Simon Johnson on Bill Moyers Journal: How to fix the economy:

[SOS]

Bill Moyers hosted MIT economist Simon Johnson on PBS last night.
It was a fascinating interview.
A sample of Johnson's thoughts from Bill Moyers site and Johnson's "The Baseline Scenario":

"Johnson believes that the U.S. financial system needs a "reboot," breaking up the biggest banks, in some cases firing management and wiping out shareholder value. Johnson tells Bill Moyers that such a move wouldn't be popular with the powerful banking lobby: "I think it's quite straightforward, in technical or economic terms. At the same time I recognize it's very hard politically."

Without drastic action, Johnson argues, taxpayers are merely subsidizing a wealthy powerful industry without forcing necessary systemic changes: "Taxpayer money is ensuring their bonuses. We're making sure that banks survive. And eventually, of course, the economy will turn around. Things will get better. The banks will be worth a lot of money. And they will cash out. And we will be paying higher taxes, we and our children, will be paying higher taxes so those people could have those bonuses. That's not fair. It's not acceptable. It's not even good economics.""

Johnson points out that, right now, we are at a turning point in American history. Will oligarchs rule the land or We the People?

Johnson expands these arguments on his blog, THE BASELINE SCENARIO:

"Weakening the big banks and their bosses should not be seen as an unfortunate side effect of beneficial medicine. It is exactly what we need to do under these circumstances. Unless and until these banks' economic and political influence declines, we are stuck with too many people who know exactly what they can get away with because their organizations are "too big to fail."
And weakening these banks (or actually having some of them go out of business and be broken up) as part of a comprehensive system reboot - with asset revaluations at market prices and a complete recapitalization program - will help return the credit system to normal."

See the interview here:
http://www.pbs.org/moyers/journal/02132009/profile.html

Johnson's highly informative site:

http://baselinescenario.com/

Too bad people like Johnson and Stiglitz aren't on the economic team...

[stray cat]

1. I tend to agree

[HowHasItComeToThis]

2. IF YOU MISSED IT YOU CAN SEE IT AT MOYER'S WABSITE. INCREDIBLY IMPORTANT

VISIT http://www.pbs.org/moyers/journal/index-flash.html

[omega minimo]

3. K/R # 3 -- a MUST SEE. Thank you for posting this.

[navarth]

4. I saw it...it was AWESOME. They both said good things about Bernie Sanders, too.

Yes, it IS too bad that Johnson isn't doing Geitner's job.

[Kolesar]

5. The bank-oligarchs may be too strong to deal with

So Americans will have lost control of our political-regulatory power.

I did not sleep well after watching that program last night.

[SOS]

10. That's the question, very important

Johnson pointed out that our crisis is more like the crisis in Thailand, rather than the former USA.
We really are at a crossroads. The oligarchs have been amassing power for years.
Now their game is over. Who will lead the nation now?

Without the hard choices being made NOW, we may end up in a 10 or 15 year downward spiral.

[alfredo]

6. Incredibly informative interview.

[dkf]

7. I'm mostly worried that some big banks have some very scary obligations

that we have no idea about...mostly credit default swaps.

If things get bad those banks will become bottomless pits.

[sixmile]

8. If there's monopoly/oligopoly busting, sign me up!

Let's also revisit Ma Bell and the communications giants.

[theoldman]

9. Simon Johnson is very smart.

That is why you will not see him in a position of power. He would do the right thing and the bankers would never allow this. We are talking big money and I believe he would be knocked off.

[mckara]

11. Not to Mention...

When they dissolve the banks, trillions of dollars of credit default swaps can be written off the books. Foolish bankers would be out of their positions and crushing liabilities would be off to money heaven. We could kill two birds with one stone!

[slipslidingaway]

12. Thanks for posting K&R n/t

[midnight]

13. A "reboot" is a nice start.... Let's get the boots moving.

"Johnson believes that the U.S. financial system needs a "reboot," breaking up the biggest banks, in some cases firing management and wiping out shareholder value. Johnson tells Bill Moyers that such a move wouldn't be popular with the powerful banking lobby: