The Stash

Citicoke

A friend who works at a progressive think tank in town forwards an amusing e-mail exchange between two wonk colleagues--replete with customized graphics! Wonk 1 writes to wonk 2: Subject: Coke Machine Anyone know if we can get the coke machine to accept stock certificates in addition to dollar bills? A 20 oz. coke costs one share of Citigroup. Wonk 2 responds: Subject: Re: Coke Machine It really ought to accept toxic assets as well, but I think there's a mark-to-market problem there. We're here all week, folks... --Noam Scheiber

A few important addenda to my earlier item about the links between Goldman and AIG, which the Times editorial page took up today. First, a thoughtful item from Portfolio's Felix Salmon casting doubt on the theory that the AIG bailout was conceived as a Goldman bailout: I do think that Geithner should be asked about the firms threatened by an AIG collapse, however, and I do think that he should reply in detail.

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There's been a bit of hand-wringing these last few days over whether Obama's proposal to cap tax deductions for the affluent would lead to a big reduction in charitable donations--in his column today, David Brooks writes that, "[I]n its very first budget, the Obama administration raises the cost of charitable giving." But, according to a recent study by the Tax Policy Center, the measure would only decrease giving by a mere 1.3 percent.

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Two quick AIG thoughts, both of them relating to who it is we're bailing out by propping up AIG. First, as the Times points out in an editorial today, and Josh Marshall has repeatedly observed, one company that clearly had a lot to lose if AIG failed was Goldman Sachs, the former employer of Bush Treasury Secretary Hank Paulson. As the Times writes: The serial A.I.G. bailouts are especially problematic for their connection to the Wall Street bank Goldman Sachs. At the time of the first A.I.G.

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Via Matt Yglesias, I see the blog Fistful of Euros has a long and interesting (but somewhat technical) post arguing that Europe is rapidly heading into deflationary territory--deflationary spirals being bad because they bring about depressions. Worse, the man who runs the European Central Bank, Jean Claude Trichet, seems blithely indifferent to the situation--indifference being bad because the central bank is really the only institution capable of preventing such a spiral.

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A plugged-in source points me to Goldman's latest economic forecast, which anticipates -7% GDP growth this quarter and -3% GDP growth next quarter, down from an earlier forecast of -4.5% and -1%, respectively. What's remarkable about the change, though, is that the new numbers factor in the stimulus, whose effects Goldman thinks will be significant (and positive), whereas the old forecast didn't. And yet they still have the economy contracting by much more than previously thought. Kind of gives you an idea of what we're up against...

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In his prepared testimony for the Senate Budget Committee today, Fed Chairman Ben Bernanke, a Bush appointee, voices support for the stimulus: As you are well aware, the Congress recently passed a major fiscal package, which is aimed at strengthening near-term economic activity. The package includes personal tax cuts and increases in transfer payments intended to stimulate household spending, incentives for business investment, federal grants for state and local governments to reduce their need to cut services or cancel building projects, and increases in federal purchases.

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Bloomberg reports that Council of Economic Advisers appointees Ceci Rouse and Austan Goolsbee have been caught up in a Senate crossfire and have yet to be confirmed: March 2 (Bloomberg) -- President Barack Obama’s economic advisers are increasingly concerned about the U.S. Senate’s delay in confirming the nominations of Austan Goolsbee and Cecilia Rouse to the White House Council of Economic Advisers.

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Amid the news today that the federal government will pump up to $30 billion more into the insurance giant AIG and ease the terms on its earlier infusions, I decided to ask former AIG CEO Maurice R. "Hank" Greenberg for his thoughts on what's become of the company. Greenberg spent over 35 years running AIG, building it from an obscure, second-rate insurer to one of the largest companies in the world before stepping down in 2005. (Greenberg resigned amid pressure from then-Attorney General Eliot Spitzer over alleged accounting improprieties.*) NS: How are you? MRG: Not too bad.

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I defer to Noam’s expertise on banks, but this column by former Secretary of the Treasury James Baker in the Financial Times sure sounds to me like an argument for nationalization.

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