First 100 days: Defending Geithner

This second article shows the writer supporting Tim Geithner is his economic policies during Obama's first 100 days of his presidency.

AIG's bonus crisis has caused an uproar among citizens, and many want Tim Geithner to resign from his post as Treasury Secretary. However, people don't realize that Tim Geithner is in a position where economic meltdown threatened the economy, and many details issues he had to deal with.

“‘Tim Geithner didn’t draft these contracts with A.I.G.,’ Mr. Obama told reporters as he left for California on Wednesday. ‘There has never been a secretary of the Treasury, except maybe Alexander Hamilton right after the Revolutionary War, who’s had to deal with the multiplicity of issues that Secretary Geithner is having to deal with — all at the same time.’”

What I got from the article is that though government intervention is harmful for the economy and makes investors angry, intervention is a necessary evil in order to the economy back on track. Geithner's agenda is revitalizing the financial markets in order to stabilize the economy and allow it to grow in the future; using governement spending in order to raise our GDP.

Personally, I agree with the idea of the government buying up bad debt from banks, because it was done in 1991. This article is from a year ago which debated whether the government should intervene or not by buying bad debt. Now the United States is in the process of buying bad debt and stabilizing the markets. The question is whether the US will see the same results from what happened in 1991. http://www.nytimes.com/2008/09/17/business/17resolution.html?fta=y

http://firstread.msnbc.msn.com/archive/2009/03/19/1843281.aspx

Geithner's Five Big Misconcpetions

I've decided to analyze the different viewpoints of Tim Geithner's from both his supporters and his critics. This article points out Geithner's five statements he made, and clarifying why it is not true or misleading.

One of the misconsceptions is about bad assets.

"Bad assets are "bad" because the market doesn't understand how much they are really worth. The reality: The bad assets are bad because they are worth less than the banks say they are. House prices have dropped by nearly 30% nationwide. That has created something in the neighborhood of $5+ trillion of losses in residential real estate alone (off a peak market value of housing about $20+ trillion). The banks don't want to take their share of those losses because doing so will wipe them out. So they, and Geithner, are doing everything they can to pawn the losses off on the taxpayer."

These bad housing investments have a big impact on GDP. One of the major components for GDP is investments. Banks are investing in houses predicting that they will continually go up, and be able to take less of a hit if the owner defaults on their loan. Not only do the banks lose money on their investments, home owners also lose money when they see their homes lose their value. This results in a lose of GDP.

The article also shows two staggering graphs of the percentage of our GDP as debt, and the writer is very skeptical that the economy will recover due to America's huge debt.

http://www.businessinsider.com/henry-blodget-geithners-three-big-misconceptions-2009-3