To me the key quote from Geithner is this one:

“The financial deleveraging feeds on the economic weakness, the economic weakness forces more financial deleveraging, and you have this vicious spiral.”

I simply don’t believe that Geithner didn’t understand what would happen once that bailout was put in place. More money leaving even faster given the promised tap into the Indonesian economy? That’s a no-brainer.

This also gives us insight into the current situation I believe. The largest banks have been stood up once again, after having fallen victim to the self-inflicted wounds of a globe-girdling bubble they were completely responsible for feeding.

But an enormous economic hole was created directly through the TARP – money pumped into the economy so that the bankers would have someone left to do business with if and when they did revive – and indirectly through the lost tax revenue from a business cycle that nearly collapsed, and the resulting loss of eight million jobs.

How to fill that hole? Why on the backs of the people, of course. Same endgame. That’s even as the economy gradually revives promising more revenue to strapped governments.

I’ve been sure to tell friends that, while I wasn’t around for the great depression, I did make this one. I’m not going to forget the greed, arrogance or stupidity of the gals and guys who like to see themselves as the smartest people in the room. Moreover, they are out of their league at this point. The international financial marketplace having become one exquisitely convoluted dynamical system with lots of feedback. They can’t predict the next collapse, even as they will completely entagled in it. No one can. These systems don’t work that way.

The sooner they are pushed aside and the levers of regulation once again brought to bear, the better. We won’t make the next round without that.

Either Bobby Rubin or Lloydy Blankfein tell him too.

You nailed it.

Having lived in Indonesia in ’97/’98, I’ll never forget this image:

http://hermansaksono.com/2012/01/hadiah- camdessus-untuk-soeharto.html

Did this not sound incredibly petty when you were composing it in your head? I understand as a journalist you want to have access to events, but believe it or not, there are many reasons a person might want to have a conversation and not have it blasted across the NY Times or Reuters, and it doesn’t mean that they are “convinced that the rest of us just couldn’t handle” it.

Looks like that CFR membership has been postponed another decade or so … but at least you’ll always have Davos!