control.

http://www.independent.co.uk/news/business/news/row-with-emerging-nations-threatens-imfs-cash-call-1674824.html

[iblog]

12:18 AM on 04/27/2009

At the 2009 G-20 London summit, it was decided that the IMF budget will be tripled to $1 trillion, to better meet the needs of the global community amidst the late 2000s recession.[6][7]

WIKI

[iblog]

11:41 PM on 04/26/2009

Bank of International Settlements

Based in Basel, Switzerland, the BIS was established by the Hague agreements of 1930.

[...]

Encourages reserve transparency

Reserve policy is also important, especially to consumers and the domestic economy. To insure liquidity and limit liability to the larger economy, banks cannot create money in specific industries or regions without limit. To make bank depositing and borrowing safer for customers and reduce risk of bank runs, banks are required to set aside or "reserve".

WIKI

[PhilipTaylor]

11:43 PM on 04/26/2009

Another useless piece of cut and paste!

[Carolab]

11:44 PM on 04/26/2009

Yup -- just eating up space again, trying to prove me wrong. So child-ish.

[Carolab]

11:48 PM on 04/26/2009

The BIS was established in the context of the Young Plan (1930), which dealt with the issue of the reparation payments imposed on Germany by the Treaty of Versailles following the First World War.

Since 1930, central bank cooperation at the BIS has taken place through the regular meetings in Basel of central bank Governors and experts from central banks and other agencies. The new bank was to take over the functions previously performed by the Agent General for Reparations in Berlin: collection, administration and distribution of the annuities payable as reparations.

The Bank's name is derived from this original role. The BIS was also created to act as a trustee for the Dawes and Young Loans (international loans issued to finance reparations) and to promote central bank cooperation in general.

In the monetary policy field, cooperation at the BIS in the immediate aftermath of the Second World War and until the early 1970s focused on implementing and defending the Bretton Woods system.

The reparations issue quickly faded, focusing the Bank's activities entirely on cooperation among central banks and, increasingly, other agencies in pursuit of monetary and financial stability.

http://www.bis.org/about/history.htm

The planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.

[Carolab]

12:00 AM on 04/27/2009

Actually, BIS was established in 1930 and the IMF was established by the post-war Bretton Woods agreement, just to correct a post I made below.
_____________

Central bank cooperation at the BIS between the end of the Second World War and the early 1970s focused on implementing and defending the Bretton Woods international monetary system, which was based on freely convertible currencies at fixed but adjustable exchange rates.

The Bretton Woods Agreement of 1944 called for the abolition of the BIS. There was widespread suspicion about BIS wartime activities and some felt that there was little scope for the BIS to play a useful role within the Bretton Woods framework alongside the International Monetary Fund (IMF) and the World Bank.

In reaction, central banks, particularly in Europe, came out strongly in favour of keeping the BIS alive – it was, after all, their institution, not an institution in the hands of governments. The BIS's credibility was further restored by its full cooperation with the investigation into the looted gold issue and full restitution of all such gold found in its possession.

http://www.bis.org/about/bretton_woods.htm

The value of the IMF's SDR was initially defined as equivalent to 0.888671 grams of fine gold, which, at the time, was also equivalent to one U.S. dollar. After the collapse of Bretton Woods in 1973, the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and the dollar.

(IMF website)