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Ben Stein How Not to Ruin Your Life

Ben Stein, How Not to Ruin Your Life

Change? To Washington? Ha!

by Ben Stein

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Posted on Tuesday, December 2, 2008, 12:00AM
The change it had to come
We knew it all along.
We were liberated from the fold, that's all.
And the world looks just the same
And history ain't changed
‘Cause the banners, They are flown in the next war.

I'll tip my hat to the new Constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play
Just like yesterday.
Then I'll get on my knees and pray
We don't get fooled again.
This snippet from the greatest of great songs by the Who keeps running through my head as I read about Timothy F. Geithner, chosen to be the new secretary of the Treasury by President-elect Barack Obama. I have studied this song for decades and never has it been more apt.

If it were scientifically possible to create a man who is the exact opposite of "change" in the political and financial realm, which is what I recall Senator Obama talking about during the campaign, it would be Mr. Geithner.

Scion of East Coast eggheads, a Dartmouth graduate, an honor student at the Johns Hopkins School of Advanced International Studies, this is no Che Guevara. Mr. Geithner was a colleague of Henry Kissinger at Kissinger Associates, a toiler at the Council on Foreign Relations and a bureaucrat at the Treasury under Larry Summers and Robert Rubin (of course, of Goldman Sachs). Mr. Geithner even made his Brooklyn-born self into a fly fisherman in the mold of Paul Volcker.

Mr. Geithner appears to be the Eastern establishment finance gentleman and scholar incarnate. A frequent defender of scant financial market regulation, à la Alan Greenspan, Mr. Geithner makes Paul O'Neill and John W. Snow, the first two Treasury secretaries under George W. Bush, look like Lenin and Trotsky.

In no sense does this make Mr. Geithner anything less than a fine man and possibly a superb steward at 15th and Pennsylvania N.W. But it does raise some interesting questions about just what kind of "change" Mr. Obama has in mind in the economic world.

Along with Henry M. Paulson Jr., the current Treasury secretary, Mr. Geithner was part of the decision not to save Lehman Brothers when it fell into crisis two months ago. Yet it now seems that allowing a bank as central as Lehman to fail was the shove that sent the world's financial system over the cliff. The rescue of Citi and the market's reaction tells us a lot about just how important a failure that fiasco with Lehman was.

We could have avoided the whole catastrophe of the last ten weeks if Geithner had had a clue. I wonder if Mr. Geithner would now acknowledge that he made a spectacular mistake. I wonder if he would promise to never even consider allowing a big financial institution to fail, and to do everything conceivable under the Constitution to keep the country from falling into a depression.

From what I read, Mr. Geithner helped fashion the so-called Troubled Asset Relief Program, the bailout program that received $700 billion from a terrified Congress a couple of months ago. Mr. Geithner and Mr. Paulson, as well as Ben S. Bernanke of the Federal Reserve, told the legislators that the money was needed to avoid financial calamity. It would be used to buy troubled assets - that is, loans - from banks and insurers and unclog lending.

After some fits and starts the legislation passed. Then for two months plus the Treasury didn't use a dime of the money for that purpose, after all, but instead bought stock in banks and for other similar purposes. This was a bait and switch of historic proportions. You need only consult bank stock prices to see how well it has worked. Earlier this month, Mr. Paulson declared that he would not buy troubled loans at all. That move battered the bond market and especially the commercial real estate bond and REIT markets.

I have not heard one word from Mr. Geithner repudiating those moves. It would be nice to know his position on them. Maybe his part in rescuing Citi tells us he and Paulson have learned something. That would be nice.

Perhaps while he's at it, Mr. Geithner might explain just what he's been doing as head of the Federal Reserve Bank of New York for the last five years. That job involves vital supervision of key "money center" banks. When did he notice that there were problems in excess leverage involving questionable assets and issues of accountability of hedge funds?

Did he do anything about it? Did he call in the lords of finance and tell them to cut down on leverage, to stop selling credit default swaps they could never pay off in a downdraft, and to act like bankers instead of gamblers? If he did, he kept it pretty quiet, and it didn't have much measurable effect. What's his explanation?

Now step back and ask the basic question: Was he, in his five years at the New York Fed part of the problem or part of the solution? I do not doubt that he worked cooperatively to put liquidity into the system along with Mr. Bernanke. But when the moment of decision for Lehman Brothers came in September, where was he?

And as the clock of destiny is ticking now for the auto makers, and thus for all of us, where is he? Or, to put it even more bluntly, it sure looks as if Mr. Geithner, charming as he may be, is not stepping up to save an economy deeply imperiled by the failures of the current financial ruling class. I have not seen one word from him that shows any marked difference from his boss, Mr. Paulson.

In fact, if it had been possible for George W. Bush to run for and win a third term, wouldn't Mr. Geithner have been exactly whom he would have chosen to replace Henry Paulson if Mr. Paulson ever decided to leave the Treasury? But wait a second. Didn't Mr. Obama campaign against Bush policies? Is he now giving us a third Bush term? Geithner at Treasury, Gates at DOD, Mrs. Clinton at State? Sure looks a lot like what Bush would have chosen if he had been able to run and win.

Not that this is a big surprise: There is a permanent ruling class in this country, whatever they call themselves, no matter how they talk about change. They may not be very good at it, but there they are. "Meet the new boss," as the Who said, "same as the old boss."

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837 Comments

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  • dick schlong - Monday, December 22, 2008, 6:39PM ET  Report Abuse

    • Overall: 5/5

    HAVE LOST ALL FAITH IN THE GOVERNMENT.......WE NEED A REVOLUTION

  • Mfen - Thursday, December 18, 2008, 2:16PM ET  Report Abuse

    • Overall: 5/5

    Exactly right, Mr. Stein.

  • Yahoo! Finance User - Tuesday, December 16, 2008, 10:18PM ET  Report Abuse

    • Overall: 1/5

    Consume Mass Quantities -Beldar Conehead

  • Jesse - Wednesday, December 10, 2008, 4:20AM ET  Report Abuse

    • Overall: 1/5

    Ben stein is a crazy lunatic! He truly believes the Earth is 6000 years old. A guy who ignore facts like Ben stein shouldn't be taken seriously. Especially nutjob ben.

  • John - Tuesday, December 9, 2008, 2:43PM ET  Report Abuse

    • Overall: 1/5

    This guy has been telling us for years to buy bank stocks. He even told us to buy Merrill Lynch when it was $95, now it's 14. Look for them "ben stein vs peter schiff" videos. ben stein was totally lunatic.

  • Yahoo! Finance User - Tuesday, December 9, 2008, 11:41AM ET  Report Abuse

    • Overall: 5/5

    It just proves by the 1 star comments and what they say that my old saying is and very evident here that on balance Democrats are nastier people.

  • makingaliving - Tuesday, December 9, 2008, 10:26AM ET  Report Abuse

    • Overall: 5/5

    The Declaration of Independence and the Constitution were written by the elite of the new country arguably because they had the "knowledge" to do it right. As a result, only men were allow to vote, blacks were counted as 3/5ths of a person and power was concentrated in the few. Flash forward 225 years. The objective of the American dream is to achieve a social status were you can join the elite few, where your influence (money) enable you access to the level of power. Righteously, you got to that level then understand the benefits of maintaining the status quo. Change? Not with this formula.

  • Paul - Tuesday, December 9, 2008, 9:55AM ET  Report Abuse

    • Overall: 5/5

    Welcome home, Ben! You have been off-track for a long time...recommending people buy stocks just to prop up your own portfolio. I don't recall you ever previously identifying the permanent ruling class. Don't be surprised when all of the bailout benefits end up in the hands of the super-rich, while the middle class taxpayers get the bill. Who do you think decides which friends get the bailouts? What justification is presented? Every asset the gov't buys will be GIFTED back to a corporatist at pennies on the dollar. It's not hard to see the future...it's a lot like the past.

  • Yahoo! Finance User - Tuesday, December 9, 2008, 2:47AM ET  Report Abuse

    • Overall: 1/5

    This guy been wrong time after time.... Its about time you apologize to peter schiff.

  • Eric - Monday, December 8, 2008, 1:43PM ET  Report Abuse

    • Overall: 5/5

    So true, Mr. Stein, so true. Although it should come as no surprise to "Main Street America" that the powerful elite in this nation would never actually allow any candidate with the intention of challenging the status quo in Washington to be elected President.

  • Randy - Monday, December 8, 2008, 6:54AM ET  Report Abuse

    • Overall: 5/5

    So true! Don't think there's a permanent ruling class? Witness Senator Clinton, future Senator C Kennedy, etc, etc, ad nauseum.

  • Yahoo! Finance User - Monday, December 8, 2008, 12:49AM ET  Report Abuse

    • Overall: 2/5

    Ben Stein is a pseudo intellectual and a fraud. This nonsense of him being an economicist, actor, writer, etc. says to me he hasn't decided what he wants to be when he grows up and it shows in his sophomoric articles. Anyone listening to his stock/commodity picking prowess would be broke by now. The fact that he thought Lehman should be rescued is both stupid and ignorant. That mummy Fuld leveraged that company to the hilt and we were supposed to save them? F*** You Quacken Stein!! We've already wasted hard working American tax dollars on the other bailouts. When is the "smartest guy in the room" Stein going to get with it. These firms have been mismanaged and need to fail, even if it means PAIN for some people and yes, maybe the country. In essence your rewarding the incompetent bankers. The competent bankers should be rewarded by getting the assets that the incompetent bankers got. Not these criminal thieves who will walk away very wealthy people in the long run anyway. This too big to fail nonsense is a big fat lie. It's being used so these greedy con artists can get your money to save themselves. If any company is too big to fail then regulators/Washington are not doing there jobs (what else is new). No one company is that important to our country and economy where it could collapse an entire system. The reality is it's a handout to make sure Paulson's former firm and his buddies on the street don't go down in flames. I hope that Stein's personal portfolio of stocks/bonds /commodities goes to zero, since that's all his sage and worldly advice is really worth.

  • TonyD - Sunday, December 7, 2008, 7:58PM ET  Report Abuse

    • Overall: 5/5

    As someone with over 20 years experience in the investment industry, I say that Ben Stein's comments are spot on. The choice of Tim Geithner as Treasury secretary is a disaster. As head of the New York Fed, Tim Geithner was supposed to supervise Wall Street. Yet Wall Street had the biggest party in history with other peoples' money and we will all be paying for it for decades to come. So he is either stupid or corrupt. Either way, it will be business as usual for Wall Street. It looks the millions of dollars that Wall Street poured into the Obama campaign got Wall Street the Treasury secretary they wanted. So much for "change".

  • Eck - Sunday, December 7, 2008, 7:35PM ET  Report Abuse

    • Overall: 2/5

    The change we are talking about here is that Obama is amassing an army of smart people, as opposed to the anti-intellectuals that have been busy ruining this country since 2001. Nuf said

  • John - Sunday, December 7, 2008, 5:25PM ET  Report Abuse

    • Overall: 5/5

    It still surprises me that so few understand what Ben knows, we are ruled by an entrenched, self-protecting ruling class that is not about to relinquish power no matter what party label they pin on their lapel. Any student of history or government understands this all to clearly. The greatest con game of all is when two rivals for high office can with all sincerity campaign on "real change" and outsider status and generate an army of true believers to man phones, mail flyers and canvas neighborhoods like cult followers selling flowers at the airport. Spot on Ben, keep telling it like it is!

  • Sam J - Sunday, December 7, 2008, 12:08PM ET  Report Abuse

    • Overall: 5/5

    The truth hurts. The most uninformed, ignrant voters in history are about to see the results of their foolishness. Next time stay home. Leave voting to people that think! And can the racism nonsense. Your boy Obama is leftist business as usual and that dog won't hunt anymore.

  • Yahoo! Finance User - Sunday, December 7, 2008, 2:42AM ET  Report Abuse

    • Overall: 5/5

    Looks like Ben lost a lot of money in Lehman Stock! If the companies (finance, auto, ....) were not prudent and smart about their business plan they should fail and not be rescued with taxpayer money!

  • Yahoo! Finance User - Saturday, December 6, 2008, 10:06PM ET  Report Abuse

    • Overall: 5/5

    Dead right.

  • Chuck - Saturday, December 6, 2008, 7:14PM ET  Report Abuse

    • Overall: 5/5

    Ben's aim on financial advice is suspect, but he hit this one right dead center, right in the X ring. All the folks who voted for "change", well, that's all we're going to have in our pockets and wallets when this mess finally plays itself out. As the Great Mogambo says, "We're freaking doomed!" It can't be fixed but it can be made worse, and that's the path we're headed down, all hellbent for economic destruction. Bullseye, Ben, good analysis!

  • Michael H - Saturday, December 6, 2008, 5:25PM ET  Report Abuse

    • Overall: 5/5

    Ben is seriously on to something in his last paragraph. Clearly, the US, and probably the world, is governed by a financial power elite that runs things from behind the scenes, regardless of what political party is in office.

  • Willow Wood Way - Saturday, December 6, 2008, 3:25PM ET  Report Abuse

    • Overall: 5/5

    Has anyone really been watching the hen house besides the fox? Looks like Geithner will continue the "look the other way" policy of our Fed. Reserve and Treasury. Any simple person could see for the last eight or more years or more that we were building a house of cards. Lord, help us in the next four years.

  • Yahoo! Finance User - Saturday, December 6, 2008, 1:38PM ET  Report Abuse

    • Overall: 5/5

    Totally agree -- Ha! Ha! Ha!

  • fortyfootowl - Saturday, December 6, 2008, 11:21AM ET  Report Abuse

    • Overall: 3/5

    Bailout the chosen ones and screw the goyim suckers... over and over

  • Yahoo! Finance User - Saturday, December 6, 2008, 9:34AM ET  Report Abuse

    • Overall: 1/5

    Change does not mean that you hire Joe the plumper to run the economy, no you get the best people that will carry your vision to get the job done. Mr. Stein when will you put blame where it belong on the, Bush and Greenspan who decided to let this housing crisis continue with those super low interest rates. Mr. Stein can not be neutral because he is the biggest Republican party cheerleader

  • Yahoo! Finance User - Saturday, December 6, 2008, 9:27AM ET  Report Abuse

    • Overall: 5/5

    Nothing like some cold hard truth, thanks again Ben. Tough crowd out there these days.

  • Danny - Saturday, December 6, 2008, 9:26AM ET  Report Abuse

    • Overall: 5/5

    100% I agree with your view.

  • Hunter C - Saturday, December 6, 2008, 7:00AM ET  Report Abuse

    • Overall: 1/5

    Why this deranged lunatic Ben Stein still has a job writing worthless crap for Yahoo while millions of Americans who function with sanity are being laid off is beyond me. I guess it's just one of those things in life that I will never understand but could have if the public education system had taken Nutjob Ben's advice and taught creationism in school. My plea to Mr. Stein: DEAREST BEN, I KNOW YOU BELIEVE THAT SUICIDE IS A SIN, BUT I AM TELLING YOU THAT IT IS NOT. THE ONLY SIN HERE IS IF YOU CONTINUE LIVING AND PUTTING ON PAPER, THE CRAP YOU PULL OUT OF YOUR ARSE. PLEASE, BENNIE, PLEASE END YOUR LIFE AND DO YAHOO READERS A FAVOR. PLEASE GO BUNGEE JUMPING WITHOUT A CORD OR SKYDIVING WITHOUT A PARACHUTE. WE WON'T MISS YOU -I PROMISE. Here's hoping Bennie takes our advice.

  • Yahoo! Finance User - Saturday, December 6, 2008, 4:07AM ET  Report Abuse

    • Overall: 5/5

    Finially a post exposing all these corrupt politicians. I cant take them anymore. They are all liars and no one in this country trusts any of them. They are all out for themselves. Pathetic! This country sucks now. It used to be great but now its a bunch of selfish little brats.

  • ROB - Saturday, December 6, 2008, 1:38AM ET  Report Abuse

    • Overall: 5/5

    Do I hear an echo? SSDD

  • jimbo - Friday, December 5, 2008, 10:13PM ET  Report Abuse

    • Overall: 5/5

    good post ben. better than your priors. i too find this government repugnant for hiding the issues. however, i disagree, lehman should fail and we should stop printing money like drunken morons.

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