Appearing on Inside Washington, Wahsington Post columnist, Colby King, let it rip:
MR. PETERSON: The news on the economy is more dreary every day, Colby. Are President Obama’s plans for dealing with it comprehensive enough?MR. KING: I think it falls short and it falls short on the financial side. They haven’t faced up to the truth about the problems facing the financial industry. And the bailouts that they’re coming up with and the new infusion of cash is only going to keep a sick system afloat. What they are going to have to do is some tough stuff, and tough stuff means valuing those assets in those banks where they belong, and let me – if they do that, they’re going to wipe out a lot of shareholders. They’re going to wipe out a lot of banks and we’re going to have to have a major restructuring of the financial sector. This is the time to do it.
Whether Timothy Geithner, who is the architect of this program, is up to it is a big question. Whether he’s up to be secretary of the treasury, quite frankly, is a big question because that tax problem he had is not the minor blip in the road that they’re suggesting it is. I worked at the World Bank under the same payment system that he had at the IMF. I helped negotiate this thing. Those institutions do not pay – employees do not have to pay taxes at those institutions. Americans do.
What the World Bank does, what the IMF does also, is they gross up the salaries of the employees – of the American employees so that they can pay their taxes, Geithner had to deliberately agree to that arrangement. How he could not recognize that he had had a tax liability is beyond me.
I say that because he is going to be the person who is going to run this financial rescue program. He’s the architect of this program that hasn’t worked. And at some point, reality is going to have to set in there with the administration too and say, what do we do about this guy, Geithner?
