Neel Kashkari Exercises In Rhetorical Hypocrisy: Asks If Government Can Handle Fall Out Of His Actions

Tyler Durden's picture

Neel Kashkari, previously of Goldman Sachs, subsequently of TARP creation fame, and currently of PIMCO payroll generosity and Macroeconomic Advisors "expert network" insight, has penned a charmingly faux-heartfelt, and supremely hypocritical Washington Post op-ed in which he asks rhetorically whether "Washington can tackle the big economic issues?" Ironically these are precisely the same "issues" that have arisen as a result of none other than his very own decision to make moral hazard a global policy courtesy of his own TARP creation. It was also none other than the Washington Post's own profile of Kashkari that explained the deep thought that went into the creation of the biggest Bernanke Put in history: "Seven hundred billion was a number out of the air,” Kashkari recalls….”It was a political calculus. I said, ‘We don’t know how much is enough. We need as much as we can get [from Congress]. What about a trillion?’ ‘No way,’ Hank shook his head. I said, ‘Okay, what about 700 billion?’ We didn’t know if it would work. We had to project confidence, hold up the world. We couldn’t admit how scared we were, or how uncertain.” So the next time Kashkari's own boss at Pimco waxes philosophically on how it is that "the Fed is now the most brazen of all ponzi schemes" perhaps he can first get the advice of his own puppet whose own morally hazardous actions "held up the world." And, by the way Neel, had the US government done the right thing, and not "held up the world" letting those who deserve to fail, actually fail, then there would be no need for Washington to tackle big economic issues - ironically the market would have long been able to fix said problems on its own. But thanks to your actions we will indeed watch in terror as the government continues its exercises in supreme central planning.

Full Kashkari platitude:

Now, Can Washington Tackle the Big Economic Issues?
  • We are facing a multi-year adjustment period, a "new normal" that many economists agree includes sustained high unemployment.
  • The proposal from the president's fiscal commission and the tax-cut
    compromise are promising starting points. But they are not nearly
  • Success in Washington should be defined as enacting major structural
    reforms to improve our economic competitiveness - and our leaders must
    answer to the American people if they fail.

This article was originally published on on December 10, 2010.

agreement on the Bush tax cuts and unemployment benefits illustrates
that Washington can tackle incremental issues. Lawmakers will
undoubtedly agree to raise the debt ceiling and pass another federal
budget to keep the government running.

But will this new divided government be able to make the major
structural changes necessary for our economy to grow and prevent the
fiscal crisis on the horizon?

Many Americans outside Washington prefer divided government. In
theory, it forces our political parties to work together on initiatives
that have the broadest possible popular support. It demands shared
accountability: With one party in control, it is too easy for
politicians to shower their constituents with largess and for the party
out of power to simply object to everything. Divided government often
leads to better governing.

Consider the landmark legislation that has been produced through
divided government in the past 30 years: Working with a Democratic
House, President Ronald Reagan enacted Social Security, tax and
immigration reforms. President Bill Clinton achieved welfare reform with
Republicans controlling both chambers of Congress. President George W.
Bush got his No Child Left Behind legislation through a Democratic

This track record suggests our political leaders can work together to pursue bold legislation – but will they do it now?

The legislative examples I cited as products of divided government
had another shared attribute: They occurred during times of economic
growth and relative stability. For the past 30 years, our economy
enjoyed strong growth in gross domestic product and asset-price
appreciation, both of which were fueled, unfortunately, by increasing

It is of course easier for politicians to make hard choices when the
economy is growing and Americans feel economically secure. Americans are
beginning to pay down their debt, a necessary course – but deleveraging
is a headwind that results in slower GDP growth, slower asset-price
appreciation and higher sustained unemployment. The result is more
insecurity for American families and a more challenging political

While there are no magic bullets to pierce this debt overhang,
pro-growth economic policies could help make the adjustment less
painful. So which policies should our leaders embrace?

Washington must start by acknowledging that our society is overly
geared toward consumption rather than savings and investment. This was a
fundamental component of the 30-year leveraging cycle we just
concluded. Consider that consumer-device pioneer Apple has a larger
market capitalization than technology infrastructure giants Microsoft,
IBM or Cisco. Our political leaders lecture Asian economies that they
should consume more and save less to facilitate a global economic
rebalancing – but they should also be working at home toward reorienting
our society to savings and investment.

When government taxes an activity, society gets less of that
activity. Hence we tax cigarette and alcohol purchases. Those make
sense. We also tax income and savings. Don't we want people to work and
save more? Temporary measures such as the one-year payroll tax reduction
in the tax cut compromise do not change long-term behavior.

Imagine if President Obama announced a plan to permanently replace
income taxes with a consumption tax. Such a plan could be
revenue-neutral. It could be combined with elements from the fiscal
responsibility commission's thoughtful proposal to reform entitlements
as part of a grand bargain to make our economy more competitive,
accelerate the necessary adjustment toward savings and investment, put
us on a path to fiscal solvency and – importantly – help create jobs.

Pundits would wail that this is naive. The president's political
advisers would warn that this is risky. All would be correct. But we are
facing a multi-year adjustment period, a "new normal" that many
economists agree includes sustained high unemployment. The country needs
bold economic leadership. It is time to stop allowing political pundits
to chip away at courageous ideas with risk-averse incrementalism. Our
country, economy and political system need a shot of adrenaline to spur

Given its record debt and spending commitments, the United States
can't afford to waste the next two years. We must hold our political
leaders accountable and demand that they work together. The proposal
from the president's fiscal commission and the tax-cut compromise are
promising starting points. But they are not nearly enough. Success
should be defined as enacting major structural reforms to improve our
economic competitiveness – and our leaders must answer to the American
people if they fail.


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redpill's picture

He needs to be caught by the mob in his Rolls, a la Charles & Camilla.

Popo's picture

These poor jackasses truly don't understand the cause of the problem. 

rocker's picture

He understands. Did you forget he engineered and testified with Hank Paulson to congress on why we needed to bail out Goldman Sachs. Who he did work for before Hank recruited him. He is the ultimate SOB scumbag who belongs in Jail with Lord Blankfein and Paulson.

The Rock's picture

Exactly, just another one of GS's bitchez...

Manbarepig's picture

Lynch mob, now...

TruthInSunshine's picture

Kahkari's mentor, Hank Paulson, was so scared, he decided to draft the 'I Need A Blank Check or A Flaming, Molten Ginormous Asteroid is Going To Slam Into The Earth Within Two Days,' otherwise known as 'TARP' program, on a Napkin, and then rush to present it to Congress, after doing his best with The Bernank's assistance, to convince President George W. Bush that that economic world as we knew it would end without such risky legislation and spending.

As we now are aware, TARP spawned TALF & QE - they're all one in the same.

Paulson's real fear is that Goldman would take major hits to the point of either going bust (if AIG didn't have the money to pay Goldman on CDS exposure, as one example - hello taxpayer-sucker!), and his hundreds of millions in stock options vested in Goldman as ex-CEO would take a massive hit.

Ain't Crony Capitalism fantastic!

SwingForce's picture

I think GS by-laws allow full vesting of stock & options if taking a Fed Gov't position. Further, US Treasury rules forced the sale of all Paulson's stock & options as a rquirement for the job as Treas Secy, income tax free (as a consolation). You can double check on this, but I'm pretty sure the reason Paulson jumped ship in 2006 was because he saw the future.

ronin12's picture

This is correct. Paulson cashed out $700 million (tax free) before taking the job as Secretary of the Treasury.



TruthInSunshine's picture

IIRC, there were numerous reports that stated Paulson, despite selling his already vested stock options as of leaving GS, still had remaining blocks of unvested shares at the time he left his CEO position, that he essentially carried forward with him.

I will try and find the links/info when I can.

unununium's picture

> Paulson cashed out $700 million (tax free) before taking the job as Secretary of the Treasury.

Tax free why exactly?  Could the treason of this hypocritical criminal be any more scandalous? 

So he could go on to strike a deal to save AIG with Goldman in the room and continue to obligating us to eternal taxation and inflation?



Popo's picture

"People should not be afraid of their government.  Governments should be afraid of their people."  - V for Vendetta

SwingForce's picture

Thanks for double-checking. Now I assume Kashkari also got the same deal. This is a good story in-of-itself!

In Fed We Trust's picture

Of course he saw the future even though he claims he didn't see the real estate thing comimg.

Knowing sub prime was going to crash, with Goldman and paulson(trader) pushing the market down.  Paulson knew he would be there to back stop AIG, to make sure that Goldman got paid.

Paulson would be there to make sure Leman Bros was kicked to the curb, with their "53$ billion in commercial real estate holdings that they couldn't liquidate fast enough"  Paulson claims "that was Lehman's main issue, that they didn't have enough time to unload their real estate"

After all, if you remember the rules.

Derveriative holders always get paid first before stock/bond holders and sometimes, the only party to get paid.

I think Leham was pushed into a liquidity trap.


Red Neck Repugnicant's picture

As we now are aware, TARP spawned TALF & QE - they're all one in the same.

Just for clarification...

QE2 is significantly different than TARP or QE1.  

TARP and QE1 directly benefited the banks.

QE2 does not benefit the banks, and that is why all those Republicans wrote that stunningly hypocritical, open letter a few weeks ago, and voiced their concern about deficits and the Fed.  

Where was their letter during TARP and QE1?  Just as soon as the banks maximized all their benefits from these government programs and returned to record profitability, the letters are finally penned. How fucking convenient!


Fucking Republican hypocrites.   

Dumb Money's picture

"QE2 does not benefit the banks, and that is why all those Republicans wrote that stunningly hypocritical, open letter a few weeks ago, and voiced their concern about deficits and the Fed."


WRONG! Actually, the banks make bank by frontrunning the Fed.


... also i don't think most of us would identify as republicans.

Hondo's picture

This guy's a clown...I think I'll pull my PIMCO money this afternoon.

Cognitive Dissonance's picture

One of the keepers of the public myth (Neel Kashkari, with plenty of help from a central myth maker, the WaPo) is now scrubbing his public image clean which simultaneously spreading shit and blame far and wide.

Arius's picture

at the end all of this is NOISE and BS...Rome is burning - the senators continue their eloquent speeches...

so much deep thought to the decision making - Neel decides on the 700 wonder we are where we are...

trav7777's picture

yeah; isn't this the most garbage, self-promoting piece of crap you've ever read?

And all the nonsense talk about "tackling" the big economic issues...what, like letting your beloved banks go bust, Krapkari?  Someone needs to spray paint fuck you on this assclown's forehead

Hansel's picture

A chisel or hot cattle brand would work better.

SheepDog-One's picture

'$1 trillion? No way....$700 billion? Sounds about right to hold up  the world'....

WTF who is he kidding its $30 trillion or so! Get a rope.

virgilcaine's picture

Pimco has a wide assortment of sociopaths, & they are brazen. You have to sell your soul to be one of them. it's mandatory.

Problem Is's picture

Neel "Down You Bitch" Kashkari
He is the private sector equivalent of Wanker Timmay Geithner. Of course the dinosaur hack media prints his propaganda musings as they fit the myth narrative.

Paper Always Excepts Ink
Pervasive incompetence in the ruling hierarchy above us...

Biggus Dickus Jr.'s picture

700 billion is a trifle in this new power game. Looks Like a good investment so far. Ireland out. Iceland out. Spain Portugal are zombies at best. UK is reeling. Germany can't continue meeting the margin calls on their monster put. The German put is one or two orders of magnitude larger than the Greenspan put and the Germans will leave the poker table long before we do. Last senior currency standing takes the entire pot. Bric countries are not yet ready for currency prime time. This old empire should not be counted out just yet. It's going to surprise you permabears.

Arius's picture

i hope and pray (contrary to logic and facts) that you are right...

Raging Debate's picture

I am also long America Biggus but the assessment from Kashkari is correct, the U.S. must return to a Save and Invest structure and this will take time. The problem is current vested interests and broken trust, these players still in the market must be forced to exit. Easier said than done with our broken electoral process. 

Ron Paul and Ben Bernanke agree on tax reform to tax consumption instead of production also mentioned in this article. Tax preparation and collection is a $450B billion industry that personally as a Small Business owner costs me $40k-$50k per year in compliance and that sum has doubled in a decade operating my business. Depending on the year, that represents between 4%-6% profit going straight toward unproductive and frustrating endeavors. 

To restore trust, Central Banking also has to evolve, to become a democratic process and mirror our times, instead of the 19th century. CB is a 4D model but purposely operating as a 3D pyramid management structure. Wealth concentration followed by debt saturation and bust is the expected conclusion over several decades. Mankind should not have one of every three generations hobbled being exhanged for exhorbitent privalege. That structure is blatant monarchy and that revolutions and war wars follow the bust shouldn't be a surprise. 

wisefool's picture

+1099. The combination of a hypercomplex tax code + Central Planning under the member bank & Federal reserve model was supposed to be the most rugged yet elegant control system the world has ever seen. It was supposed to be whole package for implementing a "good" buerocracy.

Throw in a completely subservient Academia and Press (fully programed functionaries) means TPTB have no excuses for the crisis we are in. And the effects are real (People Losing their homes, thier jobs, their careers, their retirements) The divorces, the substance abuse, the suicides, etc.

There is no excuse for this. None. And no rationale for trying another 40 years of this model. Existing PhDs in Econ, Psychology, Sociology, BA, should all be wiped and re-programmed or forced into retirement. Its what we should have done witht he TARP,TALP and QE money.

Manbarepig's picture

BDJ - I think you hit the nail on the head. Empires like ours don't collapse overnight. Ours will be a long, slow, painful demise. It took America over two centuries to get to this point, it shouldn't be a shock if it takes close to that long to fall apart. Even a cursory look at the history of world empires will show you that regimes like ours putter along for decades longer than they should simply through momentum or stubborn determination.

SheepDog-One's picture

$700 billion? Sure, if that was the actual amount. Go talk to Neil Barofsky the TARP inspector general who says the total of TARP was well over $25 trillion.

TheWord's picture

Well done, CashCarry - now that you've admitted that nobody had a clue, the next time it hits the fan, $700gazillion won't be enough, because no-one will believe you guys behind the curtain, anymore.


hack3434's picture

OT: Operation Leakspin 

Anyone that has read the cables, feel free to comment here:



Steak's picture

I ask for a bit of understanding with the off-topic nature here.  There is one more playlist after this one and then my musical contributions to this site will take a different form.  For those of you who have enjoyed them, this one and the next are worthy of being a final effort.  For those of you who think this whole effort has been right out, I contend it is at least marginally constructive and has brought at least a couple smiles :)

Mike Foyle (aka Statica) entrances us with his beautiful melodies blended with rythms that float, bounce and even stop. 

Heatbeat (aka Matias Faint and Augustin Servente) has had a breakout year in 2010.  Both as Heatbeat and on their own they bring a gritty sound that is nothing short of liquid adrenalin.

Best of 2010 - Mike Foyle & Heatbeat:

Gully Foyle's picture


Dude you got any of this guy?

Le Pétomane ( /l??p?t?me?n/, French pronunciation: [l?pet??man]) was the stage name of the French flatulist (professional farter) and entertainer Joseph Pujol (June 1, 1857–1945). He was famous for his remarkable control of the abdominal muscles, which enabled him to fart at will. His stage name combines the French verb péter, "to fart" with the -mane, "-maniac" suffix, which translates to "fartomaniac". The profession is also referred to as "flatulist", "farteur", or "fartiste".[1]

It is a common misconception to state that Joseph Pujol actually farted as part of his stage performance. Farting implies the release through the anus of intestinal gases. Pujol was "gifted" in the sense that he was able to inhale air into his rectum and then control the release of that air using his sphincter muscles (avoiding any associated odour). Evidence of his ability to control those muscles can be seen in the early accounts of demonstrations of his abilities to fellow soldiers.

Steak's picture

None of his tracks, but I'm looking at my family tree cause there is no doubt we're related :)

Tom North's picture

Neel Kashkari lecturing on fiscal prudence & diligence is akin to Larry Summers touting a fitness regimen – gack! This is a guy who should be neither seen NOR heard. Seriously. Just keep collecting your paycheck while you can Neel and STFU!


A couple of my previous  Kashkari rants:


And my contribution to Urban Dictionary (regrettably, they did not also accept Kashkosis):


Gully Foyle's picture

I'm so bored. Where the fuck is that economic collapse I was promised. Jesus I read about the coming collapse daily but it ain't fucking here yet.

C'mon people due your part and hurry it along.

Bartanist's picture

Maybe you should go back to watching Dancing with the Stars or playing video games to hold your attention.

unununium's picture

I don't think he was being sarcastic.  Haven't we all felt the same way?  Collapse would beat this BS world we're living in.

Bicycle Repairman's picture

Short answer:  Washington cannot tackle any meaningful problem.

Bartanist's picture

But it could if there were consequences for not handling the problems and they were not above and beyond the law.

Bicycle Repairman's picture

Yes, but such is not the case.  Quite the opposite.

Bruce Krasting's picture

Well said TD. Blast em..

Bartanist's picture

They were not holding up the world. That is hypocrisy and rationalization. They were holding up the corrupt parasitic banker network that should have been relegated to the dustbin of history with many treasonous crooks sent to the gallows.

It is the arrogance of a handful of parasites thinking THEY are the world.

unununium's picture

It is the arrogance of a handful of parasites thinking THEY are the world.


StychoKiller's picture

Ah, but they were holding up the world as in:  "All right, this is a HOLD UP!  Nobody move or we start shootin'!"